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Transparency concerns cloud Indonesia's 2026 budget
Tenggara Strategics January 15, 2026
Finance Minister Purbaya Yudhi Sadewa's face is displayed on screen during his speech in the main hall of the Indonesia Stock Exchange (IDX) building in Jakarta on Dec. 3, 2025. (JP/Deni Ghifari)
Indonesia entered 2026 with an unusual fiscal blind spot. In the first week of the new year, the State Budget (APBN) 2026 Law had yet to be made publicly available, only appearing on the same day the Finance Ministry released its report on the 2025 APBN performance. More strikingly, Presidential Regulation (Perpres) No. 118/2025, which details the APBN and operationalizes the budget, has yet to surface at all.
Law No. 17/2025 on APBN 2026 shows that President Prabowo Subianto signed the document on Oct. 22, 2025, shortly after the House of Representatives approved the draft budget in a September 2025 plenary session. The draft APBN itself was presented to the House in August but remained inaccessible to the public until early January 2026. This stands in contrast to claims from the Finance Ministry that the implementing regulation, Perpres No. 118/2025, has already been issued. To date, however, even this regulation has not been publicly disclosed, with its existence confirmed only through official statements rather than accessible documentation.
The APBN law is usually published well before the turn of the year, allowing ministries, regional governments, businesses and financial markets sufficient time to recalibrate spending plans and adjust expectations. For example, the APBN 2025 Law was promulgated in the final quarter of 2024 and the related Perpres was signed in early December 2024, followed by the issuance of Budget Implementation Lists (DIPA) to ministries and agencies before year-end.
The Perpres typically sets out detailed targets for tax revenue, covering income tax, value-added tax (VAT), land and building tax (PBB), excise duties and import and export duties, alongside comprehensive breakdowns of state expenditure. These include budget ceilings by ministries and agencies, program- and activity-level allocations, transfers to regional governments (TKD) and financing plans such as government debt issuance. On this basis, the government issues the DIPA, which enables ministries and agencies to prepare salary payments and begin pre-tender processes for budgeted spending.
According to the 2026 APBN, state revenue is targeted at Rp 3.15 quadrillion (US$187.05 million), comprising tax revenue of Rp 2.69 quadrillion, nontax state revenue (PNBP) of Rp 459.19 trillion and grant revenue of Rp 666.27 billion. The tax revenue target consists of income tax amounting to Rp1.21 quadrillion; VAT and luxury goods sales tax (PPnBM) of Rp 995.27 trillion; PBB of Rp 26.13 trillion; excise duties of Rp 243.53 trillion; other taxes of Rp 126.93 trillion; import duties of Rp 49.9 trillion; and export duties of Rp 42.56 trillion.
On the expenditure side, total government spending is set at Rp 3.84 quadrillion, with central government spending accounting for Rp 3.15 quadrillion and TKD amounting to Rp 692.99 trillion. This implies a budget deficit target of Rp 689.15 trillion.
These targets appear ambitious when set against the realization of the 2025 APBN as of Dec. 31, 2025. Tax revenue reached only Rp 2.22 quadrillion, while PNBP stood at Rp 534.1 trillion and grant revenue at Rp 4.3 trillion. Government spending totaled Rp3.45 quadrillion, comprising central government spending of Rp 2.6 quadrillion and TKD of Rp 849.99 trillion, after aggressive efficiency measures were implemented throughout the year.
Several lessons emerge from 2025. The government entered the year already grappling with disruptions caused by the troubled rollout of the Coretax system, raising concerns over revenue collection from the outset. Even assuming Coretax functions more smoothly in 2026, the sharp increase implied in the tax revenue target appears optimistic.
Additionally, the government targeted Rp 307 trillion in expenditure reductions, or roughly 9 percent of the 2025 APBN under Presidential Instruction (Inpres) No. 1/2025. These measures contributed to an economic slowdown and sparked demonstrations across the country, culminating in significant public unrest in the capital. The government also broke with long-standing disclosure practices by delaying the release of the APBN KiTa monthly budget realization reports for January and February 2025.
It is against this backdrop that the continued opacity surrounding the 2026 state budget has taken on heightened significance. With the implementation regulation still unavailable for public scrutiny, concerns are mounting that the finalized budget may contain provisions that would prove politically or economically contentious once revealed, or that it reflects material departures from the assumptions and allocations laid out in the 2026 draft APBN presented to the House last August.
What we've heard
Several sources at the Finance Ministry said that one of the reasons the APBN 2026 Law was not promptly issued is because it was deliberately held back at the State Secretariat Ministry. At one point, rumors circulated that the government intended to re-screen which budget line items could be made public, particularly those related to expenditure.
In addition, there were reports that ministries and agencies were advised not to immediately spend their budgets until the third quarter. The aim was to reallocate funds for the President's spending needs, despite Prabowo already having Rp 327 trillion from budget savings to finance more than 20 national strategic projects.
A senior official at a state institution said that each institution was asked to fill in detailed output specifications. However, the disbursement of funds tied to those outputs is not automatically approved by the President. "The budget has already been cut, and if an institution wants to use its budget for spending, it requires the President's approval," he said.
The government's delay in issuing the APBN 2026 Law has become a subject of gossip among financial industry analysts. Some say that fiscal management that lacks transparency and accountability could trigger distrust in financial markets. This delay carries costs for market participants. Several credit rating agencies have reportedly already come to conduct reviews. The problem, the analysts added, is that Finance Minister Purbaya Yudhi Sadewa does not have the network to lobby rating agencies should they issue an unfavorable rating for Indonesia.
A government source said that the upload of Law No. 17/2025 to the Legal Documentation and Information Network (JDIH) on Jan. 7, 2026, was closely linked to mounting pressure surrounding the whereabouts of the APBN 2026 Law. The delay was widely seen as an anomaly, as the APBN Law was typically enacted and published by October. According to the source, there were rumors that the Palace had barred the publication of all laws and presidential regulations on the JDIH. "They were only allowed to be circulated to a limited number of parties," he said.
