Indonesia Reports $30 Billion Fiscal Impact from 2025 Reallocation Programme Without Additional Borrowing
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Jakarta – Indonesia implemented a fiscal restructuring programme in 2025 under President Prabowo Subianto, generating an estimated fiscal impact of approximately US$30 billion while maintaining the fiscal deficit within the statutory 3 percent ceiling and keeping government debt at around 40 percent of GDP.
The programme focused on expenditure rationalisation, enforcement measures, and recovery of revenue from illegal economic activity. It was carried out without additional borrowing.
On the expenditure side, the government reported around US$18 billion in direct budget savings. Procurement-related waste was reduced by about 90 percent. Printing and ceremonial expenses were cut by 75 percent, building rental costs by 73 percent, and spending on meetings and seminars by approximately 45 percent. Allocations for low-impact research were reduced by more than half. The government stated that essential public services were maintained and no tax increases were introduced.
Additional fiscal space was generated through enforcement and revenue recovery measures. Approximately four million hectares of illegal palm oil plantations were brought under state control, enabling formal taxation. Nearly 1,000 illegal tin mines were shut down or regularised. Fines were imposed on non-compliant companies, and proceeds from corruption cases were recovered through asset and cash confiscations. Enforcement agencies also seized illicit cigarettes to improve excise compliance.
Funds were allocated to social and productive programmes. Between January and October 2025, rice output reached 34 million tonnes, supported by the addition of about 225,000 hectares of cultivation area. Approximately three billion nutritious meals were distributed to around 60 million people, with the programme reported to generate up to one million direct jobs. Free health check-ups were extended to about 70 million citizens. More than 16,000 schools were renovated and nearly 300,000 were equipped with digital infrastructure. Over 83,000 village cooperatives received approval.
The programme reflects an approach in which fiscal space was created through expenditure controls and enforcement measures, enabling expanded public programmes while maintaining existing deficit and debt parameters.
