Indonesia’s House passes 2025 state budget

A significant portion of the 2025 state budget has not been allocated to specific programs or ministries, as the outgoing government aimed to leave fiscal space for the next administration, which can still adjust the budget in alignment with its priority agenda.

Deni Ghifari

Deni Ghifari

The Jakarta Post

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The 2019-2020 House of Representatives (DPR) convenes the eighth plenary session of its second sitting session on Jan. 22, 2020 at the national legislature in Senayan, Jakarta. PHOTO: THE JAKARTA POST

September 20, 2024

JAKARTA – The House of Representatives passed the 2025 State Budget Bill at a plenary session on Thursday for President Joko “Jokowi” Widodo to sign within the roughly 30 days he has left in office, before it automatically becomes law.

House Budget Committee chairman Said Abdullah said in his remarks that the bill was designed to provide room for its administration at the “discretion” of the government of incoming president Prabowo Subianto, who takes office on Oct. 20.

Finance Minister Sri Mulyani Indrawati, speaking after Said, expressed her gratitude to the budget committee for accommodating the “priority programs of the [next] government” during the bill’s deliberation.

The legislative and executive branches have been deliberating the bill since the government unveiled the draft budget on Aug. 16.

A significant portion of the 2025 state budget has not been allocated to specific programs or ministries, as the outgoing government aimed to leave fiscal space for the next administration, which can still adjust the budget in alignment with its priority agenda.

Read also: Questions remain as 2025 budget moves closer to approval

The 2025 state budget gives the next government spending room totaling Rp 3.6 quadrillion (US$235.1 billion) including Rp 307.9 trillion for subsidies, around two-thirds of which is reserved for energy and the rest for housing, agriculture and other sectors.

However, the state’s energy bill could swell later this year after accounting for compensation and subsidies for oil and gas company Pertamina and electricity firm PLN, which allows the two state-owned enterprises to sell their energy products to consumers at fixed levels below the market prices.

The 2025 budget assumes an average rupiah exchange rate of Rp 16,000 per dollar and an Indonesian Crude Price (ICP) of $82 per barrel, which would affect final spending on subsidies and compensation.

It also includes Rp 109.62 trillion in spending for Prabowo’s so-called Quick Win programs, including his flagship free meals program and other education and healthcare initiatives.

Read also: Govt digs into education, regional reserves for Prabowo’s Quick Win

The budget plan sets state revenue at over Rp 3 quadrillion and aims to fill the coffers by collecting Rp 2.1 quadrillion in tax revenue and Rp 513 trillion in nontax revenue. Other income is to be sourced from customs and excise, as well as grants.

It forecasts next year’s fiscal deficit, or the amount by which state spending exceeds state revenue, at Rp 616 trillion, or 2.53 percent of GDP.

The gap is to be filled by raising Rp 775 trillion through debt issuance, mostly government bonds.

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