Arnoldus Kristianus, Jakarta – Indonesia's subsidy spending rose 44.4% in the first half of 2026 as the government increased support for energy, fertilizer, and microcredit programs to cushion households and businesses from higher energy costs and economic pressures.

Finance Minister Purbaya Yudhi Sadewa told parliament on Tuesday that subsidy spending reached Rp 233 trillion (about $12.9 billion) during the January-June period, equal to 52.1% of the full-year budget allocation.

The figure compares with Rp 161.4 trillion in the same period last year.

Purbaya said higher energy subsidies reflected fluctuations in global oil prices, the depreciation of the rupiah, and increased consumption of subsidized fuel, 3-kilogram LPG cylinders, and electricity.

"Meanwhile, non-energy subsidies increased mainly because of higher fertilizer subsidy payments," he told a hearing of the House of Representatives' Budget Committee.

Under the government's latest 2026 fiscal outlook, the total subsidy budget has been increased by Rp 132 trillion from the original allocation.

The additional spending is expected to widen Indonesia's 2026 budget deficit to Rp 734.3 trillion, equivalent to 2.85% of gross domestic product (GDP), compared with the original target of Rp 689.1 trillion, or 2.68% of GDP.

Despite the larger deficit, the government projects state revenue will exceed its original target, reaching Rp 3,208.1 trillion, or 101.7% of the budgeted amount, supported by strong tax and non-tax revenue.

Tax revenue is projected at Rp 2,631.4 trillion, while non-tax revenue is expected to reach Rp 576.6 trillion.

Total government spending is forecast to rise to Rp 3,942.4 trillion, or 102.6% of the original budget, representing 14.8% year-on-year growth.

Source: https://jakartaglobe.id/business/indonesias-firsthalf-subsidy-spending-jumps-44-to-129-billio