Indonesian Finance Minister Purbaya Yudhi Sadewa, who took office a week ago after the ouster of his predecessor, defended plans to dramatically stimulate the economy against concerns they could undermine the country’s hard-won fiscal standing.
“This is simply optimising budget allocations to improve the economy without significantly changing the deficit,” Purbaya said at a briefing in Jakarta to unveil a further 16 trillion rupiah (US$989 million or RM4.1 billion) of stimulus this year. The aid will go to eight programmes, including giving rice aid to poorer Indonesians and tax breaks for small businesses, Coordinating Minister for Economic Affairs Airlangga Hartarto said at the same briefing.
The additional spending targets gig workers and poorer Indonesians, as President Prabowo Subianto steps up efforts to speed growth following recent protests over livelihood issues. The demonstrations claimed at least ten lives, including that of a motorcycle delivery driver who was crushed by an armoured vehicle.
The spending is seen as welcome relief for poorer sections of the community, not least because the 2025 budget deficit was recently forecast to come in at 2.78% of gross domestic product, well below the official 3% cap.
Indonesia last week also announced and quickly approved a plan to shift roughly 200 trillion rupiah of the finance ministry’s cash reserves from the central bank to state-owned commercial lenders, in a bid to galvanise lending in Southeast Asia’s biggest economy. Despite multiple interest rate reductions by Bank Indonesia, bank lending has been slow, and the government hopes that is set to change.
“I suspect the bank CEOs are now racking their brains trying to figure out where to disburse the funds,” Purbaya said when asked about the disbursement.
Stocks extended gains to close at the highest in almost three weeks. The rupiah erased some losses to close 0.2% weaker against the dollar, while the 10-year government bond reversed earlier gains.
Purbaya is acting quickly to meet the president’s demands for faster growth. He succeeded ex-finance chief Sri Mulyani Indrawati, who was respected by international investors for her fiscal probity, but seen as resistant to Prabowo’s spending plans.
Today’s additional stimulus takes aim at some of the low income sectors that were the source of protest. Work accident, unemployment and death insurance coverage will be expanded to motorbike taxi riders, and there will be tax support for roughly 500,000 tourism workers in hotels, restaurants and cafes.
The Trump administration’s rollout of global tariffs, including a 19% levy on Indonesian goods, is pressuring the country’s growth. Regulators previously announced steps to boost year-end spending by targeting the transportation and tourism sectors.
The government also plans a new taskforce to speed up the execution of priority programmes such as developing village cooperatives and building public housing.
Source: The Edge Malaysia
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<p>Time: November 2025<br /> By: WTO and International Trade Group, Legal Department – VCCI</p>
