Why Indonesia’s 25% Revenue Leap May Sugest Real Economy Rebound

JAKARTA, Investortrust.id — Indonesia’s state revenue expanded sharply through the first eight months of 2026, offering signs of resilient domestic activity while leaning heavily on administrative adjustments and central bank windfalls.

Total state revenue rose 25.4% year-on-year to Rp 2,055.6 trillion ($129.28 billion) through Aug. 31, 2026, reaching 65.2% of the full-year target. Meanwhile, total state expenditures grew 17.1% to Rp 2,295.7 trillion ($144.38 billion), or 59.7% of the total budget ceiling.

Because revenue expanded faster than public outlays, the national budget deficit held steady at Rp 240.1 trillion ($15.10 billion), representing 0.93% of gross domestic product (GDP). The primary balance also recorded a positive surplus of Rp 154 trillion ($9.69 billion).

"Resilience is demonstrated by our deficit, which only reached Rp 240.1 trillion, or 0.93% of our GDP," Finance Minister Suahasil Nazara stated during the APBN KiTa briefing in Jakarta on Friday, Sept. 18, 2026. He noted that the positive primary balance shows revenue remains larger than state spending before debt interest charges.

Consumption Taxes Lead Topline Expansion

The strongest indication of firming commercial activity came from value-added tax (PPN) and luxury goods sales tax (PPnBM) collections, which jumped 38.9% year-on-year to Rp 591.5 trillion ($37.20 billion).

Because authorities levy VAT when taxable goods and services change hands, surging receipts point directly to accelerating household consumption, retail trade, and industrial shipments. Higher transaction values across distribution and manufacturing supply chains widened the tax base.

Income tax from non-oil and gas sectors (PPh nonmigas) also advanced, gaining 16.6% year-on-year to Rp 722.2 trillion ($45.42 billion), or 62.6% of its budget target. The increase reflects higher income across corporations and workers, as well as dividend and interest flows across the wider private sector.

Soaring international crude prices provided a massive boost to upstream energy levies. Oil and gas income tax surged 63.8% year-on-year to Rp 39 trillion ($2.45 billion), fulfilling 70.6% of its annual allocation.

"If global oil and gas prices rise, the company's revenue increases, which means they are likely to pay higher taxes," Suahasil explained to reporters.

Tighter Restitutions and Central Bank Windfall

Despite strong headline collections, net tax figures were heavily amplified by a steep reduction in corporate tax refunds. Total refund disbursements plunged 36.96% year-on-year to Rp 191.82 trillion ($12.06 billion) through August, down from Rp 304.29 trillion ($19.14 billion) during the same period in 2025.

Director General of Taxes Bimo Wijayanto explained that tax authorities are applying tighter scrutiny to refund claims, particularly in high-exposure segments.

"We will indeed conduct this in accordance with standard audit procedures. However, preliminary refund approvals also remain substantial, and we continue to disburse them," Bimo stated during the briefing.

Non-tax state revenue (PNBP) also surged 41.7% to Rp 435.1 trillion ($27.36 billion), driven by separated state assets (KND) which hit Rp 58 trillion ($3.65 billion) against an initial projection of Rp 1.8 trillion ($113.21 million). The jump occurred after the government booked a Rp 55 trillion ($3.46 billion) surplus transfer from Bank Indonesia’s (BI) audited 2025 earnings to extinguish historical debts from the 1997–1998 Asian financial crisis.

"We initially projected Rp 1.8 trillion because we knew that state-owned enterprise dividends would no longer flow directly into the state budget," Suahasil explained, referring to state enterprise dividends migrating to national investment agency Danantara. "However, over the course of time and through the 2025 financial audit process, we received information that Bank Indonesia recorded a surplus, which by statutory mandate must be remitted to the state treasury."

Suahasil added that close coordination between the treasury and the central bank allowed the historical debt obligations to wrap up completely.

"Close coordination between the government and Bank Indonesia confirmed that with this Rp 55 trillion surplus deployed to settle government debt obligations under the BLBI framework, the sovereign debt issued for the 1997–1998 crisis management was fully resolved in August," he confirmed.

Spending Accelerates as Foreign Capital Tilts Toward Debt

On the expenditure ledger, central government outlays reached Rp 1,791.5 trillion ($112.67 billion). Line ministry and agency spending accelerated 33% year-on-year to Rp 912.4 trillion ($57.38 billion), providing a direct multiplier effect through infrastructure projects, goods procurement, and social assistance.

"Among state spending categories experiencing strong growth, line ministry spending stands out. Faster disbursements this year show government activities are actively moving on the ground," Suahasil said, cautioning that ministries must execute budgets efficiently. "When programs are executed, they must adhere to principles of efficiency, accurate targeting, and deliver the maximum possible benefit to the public."

Capital flows continued to diverge sharply across domestic assets. Inward flows into government bonds (SBN) totaled Rp 33.8 trillion ($2.13 billion) since the third quarter began, while Bank Indonesia Rupiah Securities (SRBI) drew foreign inflows of Rp 171.6 trillion ($10.79 billion).

Domestic equities experienced substantial capital flight, booking foreign outflows of Rp 70.7 trillion ($4.45 billion).

"We must improve this. The key is credibility in our stock market. If our equities market is credible, investors will have greater confidence in buying Indonesian shares," Suahasil emphasized.

Looking ahead, the finance minister pledged to manage external pressures from global interest-rate shifts proactively. "What we must do in managing our macro-economy is minimize the negative fallout. This is what we have to monitor continuously," Suahasil concluded.