Indonesia’s fiscal stance turned more expansionary in 2025, with the deficit widening to 2.92% of GDP (Rp695.1 trillion) from 2.29% in 2024 as the government adopted a countercyclical approach to sustain growth while remaining below the 3% legal ceiling. The widening was largely revenue-driven, as collections fell to Rp2,756.3 trillion (91.7% of target) amid commodity normalization and lower oil-and-gas lifting, alongside a structural shift from roughly Rp80 trillion of SOE dividends redirected to the Danantara fund. Expenditure rose to Rp3,451.4 trillion, supported by accelerated K/L spending (129.3% of target) to fund new priorities such as the Rp51.5 trillion Free Nutritious Meals program, contrasting with 2024’s election- and El Niño-related stabilization focus. Financing increased to Rp744 trillion and was dominated by debt, yet borrowing costs improved as the 10-year SBN yield declined to 6.01%, even as the primary deficit deepened to Rp180.7 trillion versus -Rp20.7 trillion in 2024. For 2026, the budget signals a pivot toward normalization, targeting a lower deficit of 2.48% of GDP (Rp638.8 trillion) and a shift in financing strategy toward greater short-term SBN issuance and back-loaded borrowing to reduce the interest burden if rates decline.