Indonesian finance ministry forecasts Q1 spending to reach 809 trillion rupiah

Indonesian finance ministry forecasts Q1 spending to reach 809 trillion rupiah

Indonesia’s Q1 2026 Fiscal Stimulus Aims to Boost Economic Growth

The Indonesian government has announced a significant fiscal stimulus package, forecasting first-quarter spending of Rp 809 trillion ($48 billion) in 2026 to support economic expansion. This allocation, outlined by Finance Minister Purbaya Yudhi Sadewa, includes targeted measures such as airfare discounts, early Eid bonuses for civil servants, and subsidies for public services, aiming to stimulate household consumption during the holiday season.

Economists at Core Indonesia, a local think tank, project that these measures could drive Q1 GDP growth to 5.5%, with government spending and private consumption identified as the primary growth drivers. Senior economist Mohammad Faisal noted that while investment and net exports are expected to contribute modestly, a narrowing trade surplus and slower private-sector activity limit their impact.

The stimulus includes Rp 13 trillion for holiday-related packages, Rp 55 trillion for Eid bonuses for civil servants, military, and police personnel, and Rp 62 trillion for free meal programs. An additional Rp 6 trillion is earmarked for post-flood reconstruction in Sumatra. These initiatives align with the government’s broader 2026 growth target of 5.5–6.0%, as stated in February 2026 policy updates.

Indonesia’s central bank (Bank Indonesia) has maintained its key interest rate at 4.75% since late 2025, prioritizing rupiah stability amid global market uncertainties. While annual inflation rose to 3.55% year-on-year in January 2026, the bank expects inflation to moderate within its 1.5–3.5% target range by year-end.

Despite optimism, challenges remain. Core Indonesia cautions that achieving 6% growth remains distant without stronger private investment or export momentum. Meanwhile, Moody’s recent negative outlook on Indonesia’s fiscal credibility underscores risks related to rising public spending and policy predictability.

With Q1 growth forecasts at 5.5%, the government’s aggressive fiscal approach highlights its reliance on consumption-driven stimulus to offset weaker external demand and sustain momentum in 2026.

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