2016 Budget Deficit: The Largest in History

Government spending in 2016 reached Rp 1,859.5 trillion, while revenue only reached Rp 1,551.8 trillion. As a result, the 2016 State Budget experienced a deficit of Rp 307.7 trillion (2.45 percent of Gross Domestic Product or GDP). This figure is larger than the target in the Revised State Budget (APBN-P), which was Rp 296.7 trillion (2.35 percent of GDP), and represents the largest deficit in history in nominal terms.

Since 2008, the government's budget deficit has shown an upward trend, both in terms of amount and percentage of GDP. In 2008, the budget deficit only reached Rp 4.1 trillion or 0.08 percent of GDP. However, in 2016, it exceeded Rp 300 trillion. In the 2017 State Budget, the budget deficit is projected to increase again to Rp 330.2 trillion, or approximately 2.41 percent, with revenue of Rp 1,750.3 trillion and expenditure of Rp 2,080.5 trillion.

Limited government revenue, particularly from tax receipts, and the need to stimulate growth to achieve specific targets, usually lead the government to adopt a deficit budget policy. The State Budget Law allows for a budget deficit exceeding three percent.