Monthly fiscal deficit widens. Monthly government spending accelerated 69.3% m-o-m to IDR540tn in December, reversing a 11% contraction in November. Monthly revenue collection also soared by 68.7% to IDR405tn from -3.4% in November. As a result, the monthly fiscal deficit rose to IDR135tn from IDR79tn in November, implying fiscal deficit of IDR695tn or 2.9% of GDP (vs 2.3% last year), exceeding Mansek and MOF outlook of 2.8%. Net fiscal financing rose to IDR744tn in 12M25 from IDR574tn in 11M25 (112% of outlook), implying excess financing (SILPA) of IDR48.9tn in 2025, up from IDR45.7tn in 2024.
Higher central government spending. Central government spending surged by 106% m-o-m, implying 25.3% y-o-y growth from -10.4%. The monthly surge was led by material, capital and other spending (Exhibit 1). Material spending likely surged on the further release of budget efficiency, capex rose supported by infrastructure projects (roads and schools), while other spending likely reflecting faster energy subsidy compensation payment to Pertamina and PLN. By contrast, transfer to region fell sharply by 35% m-o-m, reversing 20% increase in November, implying -21% y-o-y from 11.7% previously.
Social spending rises. December social transfers edged up to IDR19.8tn from IDR19.6tn in November, bringing cumulative growth to 20.5% y-o-y, or 121% of MOF outlook, reflecting additional cash transfers in 4Q (Appendix). In 2025, spending on the free nutritious meal program reached IDR52tn, equivalent to 75% of the IDR71tn budget, covering 50.7mn recipients, or 61% of target. By contrast, budget absorption for other quick-win programs remained relatively low, led by the school program, which reached only 47% of its budget (Exhibit 2).
Non-tax revenue rebounds sharply. Monthly tax revenue accelerated by 60.3% m-o-m to IDR314tn vs 2.4% in November. The cumulative tax collections are still contracted 0.6% y-o-y (vs. -2.2% in 11M), reaching only 92.9% of outlook. MOF reported that excise and international tax rose 53% m-o-m from -27.6% in November, reflecting higher excises duties. The non-tax revenue also rose by 103.7% m-o-m (vs. -22.1% in November), reflecting 43.9% y-o-y growth, mainly supported by other non-tax revenues from CPO and sugar corruption compensation and forest area enforcement proceeds (Exhibit 3).
Higher financing and below-the-line spending. Debt financing rose to IDR736tn (95.3tn% of outlook) from IDR558tn in 2024, while non-debt financing turned into positive IDR7tn, reversing IDR111tn of negative outlook. Investment financing increased to IDR86.3tn in 2025 (62% of outlook), up from IDR59tn in 2024, mainly allocated to FLPP housing finance (IDR29.2tn), education endowment fund or LPDP (IDR26.7tn), State Logistics Agency or Bulog (IDR22.1tn), and SMF (IDR6.7tn). FLPP absorbed 83% of its budget, financing 279k housing units (80% of the 350k target).
Fiscal-led growth. A late-year spending surge lifted execution to 97.8% of MOF outlook (vs. 82.5% in 11M), close to historical ~98%, adding upside risk to our 4Q growth forecast of 5.1% (MOF: 5.45%). Finance Minister Purbaya stated that the government has not cut spending despite revenue remaining below target to safeguard domestic economic growth, while reaffirming that the fiscal deficit will remain below 3% of GDP despite a wider outturn. For 2026, we maintain our deficit forecast at 2.8% of GDP, compared with 2.7% in the 2026 budget, reflecting our expectation of a sizable revenue shortfall and stronger spending execution (Exhibit 4).
