JAKARTA (Reuters) -The Indonesian parliament’s key budget committee on Thursday approved total government spending of 3,842.7 trillion rupiah (233 billion) in the 2026 budget, with the fiscal deficit forecast at 2.68%, the committee chair said.
The spending figure is 56.2 trillion rupiah higher than the initial budget proposal presented to parliament by President Prabowo Subianto in August, which forecast a deficit of 2.48% of GDP.
The budget committee’s decision is expected to be approved by a wider parliamentary vote at a later date.
The budget allocation for regional governments has been increased to 693 trillion rupiah from the original 650 trillion rupiah.
Local leaders had complained that a proposal by Prabowo in the budget to cut regional funding would lead to increases in land and building taxes to cover the shortfall.
The rest of the increase in the approved spending plan is allocated to the central government’s budget. There was no immediate breakdown of the changes.
The committee also set a slightly bigger revenue target of 3,153.6 trillion rupiah, up 5.9 trillion rupiah compared to the proposal made in August.
Investors are watching Prabowo’s fiscal plans closely for any signs of weakening fiscal discipline after he sacked respected finance minister Sri Mulyani Indrawati last week.
Financial markets have also been unsettled by widespread anti-government protests that broke out across the country in late August.
The 2026 budget is the first spending plan to reflect Prabowo’s programmes, with this year’s budget prepared by his predecessor.
The original proposal had included large allocations for defence spending as well as his flagship programme to provide free school meals.
($1 = 16,505 rupiah)
(Reporting by Stefanno Sulaiman and Gayatri Suroyo; Editing by John Mair and David Stanway)
