ADDRESS OF THE PRESIDENT OF THE REPUBLIC OF INDONESIA ON THE PRESENTATION OF THE GOVERNMENT STATEMENT ON THE BILL ON THE STATE BUDGET FOR THE 2026 FISCAL YEAR AND ITS FINANCIAL NOTE BEFORE THE PLENARY SESSION OF THE HOUSE OF REPRESENTATIVES OF THE REPUBLIC OF INDONESIA, JAKARTA, 15 AUGUST 2025
Bismillahirrahmanirrahim.
Assalamu’alaikum warahmatullahi wabarakatuh.
Good afternoon,
May peace be upon us all,
Shalom,
Salve,
Om swastiastu,
Namo Buddhaya,
Greetings of Virtue,
Rahayu, Rahayu.
Honorable Vice President of the Republic of Indonesia Gibran Rakabuming Raka; Chairpersons of State Institutions; Speaker of the People’s Consultative Assembly of the Republic of Indonesia (MPR RI) Ahmad Muzani; along with Vice Speakers and Members of the People’s Consultative Assembly of the Republic of Indonesia;
Honorable Speaker of the House of Representatives of the Republic of Indonesia Puan Maharani (DPR RI) and Vice Speakers of the House of Representatives of the Republic of Indonesia;
Honorable Vice Speakers of the House of Representatives of the Republic of Indonesia Adies Kadir, Prof. Sufmi Ahmad Dasco, Saan Mustopa, Cucun Ahmad Syamsurijal; and all members of the House of Representatives of the Republic of Indonesia;
Honorable Speaker of the House of Regional Representatives of the Republic of Indonesia (DPD RI) Sultan Bachtiar Najamudin; along with Vice Speakers and Members of the House of Regional Representatives of the Republic of Indonesia;
Honorable Chief Justice of the Supreme Court of the Republic of Indonesia Prof. Sunarto; Chief Justice of the Constitutional Court of the Republic of Indonesia Suhartoyo; Chairman of the Judicial Commission of the Republic of Indonesia Amzulian Rifai;
Honorable Head of the Audit Board of the Republic of Indonesia Isma Yatun;
Honorable Coordinating Ministers, Ministers, Heads of Agencies, the Attorney General, Commander of the Indonesian National Defense Forces (TNI), Chief of the Indonesian National Police (Polri), Head of the State Intelligence Agency (BIN), Vice Ministers, and members of the Red and White Cabinet;
Honorable Chairs of political parties: Chair of the Indonesian Democratic Party of Struggle represented by Puan Maharani; Chair of Golkar Party Bahlil Lahadalia, Chair of Gerindra Party present here, myself; Chair of National Mandate Party Zulkifli Hasan; Chair of Democratic Party Agus Harimurti Yudhoyono; Chair of National Awakening Party Abdul Muhaimin Iskandar; President of Prosperous Justice Party Almuzzammil Yusuf; and Chair of Nasdem Party represented by the Vice Speaker of the People’s Consultative Assembly, Lestari Moeordijat;
Distinguished journalists and media, guests, my fellow Indonesians, my fellow citizens wherever you are,
Distinguished Ladies and Gentlemen, My Fellow Citizens,
Let us express our praise and gratitude to Allah Subhanahu wa Ta’ala, God the Almighty, whose blessings and guidance have enabled us to be present today at the Plenary Session of the House of Representatives of the Republic of Indonesia in a safe, calm, and peaceful atmosphere.
Allow me to deliver the Presentation of the Government Statement on the Bill on the State Budget for the 2026 Fiscal Year and Its Financial Note.
On this auspicious occasion, I would like to express my utmost appreciation to the Honorable Speaker, Vice Speakers, and Members of the House for their continued cooperation and support in the formulation and implementation of the State Budget. Insha Allah, our joint efforts will contribute to the realization of Indonesian people’s welfare.
Honorable Speaker, Vice Speakers, and Members of the House,
Today, I am standing here before you to deliver the Presentation of the Government Statement on the Bill on the State Budget for the 2026 Fiscal Year, the first State Budget I formulated as the President of the Republic of Indonesia.
The 2026 State Budget architecture is the implementation of my vision and mission with the Vice President, which is directed at realizing a resilient, self-sufficient, and prosperous Indonesia.
Resilience is the foundation for self-sufficiency and people’s welfare. We will strengthen food and energy security, economic resilience, and defense.
Natural resources must be managed for the benefit of the people, not a select few of Indonesian. We will expand downstreaming, create jobs, and maximize added value. This added value must remain in our homeland, Indonesia.
All children of the nation have the right to progress. Education and healthcare must be equitable. We will ensure equitable development from Sabang to Merauke.
These first ten months, we have all worked hard, united to realize the nation’s aspirations amidst a highly dynamic global environment.
Geopolitical tensions continue to heat up, physical wars happen in various parts of the world. Tariff wars pose a threat to the global economy. Global governance has shifted drastically. The principle of “my country first” has become increasingly dominant, depressing the economy and incurring high costs for entire countries.
With the support of all components of the nation, the Government is joining hands to ensure the protection of the people, the stability of the Indonesian economy, and the effectiveness of public services.
Now we can feel the result. The economy grew by 5.12 percent year-on-year in the second quarter of 2025, improving from 4.87 percent in the first quarter. More than half of this growth was driven by public consumption, which increased by 4.97 percent.
Exports have grown strongly by 10.67 percent, with the added value from downstreaming being the largest contributor to our strong exports.
A strong economy supports the improvement of people’s welfare. The unemployment rate fell to 4.76 percent in February 2025 from 4.82 percent last year, with 3.6 million new jobs created.
The poverty rate was reduced to 8.47 percent, an all-time low. The Government works hard to keep the inflation rate low at 2.4 percent to maintain people’s purchasing power, especially the underprivileged.
This stands as clear evidence that, with dedication and determination, we are capable of fighting for the better welfare of millions of Indonesians.
Investors place a high level of optimism and trust in Indonesia’s economic prospects and performance.
Investment realization in the first semester of 2025 has met the State Budget target, and our stock market shows promising development amidst highly uncertain global situation.
Various flagship programs have benefited the people. The Free Nutritious Meal (MBG) program currently has reached 20 million beneficiaries, the Free Medical Check-up (CKG) program has reached 17 million beneficiaries, school revitalization has been carried out in 13,000 schools and Islamic schools, 100 schools have been established under Sekolah Rakyat (People’s School) program. In addition, the establishment of Red and White Village/Subdistrict Cooperatives has started this year. A total of 80,000 cooperatives has been established, and by the end of 2025 each cooperative will have a warehouse, a cold storage, retail outlets, and two trucks to collect and deliver agricultural products. We must also remember the importance of developing excellent human resources in the long run, and that effort must start now as it will shape a productive business ecosystem in the short run.
The pulse of economic activities from the upstream to the downstream has started to be felt down to the level of village/subdistrict throughout the country.
Amidst global turmoil, our State Budget has managed to maintain economic stability and protect the people and business sector.
The Government remains responsive when global pressure affects us. The economic stimulus worth Rp33 trillion for the initial phase was disbursed in January 2025, followed by the second phase of Rp24.4 trillion in June 2025.
Social safety net is prepared to maintain purchasing power and prevent layoffs as well as social setbacks through various programs, including the Family Hope Program (PKH), Staple-Food Card (Kartu Sembako), Smart Indonesia Program, and Smart Indonesia Card for University Students (KIP Kuliah).
Indonesia fights for the national interests on the global stage. The Government has managed to negotiate bilateral tariff reduction with the United States, to 19 percent from 32 percent. This remains a challenge and we must continue to prepare for even more challenging conditions in the future.
We have completed the Indonesia–European Union Comprehensive Economic Partnership Agreement (CEPA) zero tariff negotiation. After 10 years of inconclusive negotiations, we have achieved a breakthrough this year, precisely at a time when we face even greater challenges and trials.
In multilateral forums, such as BRICS, G20, and ASEAN, Indonesia continues to remain present and active in fighting for the national interests. We are also applying to OECD, and insha Allah, we will be accepted. We want to defend our national interests on the global stage, to be on par with other countries.
Honorable Speaker, Vice Speakers, and Members of the House,
Article 33 of the 1945 Constitution serves as our blueprint in building the nation. Our blueprint. State wealth and essential production sectors must be controlled by the state for the optimal welfare of the people.
This entails that the state must be present, must protect the underprivileged and ensure safety for all. The State Budget serves as an instrument to manifest a resilient, self-sufficient, and prosperous economy. The State Budget must be used for the optimal welfare of the Indonesian people.
We focus the 2026 State Budget Bill on 8 (eight) priority agenda.
First, we must continue to realize food security as a foundation of national self-sufficiency. We must achieve food self-sufficiency, particularly on rice and corn, and ensure stable prices, the prosperity of farmers, the welfare of fishers, and satisfied customers. Indonesia must be sovereign in the food sector.
To that end, we open new rice fields. We will distribute subsidized fertilizers to the right targets. We will support high-quality seedlings, modern agricultural machinery, and cheap loans. We will also guarantee the Government’s purchase price for unhusked rice.
Distinguished Ladies and Gentlemen,
We have allocated Rp53.3 trillion for Food Estate and Food Reserves. As for subsidized fertilizers for 2026, we have allocated Rp46.9 trillion for 9.62 million tons of fertilizers.
We strengthen the State Logistics Agency (Bulog) to support food supply, protect farmers, and maintain people’s purchasing power. The presence of the Government has been felt since the beginning of 2025. The Government has streamlined 145 complicated regulations on fertilizer distribution. We have streamlined 145 regulations.
As a result, rice production has increased, the rice supply in government warehouse has exceeded four million tons, prices have been stable, and farmers’ welfare has improved. Moving forward, we will continue such a success story.
We will allocate Rp22.7 trillion of the 2026 State Budget Bill for Bulog to perform its tasks. Overall, we will allocate Rp164.4 trillion in 2026 to strengthen the national food security.
Second, we reinforce energy security for national sovereignty. We boost oil and gas production, maintain energy prices, and expedite clean energy transition.
Energy subsidies must be just and right on target, not benefiting the well-off. New and renewable energy is the future. We must accelerate the development of power plants, including solar, hydro, geothermal, and bioenergy. Indonesia must become the global pioneer of clean energy.
We must achieve 100 percent power generation from new and renewable energy within 10 years or sooner. I believe this is achievable. Though the global target is set for 2060, we can achieve it much sooner. Our people, in the cities and villages, must benefit from affordable and sustainable energy.
The State Budget props up the reinforcement of energy security through energy subsidies, tax incentives, new and renewable energy development, as well as electricity provision for villages. Overall, for 2026, the Government has allocated Rp402.4 trillion in fiscal support for energy security.
Third, we create an excellent generation, our children, through the MBG program. An excellent generation is nurtured through healthy bodies with proper nutrition. We are committed to eradicating stunting in the shortest possible time.
The MBG program has been implemented in all provinces and will continue to reach all corners of the country.
The MBG, we are aiming to reach 82.9 million students, expectant mothers, and children under the age of five. They will receive optimal nutrition through Nutritional Provision Service Units established across the country.
Moving forward, this program will be effective in bringing broader and optimal benefits to the people.
The MBG program will enhance the quality of our children’s nutrition and Indonesia’s future human capital, empower MSMEs and local economies that will grow even stronger, create hundreds of thousands of new jobs, and empower millions of farmers, fishers, livestock farmers, and MSME actors. We allocate a budget of Rp335 trillion for the MBG program in 2026.
Fourth, we realize quality education. Education is the most powerful weapon to create excellent human resources with global competitive edge. It is also a key instrument in eradicating poverty.
The Government is committed to fulfilling the education budget by 20 percent, amounting to Rp757.8 trillion in 2026, the highest in the Unitary State of the Republic of Indonesia’s history.
However, we must be vigilant. The education budget must be spent accordingly. We improve the quality of teachers, strengthen vocational education, and align our curriculum with workforce needs. The Government provides scholarships for students and university students through the Smart Indonesia Program (PIP) for 21.1 million students and KIP Kuliah for 1.2 million university students, In addition, a budget of Rp150.1 trillion is allocated for increasing the quality of school/university facilities.
The teachers’ salary and improvement of teachers and lecturers’ competence and welfare are planned at Rp178.7 trillion. Professional allowance of Non-Civil Servant Teachers and Regional State Civil Apparatus Teachers is sufficiently provided.
We strengthen Sekolah Rakyat and Sekolah Unggul Garuda (Garuda School) and Sekolah Unggul Garuda Transformasi (Garuda Excellence Transformation School) as a beacon of hope for underprivileged children to attain the best education.
We encourage the Endowment Fund for Education Agency (LPDP) to further massively provide scholarships to study in many best universities in the world. In 2026, LPDP is targeted to provide scholarships for 4,000 university students. All of these aim to create a smart, innovative, and productive generation ready to compete on the global stage. We must close the gap in science, technology, engineering, and mathematics.
Fifth, we provide quality healthcare that is just and equitable. Every citizen has the right to access health services. The healthcare budget focuses on strengthening the effectiveness and expanding access to health insurance services through the National Health Insurance Program.
We prioritize the healthcare budget to make people’s life easier, revitalize hospitals, accelerate stunting reduction, provide nutrition support for children under the age of five and expectant mothers, control infectious diseases, reduce tuberculosis cases, and provide free medical check-ups. Thus, we can prevent the diseases from becoming more severe, save an exponential amount of money from the Government. We enhance healthcare facilities.
The underprivileged and vulnerable are guaranteed to receive quality health services. Every year, the Government fully covers the health insurance cost for 96.8 million underprivileged and vulnerable people. Overall, the healthcare budget in 2026 is allocated at Rp244 trillion.
Sixth, we revive the people’s economy through strengthened Red and White Village/Subdistrict Cooperatives. We build villages, revive the cooperatives, empower MSMEs, and foster the local economy.
Villages and subdistricts are the backbone of people’s economy. We will accelerate the development of self-sufficient villages, cooperatives, and MSMEs based on the spirit of mutual cooperation. We must use our traditions and culture in implementing the people’s economy.
As many as 80,000 Red and White Village/Subdistrict Cooperatives have been established and ready to work to provide easier access to staple food, logistics, fertilizers, and financial services. Our people should no longer borrow money from loan sharks at unreasonable interest rates. We will eliminate loan sharks from Indonesia.
The Government has prepared cheap loans through state-owned banks, enabling the Red and White Village/Subdistrict Cooperatives to obtain loans access at low interest rates.
This is a new approach that will revive the local economy in the villages, cut the complicated logistics distribution chain, create new employment, and eradicate poverty, as well as strengthen food security in the villages. The local economy will thrive and regional self-sufficiency will further strengthen the nation’s unity and self-sufficiency.
Seventh, we strengthen the total people’s defense system to safeguard the nation’s sovereignty.
The world is full of uncertainty. Threats appear abruptly. Indonesia is still faced with the challenge of safeguarding territorial integrity and protecting our wealth. A strong defense is the foundation of sovereignty.
The Indonesian people do not want war. The Indonesian people view war as the last resort. We want peace, but we love our independence even more. We want peace, but we understand that history has taught us that those without strong defenses are often oppressed by stronger nations. Their wealth is often taken, plundered, and that is what has happened to our Archipelago for hundreds of years. We no longer want to be exploited by other nations.
Distinguished Ladies and Gentlemen,
Research from Oxford University revealed that the Dutch, who occupied Indonesia, had the highest GDP per capita in the world during their time in Indonesia, the Archipelago. This means that whoever controls Indonesia’s wealth will have a very high GDP per capita, become one of the top three or four in the world, and that is what we are aiming for. We must oversee, control, defend, and manage all of Indonesia’s national wealth.
To that end, we must modernize the main weapon system and strengthen reserve components. We empower the national strategic industry and improve the welfare of the nation’s soldiers.
Alhamdulillah, God the Almighty has blessed us. We have minerals called rare earths. We have all the rare earths in the world. We have them all. These rare earths are vital for high-tech ecosystem, modern life, and cutting-edge defense systems.
Distinguished Ladies and Gentlemen,
We must cultivate excellent human resources so we can utilize all of our natural resources as quickly as possible.
Eighth, we expedite global investment and trade. Using the State Budget as a catalyst, the role of Danantara and the private sector must be further strengthened as the drivers of the economy.
Through Danantara, we bolster productive investment and materialize a stronger Indonesia in the global supply chain. Professionalism, competence, and integrity will serve as the cornerstone, supported by a transparent and accountable governance. This is the momentum for Indonesia to become a respected global economy.
Various downstream projects with an investment value of approximately US$38 billion will be accelerated. These projects cover multiple sectors, including mineral mining, coal downstreaming, agriculture, fisheries, and new and renewable energy.
Ladies and Gentlemen,
The 3 million houses for the people program is implemented through various schemes, including the Housing Financing Liquidity Facility (FLPP), the Housing Stimulus Assistance Program (BSPS) in rural, urban, and coastal areas as well as Value-Added Tax Borne by the Government (PPN DTP) for commercial housing to support the construction of livable and affordable housing. The total number of houses to be supported by the 2026 State Budget is 770,000 houses.
Distinguished Ladies and Gentlemen, My Fellow Citizens,
To support the development agenda amidst global turmoil, the 2026 State Budget architecture is designed as follows:
- The State Expenditure is allocated at Rp3,786.5 trillion.
- The State Revenue is expected to reach Rp3,147.7 trillion.
- The State Budget deficit is projected to reach Rp638.8 trillion or 2.48 percent of the GDP, supported by prudent, innovative, and sustainable financing.
And the Government that I lead pledges before this assembly that we will continue to implement efficiency to minimize the deficit to the greatest extent possible. It is my hope, it is my aspiration that one day, be it in 2027 or in 2028, I could stand before this assembly, at this podium, to convey that we have succeeded to achieve no State Budget deficit. We must be courageous. We must be courageous and we must be determined to eliminate outflow, to reduce all sorts of outflow, and to that end, I ask for the support, all political support in Indonesia. Our country is big. Our country prospers. If we manage it well, the impact will reach everyone, the benefits will reach everyone.
We will develop a more creative, innovative, and massive financing so that it does not only rely on the State Budget.
The State Budget is designed to remain flexible so it is adaptive and responsive to dampen shocks.
Therefore, the State Budget must remain sound and credible through revenue optimization, expenditure quality improvement, and financing innovation.
The optimization of state revenue must be carried out consistently. Taxation serves as an instrument of justice. It redistributes revenue: the wealthy pay taxes while the underprivileged receive assistance. Tax revenues will continue to be increased while still protecting the investment climate and business sustainability.
Fiscal incentives will continue to be provided in a targeted and well-calculated manner to support strategic economic activities.
Natural resources management will be strengthened for the optimal welfare of the people.
Every state asset must be managed efficiently and productively to generate added value and make a positive contribution to people’s welfare. In the business field, in the business field, there is a term known as Return on Assets. In business, a business is good and successful if the Return on Assets is at approximately 12 percent. The conservative outlook is 10 percent. Let us say that for Indonesia, 5 percent will suffice.
Distinguished Ladies and Gentlemen,
The assets owned by the Indonesian nation through our State-Owned Enterprises (SOEs) are valued at more than US$1,000 trillion. Ideally, these SOEs should contribute at least US$50 billion to the state. With US$50 billion, our State Budget would not be in deficit. Therefore, I have assigned the Indonesia Sovereign Investment Authority Danantara to rectify the management of our SOEs.
In the past, their management was irrational. Some companies were making losses, yet had far too many commissioners. I cut the number in half—no more than six commissioners, four or five is plenty. I also remove tantiem (profit-sharing bonuses). Frankly, I never quite understood what tantiem meant. It is just something they made up. They deliberately use foreign term so that we do not understand what it is.
Distinguished Ladies and Gentlemen,
Imagine a commissioner attending one meeting a month and still receiving tantiem worth Rp40 billion a year. I have also told Danantara that even directors should not get tantiem if the company is losing money. And if there are profits, they must be real, not just numbers played around with in the books. We have been Indonesians long enough. And if any commissioner or director has an objection, they are free to step down.
Distinguished Ladies and Gentlemen,
The general election is still some time away. This feels more like a district meeting. But I am serious. This is unreasonable. If directors or commissioners refuse to give up their tantiem, they should resign. We have many capable young people ready and able to take their place.
Distinguished Ladies and Gentlemen,
Every rupiah of the people’s money must be protected. We must not treat public funds as if they were ours to play with.
The quality of state expenditure must be continually enhanced. We continue to promote expenditure efficiency, every rupiah spent must deliver tangible benefits. Inefficient operating expenditures must be cut. State expenditure should yield concrete results: creating jobs, strengthening purchasing power, and improving the quality of public services.
The role of the State Budget is pushed toward greater proportionality. We focus the State Budget on meeting basic needs and delivering the highest quality public services to the people. For high value-added economic activities that generate commercial profits, the role of Danantara is maximized by involving the national and global private sectors in a synergistic and collaborative manner.
Moving forward, State Expenditure be it Central Government Expenditure or Transfers to Regions will be designed as a single entity to ensure that Transfers to Regions is not the sole instrument for achieving economic equity and prosperity for all Indonesian people.
Energy subsidies and social assistance will continue to be more on-target based on the National Single Social and Economic Data (DTSEN).
The State Budget financing must be managed prudently and innovatively. We must be prudent in managing debt, ensuring that both the deficit and debt ratio remain within safe thresholds. The medium- to long-term sustainability of our fiscal policy serves as an anchor for economic stability and the people’s welfare.
We will continue to promote more creative financing schemes by empowering the role of Danantara and the private sector as the drivers of economic growth, job creation, investment increase, and strengthened financing innovation, thereby reducing our reliance on the State Budget.
Honorable Speaker, Vice Speakers, and Members of the House,
With sound fiscal management, strengthened by effective economic transformation and the improvement of people’s welfare, our economic growth in 2026 is targeted to reach 5.4 percent or even more, with an inflation rate maintained at 2.5 percent, Government Securities interest rates in the range of 6.9 percent, and the exchange rate hovering around Rp16,500 per US Dollar.
The open unemployment rate in 2026 is expected to further decline to a range of 4.44 percent to 4.96 percent, while our poverty rate will be reduced to a range of 6.5 percent to 7.5 percent. The Gini ratio is projected to drop to a range of 0.377 to 0.380, and the Human Capital Index is set at 0.57.
Furthermore, the Farmers’ Welfare Index and the formal job creation are expected to increase.
Honorable Speaker, Vice Speakers, and Members of the House,
This concludes the Government Statement on the Bill on the State Budget for the 2026 Fiscal Year and Its Financial Note. It is our fervent hope that the deliberation on the 2026 State Budget Bill may proceed in a constructive manner and in the spirit of mutual cooperation, in pursuit of the noble aspirations towards Independent, Sovereign, Just, and Prosperous Indonesia.
May Allah Subhanahu wa Ta’ala, God the Almighty, bestow His blessings upon us all in performing the tasks and mandates entrusted to us by the people of Indonesia.
Long Live the Republic of Indonesia!
Merdeka! Merdeka! Merdeka!
Thank you.
Wassalamu’alaikum warahmatullahi wabarakatuh.
Shalom,
Om shanti shanti shanti om,
Namo Buddhaya,
Greetings of Virtue,
Rahayu, Rahayu.
Jakarta, 15 August 2025
PRESIDENT OF THE REPUBLIC OF INDONESIA
PRABOWO SUBIANTO