Indonesia to Cut Ministry Budgets Amid Global Economic Concerns

JAKARTA – Indonesia’s Finance Minister Purbaya Yudhi Sadewa announced Saturday the government will implement budget cuts across ministries and agencies, and restrict requests for new funding.

The move is intended to maintain fiscal discipline amid global economic uncertainty, particularly rising global oil prices. The decision underscores the government’s commitment to responsible spending as external economic pressures mount.

Sadewa stated that many ministries have repeatedly sought substantial budget increases, necessitating adjustments to keep national spending under control.

“Basically, we will cut the budget. I will limit new budget requests. Ministers keep submitting requests, tens of trillions [of rupiah], we will cut those. We will adjust others,” he said at the Directorate General of Taxes office in Jakarta on Saturday, March 21, 2026.

Despite the austerity measures, Sadewa assured the public that economic growth would not be negatively impacted.

“But this will not affect the economy. We will also ensure that the economy remains well-maintained. I am constantly monitoring that,” he added.

The government is currently calculating the extent of the budget efficiencies, with a potential scenario involving a 10 percent reduction in ministry and agency budgets. However, Sadewa noted that this figure is still under discussion.

“We are calculating this for all ministries. Initially, we proposed they submit [efficiency plans] of 10 percent, but when I offered this to them, they didn’t cut, they kept adding. So I said I would cut, and they can adjust. But we are still discussing the percentage,” he explained.

Previously, Sadewa had requested that each ministry and agency prepare simulations for budget cuts, estimating potential reductions should fiscal conditions require adjustments. This preparation comes as a preemptive measure against increased pressure on the State Revenue and Expenditure Budget due to rising global oil prices.

“We have asked them to prepare, roughly how much their budget will be cut. They will then adjust their policies based on the cuts from the Ministry of Finance,” he said on Monday, March 16, 2026, at the Ministry of Coordinating Economic Affairs.

According to Sadewa, budget efficiency is the government’s first consideration if global energy prices continue to climb.