New Deputy Finance Minister Guns for 5.6% First-Quarter GDP Growth

Why It Matters

The higher growth target showcases Indonesia’s aggressive fiscal policy, aiming to boost domestic demand and attract foreign investment while testing the government’s execution capacity.

Key Takeaways

• New deputy finance minister Juda Agung targets 5.6% Q1 growth.
• Goal relies on accelerated state spending and Ramadan stimulus.
• Household consumption drives over half of Indonesia’s GDP.
• Faster spending may strain budget execution capacity early year.
• Higher growth target signals confidence, attracts foreign investment.

Pulse Analysis

Indonesia’s newly appointed deputy finance minister, Juda Agung, entered office on February 5 after a stint as Bank Indonesia’s deputy governor. Within days he announced an ambitious revision to the first‑quarter 2026 GDP target, nudging it from the baseline 5.5 percent to 5.6 percent. The modest uplift hinges on accelerating government outlays that traditionally lag at the start of the fiscal year. By fast‑tracking projects and social‑assistance programs, Agung hopes to capture the seasonal consumption surge that accompanies Ramadan and the subsequent Idul Fitri holidays. The move signals a proactive fiscal stance ahead of the upcoming budget cycle.

State spending has long been a lever for Indonesia’s growth, thanks to a sizable fiscal multiplier that amplifies public investment into private activity. In the first quarter, ministries often wait for program approvals, leaving a gap between budget allocation and disbursement. Agung’s pledge to “get spending items out fast” aims to close that gap, especially for short‑term stimulus such as cash transfers, subsidies, and infrastructure works that can be mobilised quickly. If executed efficiently, the accelerated outlay could boost household purchasing power during Ramadan, when consumer spending traditionally spikes, reinforcing the domestic demand engine that accounts for more than half of GDP.

The revised target carries broader market implications. A higher‑than‑expected Q1 growth reading would reinforce confidence among foreign investors, potentially strengthening the rupiah and attracting portfolio inflows to Indonesia’s equities and bonds. However, the strategy also raises questions about fiscal discipline, as rapid disbursement may strain treasury cash flow and increase short‑term borrowing needs. Regional peers such as Vietnam and the Philippines are pursuing similar stimulus pathways, setting a competitive backdrop for Southeast Asian growth. Observers will watch whether the government can balance the growth boost with sustainable debt levels, shaping Indonesia’s economic narrative for the rest of 2026.

New deputy finance minister guns for 5.6% first-quarter GDP growth

By Deni Ghifari (The Jakarta Post) · Jakarta · Wednesday, 11 February 2026

Just under a week since he was sworn in last Thursday, the ex‑Bank Indonesia deputy governor is setting his sights on accelerated state spending this quarter to reach up to 5.6 percent growth from an initial 5.5 percent target.

Juda Agung (at mic) salutes on 5 February 2026, during his inauguration as a deputy finance minister at the State Palace in Central Jakarta. The former Bank Indonesia (BI) deputy governor replaces Thomas “Tommy” Djiwandono, who was installed as a BI deputy governor on 9 February. (BPMI Setpres/Laily Rachev)

Deputy Finance Minister Juda Agung says the government will push gross domestic product growth beyond the baseline in the first quarter of 2026, banking on state spending and social assistance.

Juda, who was newly installed last Thursday after resigning as a Bank Indonesia deputy governor in mid‑January, said on 10 February that the first‑quarter GDP growth baseline was originally set at 5.5 percent but could be pushed to 5.6 percent on faster government spending.

“Some [government] spending could be done in this first quarter. Yes, there are some spending [items] that are normally slow. We’ll try and get them out fast,” he said on Tuesday, as quoted by CNBC Indonesia.

State spending is a key lever for boosting economic growth by virtue of a multiplier effect, wherein public expenditure pushes other growth sources, but typically falls behind schedule at the start of a year as ministries flesh out the year’s programs and wait for approval.

Slow execution of state spending in the first quarter of 2026 might come at the cost of wasting potential growth momentum during the Ramadan and Idul Fitri holidays in February and March, respectively.

The peak Islamic holiday season is typically accompanied by high consumer spending, which in turn propels economic activity and therefore GDP growth.

Household spending is the backbone of Indonesia’s GDP, as it makes up more than half of the country’s economic output. To capitalize on the seasonal spike in demand, the government frequently rolls out temporary fiscal stimulus over Ramadan and Idul Fitri, as is the case this year.