Poki (looking at sign commemorating Indonesia's 81st Independence Day): In 70 years I'll be more, what yeah?
Father: You at 81? Hmm, more...
Poki: Bigger? Richer? More respected?
Father: What's certain is the debt will be even bigger...
Poki: He he... Buy more snacks Poki...
Indonesian President Prabowo Subianto's ambition to achieve 8 percent economic growth in his first term and to elevate Indonesia to high-income status by 2045 appear to be increasingly unrealistic in the face of mounting debt to fund unproductive programs and interest payments eating into government revenue.
Indonesia is set to shoulder its largest debt interest bill on record in 2027, with payments projected to consume about 19 percent of state revenue and exceed spending on social protection or the entire government payroll.
The government has budgeted 650.3 trillion rupiah ($36.39 billion) for interest payments in 2027, up 11.7 percent from the 582.2 trillion rupiah projected in 2026. That amounts to roughly 1.78 trillion rupiah a day spent solely on servicing interest throughout 2027.
The Centre of Reform on Economics (CORE Indonesia) said that servicing debt was limiting the government's ability to use spending to stimulate the real economy, so although spending is projected to increase by 154.8 trillion rupiah next year, the hike in interest payments alone accounts for 44 percent of this.
"The role of government spending as an engine of economic growth is actually diminishing", the think tank said.
The scale of the burden becomes more apparent when compared with other government priorities. The 650.3 trillion rupiah interest bill exceeds the 549.9 trillion rupiah allocated for social protection and the 625.24 trillion rupiah earmarked for government personnel.
It is also more than three times the 195.3 trillion rupiah food security budget and larger than the allocation for any individual ministry or agency, including the Defence Ministry and the National Nutrition Agency (BGN) – which runs Prabowo's budget hungry Free Nutritious Meals (MBG) program.
Finance Minister Purbaya Yudhi Sadewa has repeatedly maintained that Indonesia's debt remains at a safe level of around 40 percent of GDP, well below the statutory ceiling of 60 percent.
But according to Gadjah Mada University (UGM) economist Wisnu Nugroho, the debt-to-GDP ratio does not fully reflect Indonesia's debt burden, pointing instead to the share of government revenue absorbed by interest payments.
He estimates that interest payments will absorb around 19 percent of state revenue and 25.4 percent of tax revenue in 2026, meaning fiscal pressure could intensify long before debt approaches the statutory ceiling.
Nugroho added that another critical question was whether borrowed funds were being directed toward productive investments that expand economic capacity and generate future government revenue.
Fellow UGM economist Evi Afifah said that although debt is not in itself a problem, what matters is whether the benefits generated by borrowing outweigh the costs.
Borrowing for infrastructure, education and health can strengthen economic capacity and generate future returns, said Afifah, but increasing debt payments reduces the government's room to fund other priorities.
"Every rupiah used to pay interest is a rupiah that cannot be used for other priorities", she said.
[Abridged from a Jakarta Globe article titled Record debt interest bill to consume 19% of state revenue.]
