Indonesia Pays Hundreds of Trillions in Debt Interest a Year. Here's How Much of Every Tax Rupiah That Takes
4 min read
Loading...
4 min read
Imagine you earn Rp10 million a month. Before you buy food or pay rent, Rp1,9 million goes straight to old loans. That is how the 2026 state budget looks.
Indonesia's 2026 budget sets aside Rp599,44 trillion for debt interest. State revenue is targeted at Rp3.153,58 trillion. Divide one by the other and you get about 19%. That is roughly Rp19 of every Rp100 the state collects.
This post explains the Indonesia debt interest to revenue ratio in plain words, what the numbers are, and why it matters more than the debt-to-GDP ratio you usually hear about.
Interest is the fee the government pays for borrowing. It is paid on bonds and loans. It is not the loan itself. Repaying the principal is a separate cost.
The ratio asks one simple question: out of all the money the state collects, how much is already spoken for by interest?
Think of it as the share of your salary that goes to loan installments before anything else. The higher it is, the less is left for schools, roads, health and everything else.
These figures come from the 2026 state budget (APBN 2026), as reported by Kontan and Bisnis.com:
| Item | 2026 budget |
|---|---|
| Debt interest | Rp599,44 trillion |
| of which domestic debt | Rp538,70 trillion |
| of which foreign debt | Rp60,74 trillion |
| State revenue target | Rp3.153,58 trillion |
| Interest as share of revenue | about 19% |
The 2025 budget set aside Rp552,85 trillion, so the 2026 figure is up 8,43%.
The 19% is our own division of the two budget numbers. Reports also say interest takes about 19% of central government spending. That is a different base, so do not mix the two.
The government's draft 2027 budget (RAPBN 2027) allots Rp650,31 trillion for interest, according to Investortrust and DDTC News. That is 11,69% above the 2026 outlook. It would be about 19,34% of central government spending of Rp3.362,19 trillion.
A draft is not final. Parliament can change it. We did not find a 2027 revenue target we could verify, so we do not show a 2027 ratio.
Yes, by most yardsticks. Here is how the ratio compares, as reported in summaries of a December 2025 World Bank report:
Some Indonesian economists also cite an IMF guideline of 7% to 10%. We saw this only in news summaries, not in an IMF document, so treat it as a rough marker.
Context matters. The World Bank noted that Indonesia's borrowing costs are not especially high. The ratio is high mostly because revenue is low. Our post on the tax ratio versus ASEAN shows why.
The usual headline is the debt-to-GDP ratio. It compares total debt with the size of the economy.
That is useful. But it does not tell you what the debt costs each year, or whether the state can pay without cutting something else.
The interest-to-revenue ratio does. A country with moderate debt but weak revenue can still feel squeezed. That is the case here.
Each rupiah of interest is a rupiah that cannot go to something else. When the interest line grows faster than revenue, the budget has three choices:
The third path is the risky one. It feeds itself.
For investors, this is background, not a trigger. A tight budget can make the government issue more bonds. More supply can push yields up. We cover that chain in how the deficit affects bond yields (Indonesian).
You can follow the last one yourself. Open the NetWort macro page and look at the Indonesia 10-year yield next to the BI policy rate. If the yield climbs while the budget stays tight, you are watching this story in real time.