The State Budget Is Not the Government’s Blank Check: Constitutional Court Now Imposes Limits

On 16 September 2026, the Constitutional Court (MK) partially granted Petition Number 100/PUU-XXIV/2026 challenging Law Number 17 of 2025 on the State Revenue and Expenditure Budget for Fiscal Year 2026 (2026 State Budget Law).

One of the provisions challenged was Article 8 paragraph (5) of the 2026 State Budget Law. This provision stipulates that the details of central government expenditure according to organization, function, and program are set out in Appendix I to the State Budget Law, and that, where there are changes, such changes shall be regulated by Presidential Regulation (Perpres).

The Petitioners considered that this formulation afforded the Government excessively broad discretion to reallocate, amend, and determine budget priorities through a Presidential Regulation. In their petition, they associated such authority with the potential for changes in public policy through budgetary instruments without going through the legislative process.

Then, following the Constitutional Court's decision, to what extent may the Government still amend the State Budget through a Presidential Regulation?

When Budgetary Changes Begin To Encroach Upon The Authority Of The House Of Representatives

The Constitutional Court did not annul Article 8 paragraph (5) of the 2026 State Budget Law. Instead, the Court provided a conditional interpretation.

The phrase “and where there are changes” must be construed to mean:

“and where there are changes that affect the amount of central government expenditure according to function, such changes shall be made with the approval of the House of Representatives.”

This means that the Presidential Regulation remains recognized as an instrument for regulating budgetary changes. However, where such changes affect the amount of central government expenditure according to function, the approval of the House of Representatives becomes a requirement.

For example, if a change causes the expenditure allocation for the Health Function to change from RpX to RpY, such change can no longer be established solely through a Presidential Regulation.

Conversely, changes that do not alter the amount of expenditure according to function do not automatically mean that they may be made without limitation. The type of budgetary change or reallocation must still have a legal basis and remain within the scope permitted by law. The Constitutional Court itself emphasized that the Government's authority to make changes or reallocations is an implementing authority, not an authority to establish new budgetary policies outside the State Budget that has been deliberated jointly by the House of Representatives and the President.

Accordingly, this decision does not mean that all budgetary changes must be brought back before the House of Representatives. What has changed is the threshold at which a change may still be made as part of the implementation of the State Budget and the point at which the House of Representatives must again be involved.

State Budget Flexibility Is Not Unlimited Authority

The Constitutional Court did not overlook the Government's need to adjust the State Budget.

According to the Court, flexibility is a consequence of the nature of the State Budget as an annual financial plan. Its implementation takes place under conditions that may change, and therefore the Government does need room to make adjustments.

Such room is also not new. Law Number 17 of 2003 on State Finance has already provided mechanisms for budgetary amendments and reallocations as well as expenditures under certain circumstances, including emergencies, while remaining within the framework of State Budget accountability.

The issue arises when such authority is used to alter the substance of a budgetary decision.

In its considerations concerning Article 20 paragraph (1) of the 2026 State Budget Law, the Constitutional Court distinguished between the authority to implement the State Budget and the authority to formulate new budgetary policies. According to the Court, the Government may make changes or reallocations to budget categories that have been exhaustively determined by law, but such authority cannot be construed as authority to alter the substance of the budget at its own discretion.

This boundary is important because the State Budget is not merely a document for implementing government programs. Article 23 paragraph (1) of the 1945 Constitution of the Republic of Indonesia places the State Budget as a law enacted annually.

Accordingly, when a budgetary change has an impact on the amount of central government expenditure according to function, such change affects a component of the State Budget that was previously established jointly by the President and the House of Representatives. According to the Constitutional Court, the involvement of the House of Representatives in such changes cannot be dispensed with.

At this point, the Constitutional Court draws a distinction between flexibility in implementing the State Budget and changes to budgetary decisions that have been jointly established.

Where Is The Boundary Of A “Change”?

The Constitutional Court's decision does establish a new boundary, but that boundary is not yet entirely straightforward in its application.

The norm as interpreted by the Constitutional Court uses the criterion of “affecting the amount of central government expenditure according to function.” However, in the implementation of the State Budget, budgetary changes do not always take the form of fund reallocations that directly alter the total amount of a particular function.

There may be changes to programs, activities, organizations, priorities, or particular needs that are interrelated. Therefore, the following question becomes important: when does a change remain an adjustment in the implementation of the State Budget, and when has the change become sufficiently substantive to require the approval of the House of Representatives?

The Constitutional Court provides several indications in its considerations. In the case concerning Article 29 paragraph (1), for example, the Court stated that changes affecting the structure, priorities, and utilization of State funds that have been jointly established cannot be entirely separated from the mechanisms of oversight by and approval of the House of Representatives.

However, with respect to Article 8 paragraph (5), the operative part of the decision ultimately uses a more specific criterion, namely changes that affect the amount of central government expenditure according to function.

This distinction means that implementation will continue to depend on how a particular budgetary change is categorized and applied in practice.

In other words, the decision does narrow the scope of the Government's discretion, but it does not transform the entire mechanism for amending the State Budget into a mechanism that must always go through the House of Representatives.

What About Urgent Circumstances?

A similar limitation was also imposed by the Constitutional Court on Article 29 paragraph (1) of the 2026 State Budget Law.

That article grants the Government authority to take policy measures concerning State revenue, State expenditure, and/or budget financing when faced with threats that endanger the national economy and/or financial system stability.

The Constitutional Court recognized that, in such situations, the Government needs the ability to act swiftly. However, the Court considered that such flexibility must nevertheless remain within the scope of the implementation of the State Budget and cannot be construed as unlimited authority.

Accordingly, Article 29 paragraph (1) was also declared conditionally constitutional. Following the Constitutional Court's interpretation, policy measures concerning revenue, expenditure, and/or financing to address such threats must be undertaken with the approval of the House of Representatives.

Here, the Constitutional Court's position is clear: an urgent situation does not automatically eliminate the function of the House of Representatives in the management of the State Budget.

So, What Has Actually Changed?

This decision does not abolish the Government's authority to adjust the State Budget. Rather, the Constitutional Court recognizes that flexibility is necessary so that the State Budget can respond to changing circumstances.

What has changed is the boundary on the exercise of that authority.

For Article 8 paragraph (5), changes that affect the amount of central government expenditure according to function now require the approval of the House of Representatives. Meanwhile, under Article 29 paragraph (1), policy measures concerning revenue, expenditure, and/or financing to address threats to the national economy or financial system stability must likewise be undertaken with the approval of the House of Representatives.

Notably, the Constitutional Court did not apply these requirements retroactively. Changes that had already been established through Presidential Regulations before the decision was pronounced remain valid. The requirement for approval by the House of Representatives applies to changes made after the decision was pronounced and to the State Budget for subsequent years.

Accordingly, this decision is not about whether the Government may or may not amend the State Budget.

The issue is how far implementing authority may be exercised before it becomes authority to redetermine a budgetary decision that had previously been made jointly with the House of Representatives.

And it is at this point that the Constitutional Court's decision reinforces one point: flexibility in implementing the State Budget is not the same as authority to unilaterally alter a budgetary decision.