Indonesia's outgoing president has approved a 20% increase in defense spending through the end of next year, to upgrade the country's military hardware in response to geopolitical developments, its finance minister said.
In a news conference on Wednesday, Sri Mulyani Indrawati said the approval came in a meeting she attended with President Joko Widodo and Defense Minister Prabowo Subianto.
Prabowo is the leading candidate in the upcoming presidential election in February and is running with Widodo's son.
The defense budget will be increased from $20.75 billion to $25 billion, Sri Mulyani said.
"The needs were put forward by the defense ministry. They considered them as a necessity given the condition of our military hardware as well as rising threats amid increasing geopolitical and geo-security dynamics," she said.
Despite the "significant" increase, the defense budget for the three five-year periods from 2020 to 2034 will remain at $55 billion, she said, saying that means it is aligned with her medium- to long-term fiscal plans.
The source of the funds will be foreign loans, she said.
The Southeast Asian country has sought to modernize its aging fleet in recent years, spearheaded by Prabowo.
For the past decade, Indonesia's defense spending per capita and as a percentage of gross domestic product has been the lowest among six of the region's emerging-market economies, according to data from the Stockholm International Peace Research Institute (SIPRI) think tank.
Deals Prabowo has signed in recent years included the purchase of 42 Dassault Rafale fighter jets for $8.1 billion, 12 new drones from Turkish Aerospace worth $300 million, and 12 Mirage 2000-5 fighter jets valued at $800 million.
He also signed agreements to buy fighter jets and transport helicopters from U.S. companies Boeing and Lockheed Martin in August 2023.
Indonesia signed a deal to buy a $100 million submarine rescue vessel from Britain in September, after one of the country's submarines sank in 2021 during a drill.
Indonesia and South Korea have also been locked in a dispute over funding for a joint KFX fighter jet project.
