Is Indonesia a Failed State? Analyzing the Hypothesis Based on UN Metrics

A recent United Nations report, "A New World of Debt 2025" from the UN Conference on Trade and Development (UNCTAD), highlights troubling trends regarding debt interest burdens in numerous developing countries.

The report reveals that between 2011–2013 and 2021–2023, the growth in debt interest expenditure surged by 84 percent. This increase surpassed the growth in education budgets, which grew by 52 percent, and health budgets, which rose by 77 percent.

During the 2021–2023 period, UNCTAD identified 22 developing countries that allocated more of their budget to debt interest payments than to education. Additionally, 45 other countries spent more on debt interest payments than on their health sectors. The report, however, did not specify the names of these 67 nations.

The Case of Indonesia

In Indonesia, a similar trend was identified by the Center of Economic and Law Studies (Celios). The institute’s analysis indicates that from 2015 to 2025, the budget for debt interest payments consistently exceeded health expenditures.

In 2025, the ratio of debt interest burden to the health budget was recorded at 253 percent, a slight decrease from 266 percent in the previous year. In comparison to the education budget, this ratio stood at 85 percent in 2024 and is projected to decrease to 76.3 percent in 2025.

Bhima Yudhistira Adhinegara, Executive Director of Celios, suggested that the UN's findings reflect Indonesia’s current situation. "If we use the UN parameters, Indonesia can be categorized as a systemic failed state," he stated on Friday, August 1, 2025.

He further argued that government-acquired debt has not significantly contributed to improving public welfare or human resource quality.

Understanding the 'Failed State' Term

As reported by EBSCO, the term 'failed state,' often referred to as a fragile state, describes a situation where a government loses effective control over its territory and citizens. This condition is characterized by the collapse of fundamental state functions, such as public services and security, alongside an increase in conflict, poverty, and widespread corruption.

Countries in this category are generally unable to fulfill their primary role as protectors of the populace. A power vacuum often emerges, which is exploited by armed groups to seize control, leading to territorial fragmentation where law and order depend on local military power. Despite retaining internationally recognized borders, these nations tend to be internally fragmented and uncoordinated.

To date, a single, universally accepted academic definition of a failed state does not exist. However, organizations such as the Fund for Peace, through its annual Fragile States Index, provide a valuable framework. This index maps countries at high risk of collapse based on various indicators, including demographic pressure, political instability, economic crises, and foreign intervention.

In the 2023 report, Somalia was the only country categorized as 'Very Alert.' Eleven others were classified as 'High Alert,' including Myanmar, Ethiopia, Haiti, Chad, Central African Republic, Sudan, Afghanistan, Syria, Democratic Republic of the Congo, and Yemen.

An additional 18 countries were listed at the 'Alert' level, signifying a worrying trend of instability worldwide.

Contributing Factors to State Failure

The phenomenon of failed states can manifest in various forms, driven by multiple contributing factors. One of the most decisive factors is the nature of the government system before its collapse.

According to Britannica, a country that previously operated under a parliamentary democratic system with functioning legislative and executive bodies may appear stable. However, if the government fails to address the needs of certain societal groups, dissatisfaction can escalate into social unrest, accelerating state collapse. 

In many cases, an ineffective parliament is dissolved by executive authorities such as the president or prime minister. Without coordination between state institutions, the governance system ceases to function optimally, marking the collapse of its fundamental responsibilities.

Another equally important factor is the country's demographic composition. Many nations comprise diverse ethnic, religious, or social groups. When the government favors one group while neglecting the interests of others, tensions can escalate.

Marginalized factions often resort to resistance and may, in some cases, succeed in seizing power. This was evident in Syria, where power struggles created a governance vacuum and worsened the conflict.

In such situations, ruling groups often become preoccupied with maintaining dominance rather than rebuilding damaged governmental structures. Some factions may even attempt to establish a state based on an extreme interpretation of religious doctrine, as seen in Afghanistan.

However, these regimes often prove unsustainable and are eventually overthrown by other factions, leaving the state trapped in a cycle of chaos without long-term stability.

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