President Prabowo Subianto’s policy, as outlined in Presidential Instruction No. 1/2025 on the efficiency of the 2025 state budget (APBN) expenditure, is a strategic step taken by the government.
This is because the government is facing difficulties in balancing potential revenue with state spending priorities to support sustainable development. The government’s revenue sources are shrinking while real spending needs continue to grow.
UGM professor of public policy management, Wahyudi Kumorotomo, stated that the budget efficiency target of IDR 306 trillion is substantial and presents a significant challenge for both the central and local governments.
Although APBN efficiency efforts can be undertaken, their implementation is challenging due to the bureaucratic culture’s ingrained tendency to spend lavishly on routine expenditures.
“Ministries and agencies, both at the central and regional levels, are accustomed to spending on office supplies, support elements, and technical meetings that have relatively high costs, and all of this is difficult to change,” he said.
Moreover, the number of ministries and agencies at the central level has increased significantly—from 34 to 48, which clearly requires more funding.
“Many of these new ministries and agencies are still in the process of consolidation, adding personnel, and all of this requires an increase in budget allocation,” he added.
Additionally, the 12% VAT increase, which was ultimately canceled, poses another challenge for the government, as it now must seek alternative revenue sources, which are not easy to find.
If these alternatives are not identified, the 2025 state budget will be strained, and the government will hesitate to pursue options with high economic-political risks.
“The government could still impose a progressive tax on the super-wealthy or levy additional taxes on natural resource exploration, such as coal, during periods of windfall profits,” he suggested.
However, implementing progressive taxes on the super-wealthy and additional taxes on natural resources requires strong political will and commitment from the government.
“I believe there are still many opportunities to secure additional funds to improve public welfare, but everything depends on the political will and the government bureaucracy’s initiative to drive welfare-enhancing programs,” he explained.
Professor Kumorotomo also noted that if the government successfully saves and achieves the efficiency target of IDR 316 trillion, its flagship programs could proceed smoothly.
“I believe priority programs like the Free Nutritious Meals (MBG) program will receive fresh funding,” he remarked.
According to Professor Kumorotomo, if the MBG program is implemented consistently and carefully monitored, it is a highly strategic initiative to improve Indonesia’s human capital, especially if it can achieve its goals of reducing stunting rates, improving the balanced nutritional status of school children, and enhancing academic performance.
However, ensuring its sustainable implementation will be a challenge in the future.
Author: Jelita Agustine
Editor: Gusti Grehenson
Post-editor: Afifudin Baliya
Photo: Mediaindonesia