Indonesia’s Prabowo Subianto Orders US$18.8 Billion Spending Cut to Boost Efficiency

President Prabowo Subianto of Indonesia has mandated a substantial reduction in government spending amounting to 306.7 trillion rupiah (US$18.8 billion) this year. This directive aims to foster efficiency within governmental operations without necessitating alterations to the state budget for 2025. Ministries and agencies are tasked with pinpointing specific areas where cuts can be implemented to achieve the desired reduction.

The presidential instruction, formalized in a document released this week, emphasizes prudent fiscal management as a hallmark of Prabowo's administration. This move follows his consistent advocacy for efficient expenditure, aligning with the government's broader economic strategies. Despite the significant budget cut, Indonesia's flagship initiative, which allocates 71 trillion rupiah to provide free meals to up to 17.5 million citizens, remains unaffected. This program, which commenced earlier this month, underscores the administration's commitment to social welfare.

In an effort to extend the impact of this initiative, President Prabowo aims to expand the recipients of the free meal program to 82.5 million individuals, representing more than a quarter of Indonesia's population, by the end of the year. The head of the agency managing the program noted that achieving this expansion would necessitate an additional 100 trillion rupiah.

The finance ministry has previously projected a budget deficit for 2025 at 2.53 percent of Indonesia's GDP. The current budget cuts represent approximately 8 percent of the total approved spending of 3,621.3 trillion rupiah for the year. To further align with the efficiency goals, Prabowo instructed his cabinet on Wednesday to reduce spending on ceremonies and business trips by half.

Despite these changes, alterations to the 2025 state budget remain off the table unless they receive approval from parliament. This underscores the administration's commitment to operating within existing fiscal frameworks while striving to enhance efficiency and expand social welfare programs.