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2025 budget to focus on purchasing power to prop up growth

The budget plan keeps many spending items unspecified, including for the development of the country’s future capital, leaving the details to the administration of president-elect Prabowo Subianto.

Aditya Hadi and Deni Ghifari (The Jakarta Post)
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Sun, August 18, 2024 Published on Aug. 17, 2024 Published on 2024-08-17T14:07:03+07:00

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2025 budget to focus on purchasing power to prop up growth President Joko “Jokowi“ Widodo (center) talks with Defense Minister and president-elect Prabowo Subianto (second left) after attending the annual People's Consultative Assembly (MPR) plenary meeting at the Senayan legislative complex in Jakarta on Aug. 16, 2024. (Antara/Dhemas Reviyanto)
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T

he government has presented a budget plan that focuses on propping up purchasing power to sustain domestic demand amid concern over the global economy.

The 2025 budget, unveiled by President Joko “Jokowi” Widodo during his State Budget Address on Friday, includes allocations for key initiatives of president-elect Prabowo Subianto, such as providing free meals and increasing food production.

However, the plan leaves unanswered questions on the financing of the under-construction city of Nusantara, a legacy program of President Jokowi, by setting a reduced basic allocation for the future capital’s development.

The plan envisions a steep increase in state revenue to nearly Rp 3 quadrillion (US$191 billion), up 6.9 percent from this year’s budget, driven by a projected 7.8 percent increase in tax collection to Rp 2.5 quadrillion.

However, state expenditure is expected to rise at an even faster rate of 8.7 percent to Rp 3.6 quadrillion.

“Given the relatively stagnant global economic conditions, our economic growth will rely more on domestic demand. Purchasing power needs to be closely maintained through inflation control and job creation as well as support from social aid and subsidies,” President Jokowi told lawmakers on Friday.

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Finance Minister Sri Mulyani Indrawati explained at a press conference on the same day that the government would focus on boosting domestic demand, which accounts for 53 percent of the country’s GDP.

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