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Govt slashes ministerial, regional spendings to finance welfare programs
Finance Minister Sri Mulyani Indrawati says Rp 306 trillion in budget cuts will be reallocated to initiatives that directly improve the people’s welfare, such as the free meals program, food and energy self-sufficiency and health care.
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President Prabowo Subianto (second from left) and Finance Minister Sri Mulyani Indrawati (third from left) meet the press to explain value added tax (VAT) policy at the Finance Ministry office in Jakarta on Dec. 31, 2024. (BPMI Setpres/Muchlis Jr)
P
resident Prabowo Subianto has ordered ministries, agencies and regional leaders to cut a combined Rp 306.7 trillion (US$18.9 billion) in spending in 2025, as the administration seeks additional funds to support the President’s flagship free nutritious meals program and other costly initiatives.
The cuts, laid out in Presidential Instruction No. 1/2025 issued on Wednesday, consist of Rp 256.1 trillion from ministry and agency budgets and Rp 50.59 trillion from regional transfer funds.
The directive is expected to affect spending related to maintenance, official travel, ceremonies, consultancy services, public works and equipment procurement, among other areas. Key exemptions include employee salaries and social assistance programs.
“Ministry and regional budgets must focus on national priorities, including job creation, productivity and foreign exchange savings,” Finance Minister Sri Mulyani Indrawati told reporters on Friday during a quarterly briefing of the Financial System Stability Committee (KSSK).
Sri Mulyani said the move would boost economic growth rather than slow it, as the funds would be reallocated to initiatives that directly improved the people’s welfare, such as the free meals program, food and energy self-sufficiency and health care.
The changes to the budget were meant to ensure better-targeted spending, she said, adding that they had no connection with expectations of weaker revenue collection this year.
“With regard to the question of economic impact, obviously, this [change] will have [a positive] impact on economic growth,” she said.
