TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Analysis: Extreme budget cuts undermine the morale of government employees
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
President Prabowo Subianto greets Red and White Cabinet members ahead of a plenary cabinet meeting at the Presidential Office in Jakarta on Jan. 22, 2025. (Antara/Hafidz Mubarak A)
P
resident Prabowo Subianto is pushing for budget efficiency, which is expected to save around Rp 300 trillion (US$18.36 billion) and could even reach Rp 750 trillion, to create enough fiscal space to fund his signature programs such as the free nutritious meals program and the new Danantara sovereign wealth fund. On the other hand, this austerity measure is feared to undermine the morale of government employees, who will see their pay drop significantly.
The budget cuts are outlined in Presidential Instruction (Inpres) No. 1/2025, dated Jan. 22, 2025, which stipulates the reallocation of Rp 256 trillion in spending of ministries and non-ministerial institutions and Rp 50 trillion in government transfers to regional governments. The figure will gradually increase in stages to Rp 750 trillion.
Prabowo plans to allocate Rp 70 trillion for the free nutritious meals program and Rp 325 trillion for Danantara, a super holding company for state-owned enterprises (SOEs) that is expected to become a new locomotive in managing national assets akin to Singapore’s Temasek and Malaysia’s Khazanah Group. Danantara is set to be launched on March 24.
Among the ministries experiencing the biggest cuts are the Public Works Ministry (Rp 81 trillion), the Higher Education, Science and Technology Ministry (Rp 22 trillion), the Health Ministry (Rp 19 trillion), the Transportation Ministry (Rp 17 trillion), the Religious Affairs Ministry (Rp 14 trillion), the Finance Ministry (Rp 12 trillion), the Agricultural Ministry (Rp 10 trillion), the Elementary and Secondary Education Ministry (Rp 8 trillion), the Immigration and Corrections Ministry (Rp 6 trillion) and the Communication and Digital Ministry (Rp 4 trillion).
All ministries and non-ministerial institutions were required to talk to the House of Representatives about the budget cuts by Feb. 14 for approval before the Finance Ministry could execute the efficiency measure.
According to Wihadi Wiyanto, deputy chairman of the House’s Budget Committee (Banggar) and a Gerindra Party politician, the government would eventually give back Rp 58 trillion to respective ministries and non-ministerial institutions.
In general, the structure of the budget of ministries and non-ministerial institution public bodies is heavy on personnel welfare, hence the extreme budget cuts can impact the well-being of government employees, especially those who remain on probation or work on a contract basis.
