President Prabowo Subianto on Friday, August 15, 2025,delivered his first state budget proposal to the People’s Consultative Assembly (MPR), outlining the 2026 State Budget Plan (RAPBN) in a speech that is expected to shape market expectations and signal his administration’s economic priorities.

The budget marks the first to be crafted under Prabowo’s presidency, amid slowing economic growth over the past three years. Lawmakers and the government have agreed on preliminary macroeconomic assumptions, including GDP growth of 5.2 to 5.8 percent, inflation of 1.5 to 3.5 percent, an exchange rate of Rp16,500 to Rp 16,900 per US dollar, and a benchmark 10-year government bond yield of 6.6 to 7.2 percent.

Oil prices are projected at US$60 to $80 per barrel, with crude output targeted at 600,000 to 605,000 barrels per day and gas lifting at 953,000 to 1.02 million barrels of oil equivalent per day (Boepd).

In the formal RAPBN, these ranges will be consolidated into single figures, along with revenue, spending, and deficit projections. Public attention is focused on how the administration will finance populist programs amid declining state revenues while maintaining fiscal discipline.

Finance Minister Sri Mulyani Indrawati said the 2026 budget would prioritize efficient and productive spending to support flagship programs, including the Free Nutritious Meals (MBG) initiative, the Red-and-White Village Cooperative program, the “Sekolah Rakyat” (People’s School) and “Sekolah Unggul Garuda” (Garuda Excellence School) projects, school revitalization, and efforts to bolster food and energy security.

The Red-and-White Village Cooperative program targets the creation of 80,000 cooperatives and 1.4 million jobs, with recruitment focused on youth and rural residents. The government projects a need for 240,000 managers, 400,000 administrators, 240,000 supervisors, and 560,000 workers for cooperative-run businesses, ranging from retail outlets and pharmacies to cold storage and logistics services.

Funding for the revitalization of Sekolah Rakyat will also increase significantly from this year’s Rp7 trillion, covering infrastructure upgrades for 159 schools serving over 15,000 students nationwide, as well as operational and teacher costs.

The MBG program aims to reach 82.9 million beneficiaries next year, up from around 15 million in August 2025. The National Nutrition Agency (BGN) has requested Rp335 trillion (US$19.8 billion) for the program, more than double this year’s estimated Rp121trillion (US$7.33 billion) budget.

Social protection spending is also set to rise in 2026, including expanded support for micro, small, and medium enterprises (MSMEs), free healthcare services, and education assistance. This year, government spending directly benefiting lower-income groups has reached Rp1,333 trillion (US$78.88 billion).

Food self-sufficiency is considered key to sustaining MBG, with Agriculture Minister Andi Amran Sulaiman seeking to raise his ministry’s budget to Rp44.64 trillion (US$2.71 billion) from an indicative Rp13.75 trillion (US$833 million) to expand farmland and boost seed distribution for strategic crops, such as sugarcane, coconut, coffee, cocoa, and staple imports like garlic, soybeans, and wheat.