The Centre for Budget Analysis (CBA) has called on President Prabowo Subianto to provide a transparent explanation regarding the recent budget cuts across various ministries and state agencies, following the issuance of Presidential Instruction No. 1/2025 on Expenditure Efficiency in the Implementation of the State Budget (APBN) and Regional Budget (APBD) for the 2025 Fiscal Year.
CBA Director Uchok Sky Khadafi expressed concern over the abrupt nature of these budget reductions, noting that even high-ranking officials appeared taken aback by the significant cuts. He emphasized that while the initiative is labeled as “efficiency,” it resembles more of a budget slashing exercise.
“President Prabowo must provide a clear explanation. This isn’t just a minor issue; the impact is substantial. Government budgets have a significant multiplier effect, especially in a sluggish economy,” Khadafi said on Tuesday, February 11, 2025.
The government’s austerity measures aim to save approximately US$18.8 billion (Rp306.7 trillion) from this year’s budget by reducing official travel, cutting office supplies, and minimizing the use of air conditioning. These savings are intended to fund key policy initiatives, notably the free lunch program for over 82 million schoolchildren and pregnant mothers.
However, the reallocation has led to substantial budget cuts in various ministries. For instance, the Ministry of Public Works faces a reduction from approximately US$7.4 billion to $2 billion, and the Ministry of Education and Research’s budget has been cut from around US$3.8 billion to $2.3 billion. The Ministry of Transportation’s budget decreased from about US$2.1 billion to $900 million.
In contrast, certain ministries and agencies, such as the Ministry of Defense, the House of Representatives (DPR), the People’s Consultative Assembly (MPR), the State Intelligence Agency (BIN), the National Police (POLRI), and the Development Finance Comptroller (BPKP), have not experienced similar budget reductions.
Economists and investors have raised concerns that these austerity measures, while intended to fund social programs, could negatively impact essential services and economic growth. The significant budget cuts in key ministries may affect public infrastructure maintenance and development, potentially leading to a slowdown in economic activity and private investment.
The CBA urges President Prabowo to clarify the rationale behind these budget cuts and to ensure that the implementation of such measures does not compromise essential public services or hinder economic growth.
