Finance Minister Ensures Social Assistance Budget Remains Intact Amid Budget Cuts

Finance Minister Sri Mulyani Indrawati has assured that social assistance (bansos) funding will not be decreased, despite the government’s budget efficiency measures designed to bolster President Prabowo Subianto’s free meals program and other high-cost initiatives.

“The social assistance budget will not be cut at all. There is no reduction whatsoever,” said Minister Indrawati at an event in Jakarta on Thursday, as reported by Kompas.com.

Social Assistance Budget & President’s Initiatives

The social assistance budget is projected to range from Rp 1 trillion (US$61 million) to Rp 1.3 trillion in 2025, with final adjustments potentially influenced by the President’s directives。

“That said, there will be no reductions in social assistance or other programs essential to public welfare,” Minister Indrawati stated, emphasizing her commitment to safeguarding these crucial programs.

Government’s Budget Cuts

President Prabowo has ordered ministries, agencies, and regional leaders to cut a combined Rp 306.7 trillion in spending this year, as per Presidential Instruction No. 1/2025 issued on Wednesday.

Allocations for Priority Programs

Minister Indrawati explained that instead of reducing social assistance funds, the government will reallocate resources to initiatives that directly improve people’s welfare, such as the free meals program, food and energy self-sufficiency, and healthcare.

The Finance Ministry has already allocated more than Rp 3.6 trillion for President Prabowo’s priority programs.

“We are currently making further adjustments to refine budget reallocations across ministries and agencies as instructed by the President,” the minister said.

Expert Analysis: Optimizing Fiscal Space

Reyhan Noor, a senior political economy analyst from Laboratorium Indonesia 2045 (LAB 45), believes that the spending cuts could create up to 9.96 percent in additional fiscal space within the 2025 state budget.

To ensure that the savings do not hinder economic growth, the government is advised to be strategic in offering tax incentives.

“Another approach to increasing fiscal capacity involves assessing the effectiveness of government-covered tax incentives. For instance, scrutinizing tax holidays and allowances to reassess the benefits of these policies,” Rayhan suggested.

Conclusion

This commitment to retaining social assistance funding despite broader budget austerity measures demonstrates the government’s prioritization of essential public welfare programs. With efficient reallocation and strategic tax policy evaluation, the government aims to bolster economic growth while maintaining critical support services.

The continued allocation of significant funds for President Prabowo’s priority programs underscores the government’s focus on addressing immediate social needs while striving for long-term economic stability.

As Indonesia navigates these budget challenges, careful management and strategic decision-making will be essential in balancing fiscal responsibilities with the well-being of its citizens.

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