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World Bank urges fiscal caution for Indonesia's free lunch program in 2025

Jakarta Globe - February 28, 2024

Arnoldus Kristianus, Jakarta – The World Bank has advised that the upcoming president's free lunch program should carefully consider the health of the 2025 State Budget.

According to the World Bank, meticulous preparation is needed by the government to ensure the implementation of the program does not burden fiscal performance.

"We hope that Indonesia can adhere to the specified upper limit of fiscal deficit, which is 3 percent of GDP as stipulated in the law, and also maintain macroeconomic and fiscal stability," Satu Kahkonen, the Head of the World Bank Representative for Indonesia and Timor-Leste, said at the Ministry of Economic Affairs Office in Jakarta on Tuesday.

Kahkonen said that the estimated Rp 400 trillion ($25.5 billion) cost of the program should be executed in a measured manner, from planning to implementation, considering both cost and resource availability.

Earlier, Airlangga Hartarto, the Chief Economic Minister, disclosed that the suggested budget for the program, proposed by presidential candidate Prabowo Subianto, is fixed at Rp 15,000 ($1) per child per day, excluding the provision of milk.

He said that the government work plan for 2025 and the draft of the 2025 State Budget would incorporate the program for the future elected president, as President Joko Widodo's term concludes in October. Quick count results from various pollsters indicate that Defense Minister Prabowo is poised to become Indonesia's next president.

According to Budiman Sudjatmiko, Vice Chairman of the Expert Council of Prabowo's Campaign Team, the free school lunch program aims to benefit approximately 82.9 million students in both schools and pesantren (Islamic boarding schools) throughout Indonesia, reaching 100 percent coverage by the year 2029. The anticipated funding required for the initial phase is estimated between Rp 100 trillion and Rp 120 trillion.

Assuming a student goes to school 245 times a year, the free lunch program would cost around Rp 327.81 trillion.

Finance Minister Sri Mulyani said the budget calculation of the free lunch program would take place next month while awaiting the announcement of the elected president from the General Election Commission (KPU). KPU has until March, 20 to announce the 2024 Elections results.

"This process is still ongoing for the next three months. Next month, our focus will be more on indicative ceilings and priority programs," she added.

Source: https://jakartaglobe.id/business/world-bank-urges-fiscal-caution-for-indonesias-free-lunch-program-in-202