Tenggara Strategics, Jakarta – President Joko "Jokowi" Widodo presented the draft state budget (RAPBN) for the 2025 fiscal year to the House of Representatives on Aug. 16, one of his last acts as president before giving the reins to the incoming administration under president-elect Prabowo Subianto. The RAPBN highlights the government's focus on improving human capital.
The 2025 RAPBN sets total government expenditure at Rp 3,613.1 trillion (US$225.8 billion) for the year and estimates a budget deficit of Rp 616.2 trillion, which translates into a deficit ratio of 2.53 percent. While the budget deficit of the RAPBN is still within regulatory standards, the debt financing spiked to Rp 775.9 trillion, which is 19.7 percent higher than the estimated Rp 648.1 trillion debt financing of the 2024 outlook.
A significant portion of the debt financing, roughly Rp 642.6 trillion, consists of government bonds, while the remaining Rp 133.3 trillion comes from loans. Compared with the 2024 outlook, government bonds increased by a substantial 42.2 percent from Rp 451.9 while loans increased by 31.6 percent from Rp 101.3 trillion.
The sharp rise in the 2025 RAPBN debt financing can be attributed to increased emphasis on human capital improvement programs, a hallmark of Prabowo's campaign focus, such as with his flagship free meal program. To implement these programs, the national budget for education saw a sizable 8.7 percent increase, from Rp 665.1 trillion in the 2024 outlook to Rp 722.6 trillion in the 2025 RAPBN. During his campaign, Prabowo mentioned that it is possible that some of the education budget allocation will be used to support the free meal program since the program is related to and benefits education.
Notably, the portion of financing from education service costs (BPP) in the 2025 RAPBN rose considerably. In 2024, the BPP contributed 36.3 percent of the education budget financing, whereas in 2025 that portion is expected to rise to 40.9 percent. This change can be viewed as worrisome from the point of view of the people, as it means they can expect notable increases to the BPP of education utilities.
In stark contrast to the rising education budget, the infrastructure budget shows a notable decrease, despite infrastructure development being the primary focus of President Jokowi's administration. The total infrastructure budget in the 2025 RAPBN is estimated at Rp 400.3 trillion, down 5.5 percent from the total infrastructure budget of Rp 423.4 trillion in 2024. Additionally, The RAPBN financial memorandum notes that the ongoing financial difficulties of construction state-owned enterprises (SOEs), such as PT Wijaya Karya and PT Waskita Karya, contributed to the infrastructure budget cuts, which make launching infrastructure projects difficult.
Despite the Prabowo-Gibran administration having to bear the burden of the 2025 national budget, purview over the 2025 RAPBN is still largely within President Jokowi's cabinet. As the last RAPBN to be made by President Jokowi's administration, the draft's supportive stance toward Prabowo's programs and focus on human capital development underscores President Jokowi's last bid to support Prabowo.
What we've heard
Several sources have said that Thomas Djiwandono, a nephew of president-elect Prabowo, was appointed deputy finance minister in an effort to accommodate any adjustments to the 2025 RAPBN, as Finance Minister Sri Mulyani did not approve many of the budget proposals Prabowo made as defense minister.
Thomas's entry has allegedly helped Prabowo secure additional funding for 2025 outside the mandatory budget allocations, and will be used to finance several of Prabowo-Gibran's flagship programs, including the free nutritious meals program.
Furthermore, Prabowo plans to focus on the defense sector as the backbone for all future activities. These include socioeconomic issues like nutrition, which is why he is involving the military in implementing the free nutritious meals program, with soldiers staffing public kitchens.
Another source mentioned that appointing Thomas to the Finance Ministry had helped Prabowo understand the complexity of the budget drafting process. In other words, Thomas has helped bridge communication between Prabowo and Sri Mulyani, resulting in Prabowo adopting a more realistic budget stance. This can be seen in the budget for the nutrition agency, which does not belong solely to that agency and instead will be distributed among other agencies.
A third source claimed that Sri Mulyani had rejected many of Prabowo's proposals on government expenditure upon the instruction of President Jokowi.
Regardless, the President gave his approval to the current 2025 RAPBN in a presentation at the House plenary session that highlighted the inclusion of the free meals program, which has an estimated budget of Rp 71 trillion (US$4.576 billion) to b drawn from the budget of the Education, Culture, Research and Technology Ministry.
"The budget for Prabowo's programs is part of Jokowi's efforts to ensure a smooth government transition," explained a separate source, who also confirmed that the draft budget was the result of intensive discussions between the President and the president-elect over the past few months.
[This content is provided by Tenggara Strategics in collaboration with The Jakarta Post to serve the latest comprehensive and reliable analysis on Indonesia's political and business landscape.]