Jakarta – Finance Minister Sri Mulyani Indrawati said that social assistance (bansos) funding would remain untouched despite the government's budget efficiency measures to support President Prabowo Subianto's flagship free meals program and other costly initiatives.
"The social assistance budget will not be cut at all. There is no reduction whatsoever," she said at an event in Jakarta on Thursday, as quoted by Kompas.com.
The social assistance budget is estimated to be between Rp 1 trillion (US$61 million) and Rp 1.3 trillion in 2025, with final adjustments depending on the President's instructions.
"That said, there will be no reductions in social assistance or other programs essential to public welfare," Sri Mulyani said.
President Prabowo has ordered ministries, agencies and regional leaders to cut a combined Rp 306.7 trillion in spending this year, as stipulated in Presidential Instruction No. 1/2025 issued on Wednesday.
The directive is expected to affect spending related to official travel, ceremonies and consultancy services, among other areas, with exemptions including employee salaries and social assistance programs.
Sri Mulyani said the move would instead boost economic growth as the funds would be reallocated to initiatives that directly improve the people's welfare, such as the free meals program, food and energy self-sufficiency and health care.
The Finance Ministry has so far allocated over Rp 3.6 trillion for 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.
Reyhan Noor, a senior political economy analyst from Laboratorium Indonesia 2045 (LAB 45), said the spending cuts could create up to 9.96 percent in additional fiscal space within the 2025 state budget.
To make sure the savings do not negatively impact the economy, the government is urged to be strategic in offering tax incentives.
"Another alternative to increasing fiscal capacity is evaluating the effectiveness of government-covered tax incentives. For example, reviewing tax holidays and allowances to reassess the benefits of these policies," said Rayhan.