Chandra Adi Nurwidya, Yogyakarta – Indonesia's economy has yet to show significant improvement as President Prabowo Subianto and Vice President Gibran Rakabuming approach their second year in office, with economists warning that fiscal constraints and weaknesses in policy implementation could limit the impact of government programs.
Universitas Gadjah Mada (UGM) economist Rimawan Pradiptyo said an assessment conducted with fellow economists found little progress from previous conditions, despite the government's push to accelerate development and roll out priority programs.
"Our joint analysis shows that there has been no improvement. When we economists previously took action, it was driven by facts on the ground that were unfavorable and unconducive. Has the situation improved now? Not yet, not significantly," Rimawan told reporters on Monday.
Rimawan said the government should base its development policies on actual conditions, economic theory and empirical evidence, rather than pursuing numerous programs within a short period without sufficient consideration of their effectiveness.
He called for an evidence-based approach to policymaking to ensure public spending and government programs address problems identified on the ground.
"Everything must be based on facts and theory, not on revelations from nowhere. We emphasize evidence-based policy, not what we call 'wangsit-based policy'," he said, using an Indonesian term for sudden inspiration or an idea without a clear evidentiary basis.
Fellow UGM economist Elan Satriawan raised concerns about the implementation of populist programs at the village level, particularly the Red and White Village Cooperatives (KDKMP) and the Free Nutritious Meals (MBG) program.
Elan said both initiatives had worthwhile objectives, but their financing structures and implementation needed careful scrutiny to prevent unintended consequences for communities.
He pointed to the cooperative program's financing scheme, which involves loans secured by village funds, warning that it could expose village finances to risks if cooperatives fail to generate sufficient revenue to meet their repayment obligations.
Limited regional budgets could, in turn, constrain funding for development and public services, including basic infrastructure, Elan said.
He also called for a more flexible social protection system that could respond to sudden economic shocks and natural disasters. One approach he advocated was Adaptive Social Protection, which would allow the government to extend assistance to vulnerable groups whose circumstances change unexpectedly.
"Social protection is not just about data availability but also budget flexibility. When new groups become eligible for assistance because of a shock, a rigid budgeting system can prevent them from receiving protection promptly," he said.
Source: https://jakartaglobe.id/business/little-economic-progress-tight-budgets-cloud-prabowos-second-yea