The Indonesian parliament has given the green light to President-elect Prabowo Subianto’s inaugural budget for 2025, setting the stage for his administration’s economic and social agenda. The budget, totaling a hefty 3,621.3 trillion rupiah ($237 billion), signifies a major step towards fulfilling Prabowo’s ambitious growth plans.
With Prabowo set to commence his five-year term on October 20th, the approved budget lays out a roadmap for his administration. The lawmakers have opted for a state spending target of 3,621 trillion rupiah to fuel an economic growth target of 5.2 percent, a slight bump from the 5.1 percent forecast for 2024.
The budget also reflects a commitment to fiscal prudence. The fiscal deficit is projected to narrow from 2.7 percent of GDP this year to 2.53 percent in 2025. To achieve this, the government plans to increase tax collection by 14 percent compared to 2024 projections, reaching an estimated 3,005.1 trillion rupiah in state revenue.
Further bolstering the budget’s focus on economic growth, the oil lifting target has been increased to 605,000 barrels per day, aiming to boost non-tax receipts and reduce crude imports. To manage debt obligations, the average bond yield target has been lowered to 7 percent, down from 7.1 percent previously.
Recognizing potential external risks in the coming year, the Indonesian government has set a stronger assumption for the rupiah, targeting an average rate of 16,000 per US dollar compared to the previous estimate of 16,100.
In line with Prabowo’s vision for a more inclusive and prosperous Indonesia, the budget allocates significant funds to flagship programs designed to uplift the nation’s well-being. These include:
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Free nutritious meals for children:
A 71 trillion rupiah investment aimed at addressing food insecurity and improving child health.*
Free health check-ups:
Expanding access to healthcare for all citizens.*
Renovation of schools and construction of hospitals:
Enhancing educational and healthcare infrastructure nationwide.*
Food security initiatives:
Strengthening agricultural production and ensuring food availability for the population.With the budget approved, Indonesia is poised to embark on a new chapter under Prabowo’s leadership. The focus on economic growth, fiscal discipline, and social programs indicates a clear direction for his administration, setting the stage for a transformative period for Indonesia.
