3 weeks ago
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February 11, 2025 | 12:25 pm
TEMPO.CO, Jakarta - There are no clear criteria for the budget cuts imposed on ministries and agencies, and there is an impression of favoritism.
THE substantial cuts in the budgets of ministries and state institutions are the result of the government’s poor financial planning. The desire of President Prabowo Subianto to force through the continuation of populist programs could disrupt the running of the government and the provision of public services.
Prabowo ordered these budget cuts through Presidential Instruction No. 1/2025 on Spending Efficiencies in the Implementation of the 2025 Financial Year State Budget and Regional Budget, which was issued on January 22. Through this regulation, the Ministry of Finance has reduced spending by Rp306.6 trillion from 16 budget items comprising Rp256.1 trillion from ministries and institutions and Rp50.5 trillion from fund transfers to the regions.
This problem began with errors in the drawing up of the 2025 State Budget by President Joko Widodo and his economic team. Finance Minister Sri Mulyani Indrawati drew up a budget that was not based on the reality of the outstanding debt that the government had to pay.
In Jokowi’s 10 years as president, government debt grew to almost Rp6 quadrillion, a sharp rise of 224 percent. Over the next five years, principal and interest in government securities due for payment total Rp3.036 quadrillion, of which Rp803 trillion is due this year. In the 2025 State Budget, the government allocated Rp1.353 quadrillion for principal and interest payments.
Jokowi ignored this huge burden. In the 2025 State Budget, there are still budget items for flagship projects such as the Rp14.4 trillion for the Nusantara capital city and Rp71 trillion for the free lunch program.
But there is a huge storm on the horizon as tax revenues have fallen sharply because of problems with Coretex, the new digital taxation system. As a result, the Taxation Directorate-General has only managed to gather 20 million tax invoices, far below the total in the same period last year of 60 million. The consequences of this are that as of January 2025, new tax revenues were only around Rp50 trillion, far below the figure for last year of Rp172 trillion.
This huge shortfall has undermined state finances. Ministries and state institutions have no funds to implement programs that have already been planned. For the time being, for two months, state finances are coming from the remaining 2024 budget funds of Rp45.4 trillion.
Prabowo and Sri Mulyani cannot simply blame force majeure because when the 2025 budget was drawn up, they were members of Jokowi's cabinet. Elected as President and reappointed as Minister of Finance in the following government, Prabowo and Sri Mulayni should have had an understanding of the conditions and had projections of financial challenges in the following year.
These budget cuts—which the government is packaging as efficiencies—also appear rather strange. There is a distinct impression that ministries and institutions whose budgets were not cut received privileges because they successfully lobbied the Palace and the House of Representatives. Budget cuts were carried out without any clear criteria, and there is an impression that they were based on ‘likes and dislikes.’
A total of 17 state institutions did not have their budgets cut. These include the Ministry of Defense, the National Police, and the Attorney General’s Office. These three institutions have huge budget allocations: Rp166.2 trillion, Rp126.6 trillion and Rp24.2 trillion, respectively.
Conversely, a number of technical ministries that provide a range of public services had significant cuts. For example, funding for the Public Works Ministry was reduced to Rp81.38 trillion from an original Rp110.95 trillion, while the Ministry of Transportation budget was cut to Rp17.9 trillion from Rp31.5 trillion. It is fair to ask why the defense and security budgets for the military and the police were maintained, but the budget for road and bridge maintenance was reduced, while transportation subsidies and flights between isolated regions were cut.
Meanwhile, funds have been squandered on state visits by the president, who always travels with large delegations. And there are no signs that the huge cabinet will be slimmed down. According to the University of Indonesia Economics Faculty Public Economics Research Institute, Prabowo’s bloated cabinet could require funding of Rp39.55 trillion to Rp158.21 trillion in 2025 alone.
If the government continues to be indifferent, it is not impossible that Indonesia will become a failed state.
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