Budget Efficiency In The Middle Of A Fat Cabinet Can Threaten The Economy And Manpower Absorption

JAKARTA President Prabowo Subianto asked ministries and institutions (K/L) to make budget efficiency by 2025. This is stated in Presidential Instruction (Inpres) Number 1 of 2025 concerning Expenditure Efficiency in the Implementation of the State Budget and the Regional Budget for Fiscal Year 2025.

Presiden Prabowo memerintahkan langkah pengurangan anggaran pada kegiatan yang dianggap mendesak, termasuk perjalanan dinas, kegiatan seremonial, rapat, seminar, pengadaan barang, dan sebagainya. Pemerintah ingin anggaran negara lebih fokus digunakan untuk pembangunan dan peningkatan layanan publik.

The government is also trying to maintain fiscal stability without having to increase the burden on the state's debt.

The total budget cut is estimated at IDR 306.69 trillion from the total 2025 state expenditure of IDR 3,621.3 trillion, with details of the ministry / ministry expenditure budget of IDR 256.1 trillion and transfers to the regions (TKD) of IDR 50.59 trillion.

Free Nutrition Food (MBG) is said to be the culprit for the emergence of Presidential Instruction Number 1 of 2025. In order to finance MBG which costs super large, the government must rack its brains to seek funds.

And this was also confirmed by the Minister of Finance (Menkeu) Sri Mulyani Indrawati, and even President Prabowo's budget cuts of Rp306 trillion were carried out to finance policies directly felt by the community, for example MBG.

Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira explained that President Prabowo's budget cuts had significant impacts, especially at the local government level.

The efficiency of the budget, said Bhima, is a contradiction, because on the one hand the nomenclature of ministries/agencies has not been changed. President Prabowo's Red and White Cabinet has even been said to be the fattest since the reform era.

"Imagine, there are still many ministries/agencies but there is budget efficiency. This can threaten the economy and labor absorption, the efficiency carried out brutally can also have an impact on programs outside MBG," Bhima told VOI.

Bhima also highlighted the government's policy of cutting meetings and official travel. Whereas in several ministries/agencies, such as the Ministry of Agriculture, it is necessary to do this to carry out downstream agricultural products.

"We have to coordinate with local governments, that means efficiency can interfere with the achievement of programs and will make economic growth in 2025 4.7 percent," he said.

"This should also be a government study before carrying out budget efficiency, especially the efficiency for MBG, which we know the impact of MBG is not that big and the involvement of MSMEs is still minimal," Bhima added.

The reduction of regional transfer funds, as stated in the Presidential Instruction, also has the potential to injure the spirit of fiscal decentralization in the regional autonomy era. Given the different regional fiscal capacity, the government with limited APBD or local governments that have just experienced expansion, the economy in the area will suffer even more with this cut, according to Bhima.

"The effect in public service areas is deteriorating, the cutting of honorary staff, contract workers in local governments, public services are disrupted, important regional infrastructure is delayed or even completely stopped. Has this been thought of before?" said Bhima.

Meanwhile, researcher from the economic sector at the Institute for Development of Economics and Finance (Indef) Abdul Manap Pulungan saw two sides of this budget cuts plan. On the one hand, this policy is the government's effort to reduce debt burdens.

"In the midst of a very low tax revenue situation last year, only about 97 percent of the target was realized. This savings is expected to reduce new debt withdrawals which will ultimately affect our fiscal system and policy," he said.

This policy is also a positive signal and momentum for ministries/agencies and other agencies to tighten their belts so as not to waste the budget for activities that are less useful.

However, according to Abdul, the entry of infrastructure posts that are included in the budget cuts plan needs to be a concern. According to him, this is quite worrying because the infrastructure budget is considered to provide the most stimulus for the regional economy, including through employment.

"Workers who are absorbed are usually not formal but informal, yes, workers are free. And they really hope that these government projects, especially from infrastructure. So hopefully, the saved ones are not from infrastructure development but maintenance," said Abdul.

Another sector that has the potential to be affected by budget efficiency is hospitality, considering that President Prabowo also instructed to cut ceremonial budgets, meetings, and official trips.

In fact, according to data from the Indonesian Hotel and Restaurant Association (PHRI), government official travel has large donations, especially for the three and four star sectors, with a market share of 40 percent.

Even in areas such as Sulawesi, East Nusa Tenggara, West Nusa Tenggara, Maluku, to Papua, the contribution of government official travel activities can reach 70 percent.

"Currently, the steps that must be taken by the hotel are to maximize cooperation with the tourism ministry to spur foreign or domestic tourists to their hotels, so that the reduction from activities in ministries/institutions can be covered by increasing from these tourists," he concluded.