CSIS Proposes Government Review Of Priority Programs In RAPBN 2026

JAKARTA - The Center of Strategic and International Studies (CSIS) or CSIS Indonesia proposed that the government need to review priority programs so that they are more efficient in the 2026 State Revenue and Expenditure Budget Draft (RAPBN).

Senior Researcher of the Ministry of Economics CSIS Deni Friawan understands that the 2026 RAPBN is an important milestone in President Prabowo Subianto's administration. This is because this is the first state budget that is fully designed and will be executed by the government he leads.

"This is the first RAPBN that is fully designed and will be executed by the Prabowo Government. This RAPBN is the embodiment and continuation of the implementation of the Prabowo Government's priority program which has actually begun in the first year," Deni said in a media briefing entitled RAPBN 2026: Considering Political Promises in the Midst of Fiscal Restrictions, Monday, August 18.

As for various priority programs, such as Free Nutrition Food (MBG), construction of 3 million houses, Red and White village cooperatives to defense modernization, the budget portion is quite large.

MBG, for example, jumped from Rp. 171 trillion to Rp. 335 trillion. A large allocation was also given to the Red and White cooperative of Rp. 181.8 trillion, the construction of houses of Rp. 57.7 trillion and energy security of Rp. 402.4 trillion.

Senior Researcher Of The Ministry Of Economy CSIS Deni Friawan/Screenshot/YouTube CSIS Indonesia

However, behind this fantastic figure, CSIS reminded that there are serious consequences for fiscal posture. Fiscal space constraints make the government have to keep the deficit under control at 2.48 percent.

"Restrictions on fiscal space and the government's efforts to maintain the state budget deficit are below 3 percent, in this case the deficit is 2.48 percent, it makes the implementation of these programs have the potential to force an increase in state revenues and/or sacrifice other expenditures," he said.

Deni also highlighted the potential crowding out effect of financing these large-scale programs. The involvement of Himbara banks to Bank Indonesia (BI) in channeling credit or buying SBN to support financing, according to him, could reduce the movement space of the private sector. As a result, investment and private consumption have the potential to be disrupted.

"The existence of these programs also has the potential to trigger crowding out effects on private consumption and investment. Especially when this involves BI or Himbara banks who are forced to participate in financing these programs," he said.

In addition, Deni assessed that the implementation of a national-scale priority program that involved a lot of the central government, including the TNI and Polri, showed a tendency to increase centralization. Meanwhile, regional fiscal space has actually narrowed due to the decline in transfers to regions (TKD).

Facing these conditions, CSIS recommends that the government review the design of the implementation of priority programs.

It does not mean canceling, but ensuring the execution scheme is more efficient, transparent and on target. According to Deni, with a mature design, the government can reduce the risk of waste of the budget while maintaining medium-long-term fiscal resilience.

"Our advice is that rather than imposing priority programs on a large scale, the government should review the design of the implementation of these priority programs in order to increase efficiency and maintain macroeconomic stability.