Heritage Policy Demands: Realize Fiscal Justice

JAKARTA Purbaya Yudhi Sadive faced a challenge that was not easy after being inaugurated by President Prabowo Subianto as minister of finance. How not, he must manage state finances in the midst of a global economy that is haunted by uncertainty, potential recession, and geopolitical turmoil.

Purbaya is of course required to continue the legacy of Sri Mulyani's fiscal policy which is known as a prudent, but must also present a new breakthrough so that the domestic economy remains resilient. The main focus as a State Treasurer is the management of a healthy APBN, maintaining financial stability, strengthening investment, and encouraging inclusive growth.

Senior Economist of INDEF, Tauhid Ahmad, assessed that the momentum of changing the minister from Sri Mulyani to Purbaya was quite crucial because it coincided with the discussion of the 2026 State Budget. "The first, of course, is currently forming a discussion on the 2026 State Budget. This means that this is a very critical period of how our fiscal processing will be for the coming year," he said.

According to him, the biggest challenge lies in state revenues which until mid-2025 have not been as expected. This is because until August 11, 2025, the amount of tax revenues that have been collected is only Rp996 trillion or 45.5 percent of the target.

Meanwhile, in the 2025 State Budget, the government has set a tax revenue target of IDR 2,189 trillion. If we look at data, say until June, the realization of June 2025, there are two important points. First, taxes for income, especially corporate or agency, have fallen 11.7 percent. Second, VAT has fallen by 19.7 percent until June 2025," added Tauhid.

In terms of state spending, it has not run optimally. Despite acknowledging Purbaya's experience as an economist, Tauhid highlighted the weakness side in the fiscal sector. The realization is only 38.8 percent of the target. The figure is Rp1,406 trillion from the budget of Rp3,621 trillion. This means that accelerating spending is also a problem. He has enough experience, but these two things have experience in fiscal, managing fiscal, and also as a Chairman of the KSSK (Financial System Stability Committee) it is also taken into account," he continued.

In addition, Purbaya's statement regarding the 8 percent economic growth target was considered too ambitious. This is because the burden on the minister of finance is considered very heavy, ranging from maintaining fiscal, improving transparency, to easing the burden on the community.

In my opinion, the figure of 8 percent is something that is a bit difficult in a short time. I think maybe what can be done to keep 5 percent alone is already Alhamdulillah in the current situation. I think the tough task of the new minister now is to ease the burden on the community. The increase in VAT needs to be reviewed," said Tauhid.

However, Minister of Finance Purbaya believes there is an opportunity to achieve 8 percent economic growth at least in the next 2-3 years, especially after the current economic slowdown problem can be resolved immediately. "I said (to the President) gradually sir, we achieved that 8 percent. (President) he said don't take too long, as soon as possible! Yes, we try," he said.

"As an economist, yes, this year 8 percent may be a bit difficult. 2 years, the next 3 years there is a chance to be achieved. We will return the economic direction which has slowed down to be faster first, let's say towards 6 percent, 6 percent more in less time. After that, we will build another one so that the growth can be even faster," added Purbaya.

In addition to the economic growth target, he also emphasized that he would not impose new tax levies for the community considering that the tax system which is currently being used is effective enough to collect taxes which are one of the sources of state revenue.

He emphasized that one of his priorities is currently increasing growth, because it also correlates positively with state revenues. Even with the existing system, if the growth is good, think of the tax to GDP ratio as constra, the income is fast too," said Purbaya.

The government also encourages the people's plantation program through replanting 870 thousand hectares of land. This can open up 1.6 million jobs with priority commodities: sugar cane, cocoa, coconut, coffee, mete, and nutmeg, "concluded Airlangga. (Photo: Press Bureau of the Presidential Secretariat)

He also ensured that under his leadership, the preparation of the 2026 RAPBN would remain disciplined, so that the government's fiscals remained healthy amid the great challenges of the global economy. This is because the 2026 RAPBN is designed to maintain the continuity of fiscal and disciplined policies, as well as side with the people.

"The precautionary principle will be maintained so that the 2025 State Budget remains healthy, credible, and able to support the national development agenda. Every rupiah that we manage is people's money, and we have a big responsibility to ensure that the money is used as well as possible for the benefit of the people," he said.

Fiscal Injustice Triggers People's Anger

Senior economist from CORE Indonesia, Hendri Saparini, assessed that Purbaya had challenges that had to be found a solution. First, the interest on debt is mounting. This problem is based on the posture of the 2026 RAPBN which is assessed by several vulnerable groups because state spending is greater than state revenues, which if allowed to continue can increase the financing of state debt.

Referring to Book II of the Financial Note and the 2026 RAPBN, the projected state revenue is IDR 3,147.7 trillion and state expenditures are IDR 3,786.5 trillion. Thus, the deficit is estimated to reach IDR 638.8 trillion. Therefore, the government also plans to withdraw new debts worth IDR 781.9 trillion in 2026 for the continuity of government programs.

But the risk of increasing these debts is the increasing ratio of debt payments to state revenues. This means that with the new debt, the debt interest payment burden can reach more than Rp600 trillion in 2026 or 19 percent of the total state expenditure. The impact will certainly affect the budget allocation which was originally intended for public benefit such as education, health, and infrastructure.

"If debt becomes one of the problems of President Prabowo replacing Sri Mulyani, there should be a correction from the expenditure side. For Pak Purbaya, don't make more debt because it becomes a risk. But if it turns out that Pak Prabowo needs more funds because he wants to boost his spending, the Minister of Finance just needs to do what he wants, right," explained Hendri.

Efforts to modernize fishing boats are also an important part of the discussion agenda. There are 1,000 fishing boats that are estimated to create 200,000 new jobs," said the Coordinating Minister for the Economy. (Photo: Press Bureau of the Presidential Secretariat)

The second problem is fiscal injustice. Hendri revealed, at the beginning of his tenure, President Prabowo made a decision to make budget efficiency so that state finances could focus on the interests of the people. The decision is contained in Presidential Instruction (Inpres) Number 1 of 2025 concerning Expenditure Efficiency in the Implementation of the State Budget and Regional Budget for Fiscal Year 2025. This budget savings will be made up to three rounds with a total of IDR 750 trillion.

The proceeds from the savings will be used to fund Prabowo's priority project, namely Free Nutrition Food (MBG) and providing capital to the Anagata Nusantara Power Investment Management Agency (Dantara). But because of efficiency, the budget of a number of ministries was cut which resulted in a number of things: ranging from the threat of layoffs for hotel workers and contributors at government-owned news agencies; reduction of lecturer research funds to lecture fees; including saving work facilities for state civil servants.

"Not only that, because of the efficiency of state spending, the central government cut Transfer Funds to Regions (TKD) which made 104 regions look for sources of income by increasing Land Taxes and Urban and Rural Buildings (PBB-P2) many times over," said Hendri.

Economic observer Andri Perdana added that this fiscal injustice made the people angry. Moreover, the Ministry of Finance will boost new taxes targeting the lower middle class even more intensively. The PBB even though it determines the head of blood, the Ministry of Finance decides the TKD funds. If the TKD is not cut, the PBB will not increase," he said.

The Minister of Finance should be able to explain to the president which programs can be blocked or evaluated. With a large expenditure for MBG, then the Red and White Cooperative, plus the construction of three million houses, fiscals will not be sustainable. That is the importance of fair fiscals," continued Andri.

He hopes that Purbaya will have the establishment and dare to challenge President Prabowo if his decision is considered less realistic and could have a negative impact on fiscal health in the long term.

"We don't need people who are smarter than Sri Mulyani at this time, but who are more independent. But if the new finance minister is more submissive, let alone better than Sri Mulyani, I think it will worsen things," concluded Andri.