MK Decides MBG Budget to be Separated from Education, Economists Ask 2027 State Budget to be a Transition Period

JAKARTA - The Constitutional Court (MK) has decided to separate the budget for the Free Nutritious Meal (MBG) program from the education budget in the State Budget (APBN) starting in 2028.

Responding to this, Andalas University Economist Syafruddin Karimi assessed that the government should make the 2027 State Budget as a transition period to start making adjustments, not wait until the deadline set by the Constitutional Court.

According to Syafruddin, the MBG budget should be placed as a separate budget item, while the education allocation of 20 percent is calculated after all MBG expenditures are removed from the education component.

In addition, he said, the government also needs to prepare a medium-term financing framework that includes projections of the number of beneficiaries, per-portion costs, food inflation, logistics needs, the impact on the APBD, and sustainable funding sources.

"If fiscal capacity is inadequate, the government needs to rearrange the scope of the program by prioritizing children from poor and vulnerable families, regions with high nutrition problems, and lagging areas. More targeted targeting can maintain social benefits without burdening the state budget excessively," he said in a statement. Friday, July 31.

He emphasized that economic stability can only be maintained if the financing of the MBG program and the obligation of the education budget are carried out through sustainable state revenues, clear spending priorities, credible deficits, and careful debt management.

"Compliance with the Constitutional Court's decision is not merely a legal obligation, but a test of the transparency of the state budget, fiscal discipline, protection of the right to education, and the credibility of the management of the national economy," he said.

Syafruddin explained that the Supreme Court Decision Number 40/PUU-XXIV/2026 forced the government to adjust the ambition of the program to the fiscal capacity of the country, so that with the decision, the government could no longer include the MBG budget as part of the mandatory allocation of education of 20 percent.

He assessed that the Constitutional Court's decision also improved the classification of state expenditures and made the MBG fiscal costs more transparent, because until now the budget for the program was still recorded in the education post.

In the 2026 State Budget, the education budget was recorded at Rp. 769.1 trillion and of that amount, Rp. 223.6 trillion was allocated for MBG so that pure education spending only remained Rp. 545.5 trillion or about 14.2 percent of total state spending, which is lower than the constitutional mandate which requires an allocation of education of 20 percent.

"The government therefore needs to provide additional budget in a comparable amount so that pure education spending continues to meet the constitutional mandate. If MBG is maintained at the same scale, the combined budget for education and MBG can reach around Rp. 992.7 trillion or 25.8 percent of state spending," he explained.

He assessed that the Constitutional Court's decision had major consequences for fiscal policy and the government must determine a combination of policies between increasing state revenues, reallocating spending, adjusting the scale of the MBG program, utilizing the Surplus Budget Balance (SAL), and adding debt.

Syafruddin reminded that too aggressive tax increases have the potential to suppress consumption and investment, while cutting spending can reduce financing space for the health sector, social protection, infrastructure, food security, transfers to regions, and disaster management.

Meanwhile, he said the use of SAL could only be a temporary solution because it was not sustainable.

According to him, the addition of debt has the potential to widen the state budget deficit, increase the issuance of State Securities (SBN), increase interest burden, and narrow the fiscal space for productive spending in the coming years.

"These risks become even more important when the deficit outlook is close to the 3 percent limit of GDP (Gross Domestic Product), SBN yields are still high, and state revenues are not strong enough to support all priority programs," he said.

In terms of macroeconomic stability, he assessed that MBG financing through excessive deficits and debt could increase the fiscal risk premium, encourage an increase in SBN yields, and put pressure on the rupiah exchange rate.

According to him, market participants not only look at the debt-to-GDP ratio, but also pay attention to the quality of state spending, the credibility of deficit management, the government's ability to pay the interest burden of debt, and consistency in implementing constitutional rulings.

"If investors see the government maintaining the expansion of the program without a clear source of funding, they can ask for higher risk compensation," he explained.

He added that the increase in state financing costs could eventually spread to credit interest rates, suppressing private investment, slowing economic growth, and increasing the stabilization burden that Bank Indonesia must bear.

"Too expansive fiscal policies can also increase demand for food, push up inflation on certain commodities, and make fiscal-monetary coordination more difficult if production and distribution capacity are not ready," he explained.