By Stefanno Sulaiman
Potentially widening its budget deficit, Indonesia is considering funding a free school lunch program, as revealed in a briefing document obtained by Reuters. This initiative was promised by the likely new president, Prabowo Subianto.
Recently, Defense Minister Prabowo and his running mate, Gibran Rakabuming Raka, claimed victory in the presidential election. The official results are expected to be announced by March 20th.
Cost Estimation and Concerns Analysts have raised concerns about the impact of this program on Indonesia’s fiscal discipline. The coordinating ministry for economic affairs has projected that implementing the program nationwide could increase the budget deficit by up to 0.33% of GDP in 2025.
The document outlines that providing one meal per day to 58 million children, ranging from one year old to elementary school, could cost approximately 193.2 trillion rupiah ($12.39 billion) annually. However, if the program is limited to children from low-income families, the cost would significantly decrease.
Implications The calculations are based on a projected budget deficit of less than 2.5% of GDP and economic growth between 5.3% and 5.6% in 2025. This stands against the 2.29% fiscal deficit target for 2024, with an economic growth goal of 5.2%.
Discussions and Future Plans The proposal is set to be discussed at a cabinet meeting with President Widodo. Airlangga Hartarto, the coordinating minister for economic affairs, indicated that the program’s initial cost could reach 120 trillion rupiah, eventually escalating to 450 trillion rupiah by 2029 for nationwide coverage.
Final Thoughts As Indonesia navigates the potential impact of the free school lunch program, financial decisions will play a crucial role in ensuring both fiscal stability and social welfare.
($1 = 15,590.0000 rupiah)