Budget Efficiency Used for MBG and Danantara, What Impact Does it Have on the People?

JAKARTA, KOMPAS — President Prabowo Subianto targets budget efficiency of up to 44 billion US dollars or equivalent to Rp 750 trillion in the first year of his leadership to finance Free Nutritious Meals and "inject" BPI Danantara. The government is reminded that the efficiency policy should have a maximal impact on the welfare of the community.

The budget efficiency plan was announced by Prabowo during his speech at the 17th Anniversary of the Gerindra Party at the Sentul International Convention Center (SICC), Bogor, West Java, on Saturday (15/2/2025). In his presentation, he mentioned that the budget efficiency would be carried out in three phases.

The first round involves savings from the State General Treasurer's Budget Section (BA BUN) amounting to Rp 300 trillion. BA BUN is a budget section directly managed by the Minister of Finance and is not under the budget section of any specific ministry or agency (K/L).

The second round came from the results of budget cuts in all Ministries/Institutions that were just completed on February 14, 2025, in accordance with Presidential Instruction Number 1 of 2025. The budget sweep was carried out down to unit 9 or detailed spending items. The budget efficiency was initially targeted at IDR 306.7 trillion, but increased to IDR 308 trillion.

Later, IDR 58 trillion from the efficiency results will be returned to 17 ministries/agencies. It is not yet known which ministries/agencies will receive the budget return. Thus, the efficiency results obtained by Prabowo from the second round amount to IDR 250 trillion.

The third round is an additional revenue targeted from state-owned enterprises (SOEs) dividends, which is expected to reach IDR 300 trillion by 2025. Of that amount, IDR 100 trillion will be returned to the SOEs in the form of state capital participation (PMN).

The funds pocketed by Prabowo from the third round of state-owned enterprise dividend receipts will amount to Rp 200 trillion. Thus, the three rounds of savings will generate a reserve fund for Prabowo's administration of Rp 750 trillion for the year 2025.

In his speech, Prabowo stated that he plans to use part of the efficiency savings to fund the Free Nutritious Meals (MBG) program. In the 2025 State Budget, the MBG program had already been allocated a budget ceiling of IDR 71 trillion, which was then slightly reduced to IDR 70.8 trillion.

Another portion, 20 billion US dollars or equivalent to Rp325 trillion will be invested in the Investment Management Agency (BPI) Daya Anagata Nusantara (Danantara). BPI Danantara is a state-owned superholding institution recently formed by Prabowo. Its management model will resemble Temasek in Singapore and Khazanah Nasional in Malaysia.

When contacted, Sunday (16/2/2025), Deputy Chairman of the Budget Agency of the House of Representatives from the Gerindra Party Faction, Wihadi Wiyanto, explained that the Prabowo government would adjust the use of the results of the budget efficiency according to needs.

According to him, the results of budget efficiency will not only be used for MBG and Danantara. The government will "return" a budget of Rp 58 trillion to 17 K/L from the results of the efficiency that has been carried out in the second round.

Wihadi explained that the funds would be used to increase the budget for school improvement programs, food security, and so on. "So, the additional budget will still be adjusted later. For MBG, then Mr. Prabowo also wants to improve schools. There is also for food security. So, it is still in the interest of the community," he said.

Contacted separately, Paramadina University economist Wijayanto Samirin reminded the government to truly use the results of budget efficiency for the benefit of the people. "APBN efficiency is a good idea, but without careful planning it will not have a maximum impact, it could even be the opposite," he said.

He reminded the government not to just focus on MBG and then sacrifice other more important programs. Ideally, an optimal point should be sought between funding for MBG and budget cuts.

"MBG escalation does not need to be too massive, budget cuts should not be too drastic. If we continue to force a budget of Rp 170 trillion for MBG in 2025 according to the initial plan, it is too aggressive and actually contradicts the idea of efficiency promoted by the President," Wijayanto said on Sunday.

He also highlighted the use of efficiency results for Danantara. According to him, the impact of investment fund management in Danantara can only be obtained in the medium to long term.

"My guess is that this is for capital that can be leveraged up to six times to finance various programs, including infrastructure and housing. The challenge in the current difficult situation is that it is not easy to find investors who want to invest their funds in Danantara," he said.

Regarding the source of efficiency, Wihadi explained that the Rp 750 trillion mentioned by Prabowo is the total savings that have been and will be made in 2025. The first round of savings has been made since the era of Joko Widodo's administration through automatic adjustment (AA).

The AA policy at that time required all Ministries/Institutions to block part of their budgets that were considered not yet a priority so that they could be “reserved” for more important spending. If along the way the Ministries/Institutions needed the budget, the block could be opened.

Wihadi explained that since Prabowo first took office, there had been a reserve fund of IDR 300 trillion in the BA BUN post managed by the Minister of Finance from savings through AA and other efficiency measures.

"So far, there have been AA and spending better programs that have been carried out by the Ministry of Finance for a long time. So, the Rp300 trillion is the result of savings that have indeed been included in BA BUN," he said.

Meanwhile, the third round of IDR 300 trillion comes from the dividend target projected for 2025. This target is considered ambitious considering that so far, BUMN has only been able to deposit dividends in the range of IDR 80 trillion into the state treasury.

Wihadi said, so far there is no plan to continue budget efficiency in 2026 and beyond. "For 2026 there must still be further discussion. What is clear, this year we have saved Rp 750 trillion," he said.