Budget Cuts Could Be Unconstitutional

JAKARTA, KOMPAS – The government's policy to streamline the budget needs to be reviewed because it is carried out unconstitutionally and implemented in ways that do not comply with the provisions of the legislation. The reallocation of budget items also needs to be aligned with the objectives of state financial management that are explicitly stated in the constitution, particularly in the fourth paragraph of the Preamble to the 1945 Constitution of the Republic of Indonesia.

Beni Kurnia Ilahi, a researcher at the Center for Constitutional Studies, Faculty of Law, Andalas University, stated that the budget efficiency policy regulated through Presidential Instruction Number 1 of 2025 is legally and constitutionally flawed. From a constitutional perspective, there are two parameters that must be used when making budget cuts.

First, is it in accordance with the state objectives stated in paragraph IV of the Preamble to the 1945 Constitution of the Republic of Indonesia? Second, is the supervision in accordance with the principles of efficiency and good governance.

"If those two things are not fulfilled, then it can be said that the 2025 State Budget might be unconstitutional. With just the legal instruments, it is already unconstitutional, especially if it is then used in unfair ways in implementing the state budget cuts," said Beni.

Referring to the provisions of the State Finance Law, the policy of budget reallocation should be wrapped through the Revised State Budget scheme, which is discussed jointly by the President and the House of Representatives.

Beni observed that the financial architecture of the state during the previous decade of governance and in the recent months under Prabowo's administration has not been determined by social justice factors. The state's financial factors have been dominated by government leadership that is often altered according to temporary political interests.

In fact, referring to Article 23 paragraph (1) and Article 33 paragraph (3) of the 1945 Constitution of the Republic of Indonesia, the state budget is intended for the welfare of the people, and the earth, water, and natural resources are to be utilized to the greatest extent for the prosperity of the people.

Previously, the government explained that the reallocation of the budget resulting from efficiency would be used to finance the free nutritious meal program (MBG) worth Rp 390 trillion and invested in Danantara Rp 325 trillion. Beni criticized the allocation, particularly the Danantara investment, which was done without discussing it with the public.

"This is a sudden policy. It should have been communicated to the public first, but suddenly it was invested directly into Danantara. Just imagine, the funds deposited by the people, from the lower classes to the upper classes, from pedicab drivers, laborers, teachers, lecturers, even law enforcement officers who pay taxes to the state, the money was actually circulated through Danantara investment activities that had never been socialized before. It's as if the owner of the country is KIM Plus, not the public, not the community," said Beni.

Beni also questioned the procedures in shifting or cutting the budget carried out by President Prabowo's government. The budget cuts were carried out haphazardly by the President and the Minister of Finance and clearly contradict Article 27 paragraph (3) letter c and Article 27 paragraph (5) of the State Finance Law. Referring to these provisions, the budget shift policy should be packaged through the Revised State Budget scheme discussed together by the President and the DPR.

Conceptually, he added, budget shifts must obtain the approval of the people. If the people do not want it, the budget cannot be blocked or even cut. This means that the government cannot block budget items first before getting the approval of the DPR.

"If the budget cuts are still carried out without the approval of the DPR which is stated in the form of the APBN-P, then the APBN allocated for the President's priority programs will be considered a violation of the law. If the policy has been justified as a violation of the law, then the state losses can be estimated. The BPK can come in, law enforcement officers can come in. Because there is no legality," said Beni.

He also criticized budget cuts in several areas that are actually categorized as mandatory spending or budgets that have been determined by the constitution or law. For example, the education budget that has been determined must be 20 percent of the APBN/APBD according to the mandate of Article 31 paragraph (4) of the 1945 NRI Constitution.

Next, the health budget which is allocated five percent of the APBN in accordance with Law 36/2009 on Health and 10 percent of the APBD. Then, general transfer funds (to regions) whose use is at least 25 percent for infrastructure spending and village funds which are at least 10 percent of the balancing funds received by districts/cities.

In fact, the budget in the sector has also been cut. For example, the education budget spread across three ministries has also been cut by Rp 22.8 trillion. In addition, he added, the government also plans to cut general transfer funds to the regions.

"I am worried that if the government does not interpret it as mandatory spending, then we can categorize that today's government is the government that most often violates the constitution, especially for these fundamental things, education and health," said Beni.

Meanwhile, a lecturer at the Faculty of Economics and Business, Andalas University, Hadi Rahadian, reminded of the impact of budget efficiency carried out by the government. One of the things that is worrying is the potential for layoffs (PHK) for employees in the hotel and transportation sectors.

Because, the reduction in business travel will have an impact on the industry. State revenue from taxes will also decrease considering that hotel taxes have been one of the sources of regional tax revenue.

The number of layoffs, according to Hadi, is correlated with the decline in people's purchasing power. In addition, budget cuts also have an impact on the decline in the quality of infrastructure.

The same thing was also expressed by the Center of Economic and Law Studies (Celios) Researcher, Bakhrul Fikri. According to him, the impact of the current budget efficiency is quite terrible for the overall economic output. The decline in people's purchasing power will have an impact on the business surplus which is the first threat to retail entrepreneurs who sell people's daily consumption.

According to him, the government needs to evaluate the Free Nutritious Meals (MBG) program to be more targeted. So far, the program has been given with a universal coverage approach or for all children without distinguishing social classes.

In fact, if the MBG program is given by prioritizing poor families (income below Rp 2 million) and underdeveloped areas, then the budget needed is much less. According to Celios' calculations, only Rp 111.93 trillion is needed per year and not more than Rp 400 trillion.

"If universal coverage is still implemented, there will be an inappropriate subsidy of 31.8 percent or equivalent to Rp 50.72 trillion. There will be children of rich people who get MBG. This means that it is inefficiency in state spending," said Bakhrul.