TEMPO.CO, Jakarta - Executive Director of the Institute for Development of Economics and Finance (INDEF), Esther Sri Astuti, said the construction of Nusantara Capital City, or IKN burdens the State Budget. Esther said other programs such as President-elect Prabowo Subianto’s free meal program also burden state funds, but no more than the new capital project.

"If asked to choose between the free lunch program or IKN, I’d choose free lunch," she said on Wednesday, July 10, 2024.

Esther explained that the Prabowo-backed program at least boosts public consumption which could improve GDP or economic growth.

Indef Big Data’s team analysis showed that 78 percent of netizens said IKN is a burden to the State Budget due to the slow private investment progress. The government initially promised to only spend about 20% of state funds of the total Rp466 trillion needed for IKN.

However, the number will potentially swell up, as the IKN Authority has submitted an additional Rp29.8 trillion of funding for 2025. Esther said the government must reconsider the capital transfer. She’s hesitant about whether the project proposed by President Joko Widodo or Jokowi will push Indonesia to finally become a developed country.

She also highlighted Jokowi's statement that he would postpone transferring office to IKN due to incomplete infrastructure construction. Esther said investors may be reluctant to invest in Nusantara if the public facilities construction is unfinished.

Esther urged the government to be careful in managing the State Budget amidst the current decline in revenues. In addition, there is a debt maturity of Rp800 trillion during the government transition period from 2025 to 2027. The budget should be allocated to programs and projects that support economic growth.

Previously, the Minister of Finance Sri Mulyani Indrawati explained that the government has allotted over Rp72.5 trillion for IKN development. She hoped the new capital city would be ready to host the commemorative ceremony for Indonesia’s Independence Day in upcoming August 17.

ILONA ESTHERINA

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