Minister: Prabowo's Budget for Nusantara Capital City, Free Meals Program is Safe for the Next 5 Years

TEMPO.CO, Jakarta - Indonesia's Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said the budget for the Nusantara Capital City (IKN) project and Prabowo's free nutritious meals is safe even for the next five years.

"As a result of the economic model created, I see that there will be no funding problems for the next five years," said Luhut on the sidelines of the launch of the marine resources balance sheet in Denpasar, Bali, Indonesia, on Friday, July 5, 2024.

According to him, based on economic studies from the Coordinating Ministry for Maritime Affairs and Fisheries, the government can still allocate up to Rp612 trillion per year assuming the budget deficit reaches 2.5 percent.

The budget, he said, could be allocated for the free meals program, IKN development, including completing the construction of the Sumatra toll road.

"We can still get Rp612 trillion per year, we can still use the budget to complete the Sumatra toll road, and use it for the free meals and the IKN programs. "So there's nothing to worry about," said Luhut.

To support the budget, a number of efforts need to be made, including ensuring improvements in government technology, tax payments that need to be intensified and ensuring that no one is in arrears on taxes.

Luhut is optimistic that both the IKN and the nutritious lunch program can be fully realized even though the decision is in the hands of the elected president Prabowo Subianto.

"I don't want to think that it will be left for later after Prabowo Subianto is inaugurated, but I think the free meals program is a good program," he said.

Beware of Overdue Debt

On a separate occasion, Program Director of the Institute for Development and Economics Finance (Indef) Eisha Maghfiruha Rachbini in a public discussion on Thursday, July 4, 2024, revealed that it was necessary to watch out for maturing government debt, especially for the next government program.

He said that based on data from the Ministry of Finance as of April 30, 2024, government debt due in 2025 reached Rp800.33 trillion.

There is also a portion of debt due in 2025, namely in the form of Government Securities (SBN) amounting to 88.28 percent and loans amounting to 11.72 percent.

This amount is almost double compared to the debt due in 2024 which reached Rp424.29 trillion.

"This actually requires vigilance in the midst of a fantastic government program carrying out program financing plus maturing debt," he said in an online discussion.

Based on data from our APBN as of April 2024 which was released in May by the Ministry of Finance, the debt composition as of April 30 2024 reached Rp8,338 trillion.

The amount of debt is 38.64 percent of gross domestic product (GDP) or below the safe limit of 60 percent of GDP in accordance with Law Number 17 of 2003 concerning State Finance.

The debt portion consists of state securities amounting to 87.94 percent or reaching Rp7.333 trillion and loans amounting to 12.06 percent or Rp1,005 trillion.

The majority of government debt comes from within the country with a proportion reaching 71.18 percent.

IKN and Free Meals Suck Up the State Budget

The July 7 2024 edition of Tempo Magazine wrote about the construction of the IKN and the free meals program costing a huge amount of money. According to Minister of Finance Sri Mulyani, in the first four months of 2024, the realization of the State Budget (APBN) for IKN has reached Rp5.5 trillion or around 13.7 percent of the set ceiling.

In 2024, the government will allocate IKN an amount of Rp40 trillion. However, if calculated as a whole, the state budget disbursed to IKN projects has reached Rp72.5 trillion.

Meanwhile, the Ministry of Public Works and Public Housing recorded that the total funds used for IKN under their authority were Rp79.8 trillion until May 31, 2024.

Minister of Public Works and Public Housing (PUPR) Basuki Hadimuljono said that funds had been absorbed for 104 work packages, 25 of which had been completed. "This is equivalent to 41.3 percent of the total work package," said Basuki some time ago.

The Nutritious Meals program, previously called the Free Lunch program, also require large budgets. In the 2025 State Budget Plan (RAPBN), the government has prepared Rp71 trillion to carry out the program in stages.

Prabowo targets free food and milk for 82.9 million children from pre-school to high school students, as well as pregnant women.

ANTARA | TEMPO

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