Several economists met with former Vice President Jusuf Kalla to\ndiscuss the economic impacts of the United States-Iran conflict. Vid\nAdrison, an economist at the Institute for Economic and Social Research\n(LPEM) at the Faculty of Economics and Business, University of\nIndonesia, explained that one of the key concerns raised during the\ndiscussion was the increasingly constrained fiscal space.<\/p>\n
Vid stated that the Middle East conflict could affect Indonesia\nthrough two channels: rising energy prices that could trigger inflation,\nand economic slowdown that could reduce exports. The government, he\nsaid, must respond to these challenges through budget reallocation\ntowards more productive expenditure.<\/p>\n
\u201cOne option that could be considered is to reconsider the free\nnutritious meal programme (MBG),\u201d Vid said following the meeting at\nKalla\u2019s residence in South Jakarta on 8 March 2026. He noted that MBG\nrequires an extraordinarily large budget, approximately 8 per cent of\nthe state revenue and expenditure budget (APBN).<\/p>\n
However, based on data from the National Socioeconomic Survey\n(Susenas), only 15 per cent of the population expressed concern about\nhaving insufficient food. This means, Vid argued, the government could\nsave money by focusing the MBG programme on the 15 per cent of the\npopulation that genuinely needs it.<\/p>\n
Yose Rizal Damuri, Executive Director of the Centre for Strategic and\nInternational Studies, added that the government must also ensure\nadequate fuel supply. Therefore, he said, the government needs to\ndiversify fuel oil supply as quickly as possible.<\/p>\n
Yose also urged the government to provide accurate information to the\npublic. \u201cAdditionally, it is important to provide accurate and regular\ninformation to the public to calm the concerns that are currently\nemerging in society,\u201d he said.<\/p>\n
Meanwhile, Jusuf Kalla stated that the current economic situation is\ninfluenced by global conditions, past policies, and current policies.\nHowever, what can be intervened is current policy. He believes that when\nthe state budget faces a large deficit, the solution is to choose\nfinancing that can advance the country and increase revenues.<\/p>\n
According to Jusuf Kalla, the government must prioritise programmes\nthat can drive economic growth. \u201cFree nutritious meals (MBG) are\nimportant, military equipment purchases are important, cooperatives are\nimportant. But there are more important things,\u201d he said.<\/p>\n
Previously, Finance Minister Purbaya Yudhi Sadewa stated that the\ngovernment would take cost-saving measures to prevent the fiscal deficit\nfrom exceeding 3 per cent of Gross Domestic Product (GDP) amid the\ncurrent geopolitical situation. According to Purbaya, the state budget\ndeficit could reach 3.6 per cent if world crude oil prices reach US$92\nper barrel.<\/p>\n
The state treasurer indicated that this scenario would only occur if\nthe government did not intervene. Therefore, the government is\nconsidering spending cuts in several budget categories, one of which is\nthe free nutritious meal programme. \u201cIf that is the case, we will take\nsteps to prevent it from happening. Where can we cut spending? For\nexample, in the MBG programme,\u201d Purbaya said at his office on Friday, 6\nMarch 2026.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/budget-shadowed-by-geopolitics-economists-urge-budget-reallocation-1773035649", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }