LPEM UI Recommends Review of MBG Programme
The Institute for Economic and Social Research at the Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), recommends that the Free Nutritious Meals (MBG) programme be reviewed. This is influenced by pressures from rising crude oil prices in the global market due to the war in the Middle East, a weakening rupiah exchange rate, and limited empirical evidence regarding the economic impact of the programme.
“This further strengthens the rationale for conducting an evaluation and reallocation to create fiscal space amid the existing pressures,” wrote LPEM UI researcher Jahen F. Rezki and colleagues in the Indonesia Economic Outlook Q2-2026 report.
In the report, the MBG programme has the largest budget at Rp 335 trillion in 2026, or about 10.7% of total central government expenditure. The MBG budget is also larger than the scenario of providing Direct Cash Assistance (BLT) for eight months at Rp 500,000 per month to lower- and middle-income households (up to the 50th income percentile), with a projected budget of Rp 140.7 trillion.
The BLT budget is only about half of the MBG allocation and energy subsidies and compensation totalling Rp 381.3 trillion. LPEM UI also suggests setting clear and effective policy targets by considering fiscal aspects and the multiplier effects of rising world oil prices.
Social protection for poor and vulnerable communities must be prioritised to maintain household purchasing power, while minimising the distribution of subsidies that miss their targets. Subsidies can be provided through BLT for those most in need, supported by an integrated and up-to-date beneficiary data system.
“Indonesia also has a strong precedent for adopting similar measures, given the 2022 policy that redirected fuel subsidies to social assistance programmes,” wrote Jahen and colleagues.
On one hand, MBG serves as a driver of growth in the livestock sector, which reached 7.78% year-on-year in the fourth quarter of 2025. The programme absorbs egg and broiler chicken production, in addition to domestic needs.
MBG also contributes to credit growth in the property sector, which reached 8.57% year-on-year in the fourth quarter of 2025. This is to encourage construction activities for Nutritious Meal Service Units (SPPG) to become kitchens.