Purbaya Cuts MBG Funds If Oil Price Reaches Safe Threshold

Jakarta, CNBC Indonesia – Finance Minister Purbaya Yudhi Sadewa has opened the option of making savings in the MBG budget for free nutritious meals if world oil prices surge to US$92 per barrel as a result of the Iran–Israel–US conflict, which could push the state budget deficit beyond the safe threshold to as high as 3.6% of GDP.

“We have run the exercise that if oil prices average US$92 for a year, the deficit would be 3.6% or more,” Purbaya said in his Jakarta office on Friday, 6 March 2026.

“If that happens, we will take steps to ensure it does not occur. Where could savings come from? For instance, savings in MBG,” he asserted.

“Nevertheless, MBG budget savings will not touch the ceiling for its main function, i.e., providing meals to schoolchildren, pregnant women, and the elderly.

“Meanwhile other budgets, such as procurement of goods, would become targets for savings or have their allocations cut if the deficit widens due to the rise in oil prices rather than increasing the price of subsidised fuel.

“The MBG programme is clearly good, but we want to guard against spending that does not directly support the food aspect. For example, buying motorcycles—if all SPPG funds were replaced with motorcycles, they’d be happy; I would be the one to lose. And for example if we buy computers, all SPPG would be given computers,” he said.

“In addition to MBG savings should the deficit widen, Purbaya said he would also trim budgets for infrastructure projects that can be carried over into multiple years. For instance, the Ministry of Public Works. There may be expenditures that can be shifted to next year. Various programmes they have, such as bridges and schools,” he said.

“As is known, MBG’s budget for this year amounts to Rp 335 trillion with a target of 82.9 million recipients. This budget is higher than 2025’s Rp 71 trillion with a target of 17.9 million recipients.”