Prabowo Administration Cuts Non-Productive Spending, Realizes Rp308 Trillion in Savings
Jakarta – Indonesian President Prabowo Subianto’s administration has achieved Rp308 trillion (approximately $18 billion USD) in savings during its first year by implementing stringent cuts to non-productive spending across government ministries, and agencies. The move is aimed at bolstering fiscal efficiency and mitigating the risk of corruption, according to a statement released by the Presidential Secretariat on Thursday.
Addressing Budget Inefficiencies
President Prabowo emphasized that the savings stemmed from a thorough review of central government expenditures, identifying and eliminating wasteful allocations. He expressed concern that without these cuts, a significant portion of the funds would have been vulnerable to misuse. “I believe that if this Rp308 trillion had not been cut, it would have led to corruption,” Prabowo stated. Antara News reported.
ICOR and Economic Efficiency
The President highlighted Indonesia’s high Incremental Capital Output Ratio (ICOR), currently at 6.5, which is considerably higher than that of neighboring countries. This elevated ICOR indicates inefficiencies in the Indonesian economy, equivalent to roughly $75 billion from a state budget nearing Rp3,700 trillion.
Targeted Spending Cuts
The government’s austerity measures are focused on reducing expenditures related to ceremonial events, office supplies, and non-essential off-site meetings and seminars. Prabowo noted that these areas often fail to contribute meaningfully to critical objectives such as poverty reduction and job creation. Routine procurement practices, including the annual repurchase of office equipment, are also under review. VOI
Reallocation of Funds to Productive Programs
The realized savings are being redirected to support productive programs, including the Free Nutritious Meal (MBG) program, aimed at improving the nutritional well-being of the population. President Prabowo indicated that further savings are possible through tighter budget controls and the implementation of innovative working arrangements.
Exploring Flexible Work Arrangements
The administration is considering adopting flexible work arrangements, such as shorter workweeks and increased remote work opportunities, to further reduce operational costs. Prabowo cited examples of other countries, including the Philippines and Pakistan, that have successfully implemented four-day workweeks. He also pointed to the positive experience of remote work during the COVID-19 pandemic as a potential model for future implementation, suggesting that up to 75% of employees could potentially work from home.
Commitment to Fiscal Discipline
President Prabowo’s administration has demonstrated a strong commitment to fiscal discipline and transparency, aiming to strengthen the national economy and ensure that government programs deliver tangible benefits to the Indonesian people. Bernama