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🇮🇩 Indonesia /Economy & Trade

Indonesian Think Tank Urges Review of Ambitious Free Meal Program Amid Economic Headwinds

From Tempo · (6m ago) Indonesian Critical tone

Translated from Indonesian, summarized and contextualized by DistantNews.

TLDR

  • Indonesia's Economic and Business Faculty at the University of Indonesia (LPEM FEB UI) recommends a review of the Free Nutritious Meal (MBG) program.
  • The recommendation stems from global economic pressures including rising oil prices, a weakening rupiah, and limited empirical evidence of the program's economic impact.
  • LPEM FEB UI suggests reallocating the MBG budget, which is the largest government expenditure at Rp 335 trillion in 2026, towards more targeted social assistance like direct cash transfers (BLT) to protect household purchasing power.

The Institute for Economic and Social Research (LPEM) at the University of Indonesia's Faculty of Economics and Business has issued a critical assessment of the government's Free Nutritious Meal (MBG) program, recommending a thorough review. In their Indonesia Economic Outlook Q2-2026 report, LPEM researchers Jahen F. Rezki and colleagues highlight significant economic headwinds, including the impact of the Middle East conflict on global oil prices and a depreciating rupiah, as key factors necessitating fiscal prudence.

LPEM's analysis points to the substantial budget allocated to MBG, projected at Rp 335 trillion for 2026, which constitutes over 10% of the central government's total spending. This figure dwarfs the estimated Rp 140.7 trillion needed for an eight-month direct cash transfer (BLT) program for lower-middle-income households. The researchers argue that while social protection for the poor and vulnerable is crucial for maintaining purchasing power, the MBG program's broad scope may not be the most efficient use of resources, especially given current fiscal pressures.

Semakin menguatkan alasan untuk melakukan evaluasi dan realokasi guna menciptakan ruang fiskal di tengah tekanan yang ada.

— Jahen F. RezkiLPEM UI researchers' statement in the Indonesia Economic Outlook Q2-2026 report advocating for an evaluation and reallocation of the MBG program due to fiscal pressures.

The report suggests a shift towards more targeted interventions, such as BLT, supported by an integrated and up-to-date beneficiary database. This approach, LPEM notes, aligns with Indonesia's past policy precedents, like the 2022 reallocation of fuel subsidies to social assistance programs. While acknowledging MBG's positive spillover effects on the livestock sector and property credit growth, LPEM emphasizes the need for a strategic fiscal review to ensure optimal resource allocation amidst economic uncertainties.

Indonesia pun memiliki preseden kuat untuk mengadopsi langkah serupa, mengingat kebijakan pada tahun 2022 yang mengalihkan subsidi BBM ke program bantuan sosial.

— Jahen dan kawan-kawanLPEM UI researchers referencing past Indonesian policy decisions to support their recommendation for reallocating funds from the MBG program.
DistantNews Editorial

Originally published by Tempo in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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