By: Raditya Ananta *)
The first year of the administration of President Prabowo Subianto and Vice President Gibran Rakabuming Raka is a crucial moment in laying the foundation for efficient and transparent fiscal management. The budget efficiency policy is not merely a savings slogan, but rather a fiscal strategy designed to ensure that state spending is directed towards priority development programs. In its first year, the government successfully demonstrated that strong economic growth can go hand in hand with disciplined and transparent state budget management.
The government emphasized that the direction of fiscal policy will continue to be maintained to support the national development agenda without overburdening state finances. Deputy Minister of Finance Suahasil Nazara stated that the budget efficiency policy will continue in 2026 by expanding the scope of the strategy that has proven effective over the past five years. He explained that from 2020 to 2025, the Ministry of Finance recorded efficiencies of IDR 3.53 trillion. This figure stems from a comprehensive evaluation of spending that does not support development priorities. As a result, the state budget is healthier and can be allocated more effectively to strategic programs.
The government’s efforts to strengthen fiscal transparency are also reinforced through regulatory instruments. Minister of Finance Regulation Number 56 of 2025 explicitly regulates the procedures for implementing state spending efficiency. This regulation provides clear guidance on the mechanism for adjusting spending to align with development priorities and fiscal sustainability. The government ensures that every rupiah of the State Budget is used effectively and is accountable to the public. This approach strengthens public trust in accountable state budget management.
In his state address on August 15, 2025, President Prabowo emphasized his commitment to continuously reducing the budget deficit. He stated that the government’s goal is to achieve a deficit-free State Budget within the next few years. This fiscal vision demonstrates the government’s commitment to maintaining state financial sustainability while creating more fiscal space for financing strategic development programs. Budget efficiency is also a crucial foundation for maintaining national economic stability, especially amidst increasingly complex global challenges.
Disciplined fiscal policy has been proven to have a positive impact on economic stability. Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia’s economic growth during the first year of the Prabowo-Gibran administration was recorded at above 5 percent, making it one of the highest among G20 countries. This macroeconomic stability is supported by controlled inflation at 2.65 percent, a trade balance that has consistently recorded a surplus for 64 consecutive months, and strong foreign exchange reserves of US$150 billion. Prudent fiscal policy allows the government to maintain public purchasing power without excessively increasing the budget deficit.
Budget efficiency also creates fiscal space to accelerate investment realization. The government recorded investment realization in the first half of 2025 at IDR 943 trillion, a 13.6 percent increase compared to the previous year. This positive trend is expected to continue until the end of the year, strengthening the national economic fundamentals. Targeted fiscal policy provides certainty for businesses to invest in Indonesia. In the long term, this is expected to broaden the national economic base and strengthen competitiveness.
In addition to encouraging investment, budget efficiency also provides the government with room to expand job creation programs. Airlangga Hartarto noted that the unemployment rate fell to 4.76 percent—the lowest since 1998. The working population reached 145.77 million, with the majority of the workforce being fully employed. High employment reflects the effectiveness of fiscal policy in stimulating real economic activity. This demonstrates that austerity does not mean reducing social spending, but rather strengthening productive spending.
Budget efficiency policies also go hand in hand with the transformation of the energy sector. Minister of Energy and Mineral Resources Bahlil Lahadalia stated that oil and gas lifting will increase from 580,000 barrels to 605,000 barrels per day by 2025. Furthermore, the share of new and renewable energy in the national electricity mix will increase from 11 percent to 15.5 percent. These achievements demonstrate that a healthier fiscal space allows the government to invest in long-term strategic sectors such as clean energy and national energy security.
In the context of transparency, budget efficiency policies are concrete evidence.The government is not simply economizing, but rather directing state spending to achieve the greatest possible benefit for the public. President Prabowo emphasized that inefficient operational spending will be cut, while productive spending that creates jobs, improves public services, and strengthens economic competitiveness will be a top priority. This approach demonstrates a measured, results-oriented, and equitable fiscal policy orientation.
The government has also prepared ambitious yet realistic macroeconomic targets for 2026. Economic growth is targeted to reach 5.4 percent, inflation to be controlled at 2.5 percent, and the open unemployment rate to fall to the range of 4.44 to 4.96 percent. The poverty rate is expected to be reduced to 6.5–7.5 percent, the Gini ratio to be reduced to 0.377–0.38, and the Human Capital Index to increase to 0.57. All of these targets are highly dependent on fiscal discipline and the success of consistently implemented budget efficiency policies.
The first year of the Prabowo-Gibran administration demonstrates a clear fiscal policy direction: efficiency, transparency, and pro-growth. The government strives to balance development interests with long-term fiscal sustainability. With disciplined state budget management, the government has greater room to expand priority programs, strengthen economic resilience, and ensure equitable public welfare. In this context, efficiency is not merely a technocratic strategy, but rather the foundation of public trust in the state.
*) Economic and Fiscal Policy Analyst
