Jakarta. Vid Adrison, an economist at the Institute for Economic and Social Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI), has warned of potential budget misallocations in the 2026 state budget (APBN) that could weigh on regional economic growth.

He said the massive Rp 335 trillion ($20 billion) allocation for President Prabowo Subianto's flagship Free Nutritious Meal (MBG) program may come at the expense of other critical items, including central government transfers to regional governments (TKD).  

“This large budget cuts into other items. In 2025, regional transfers fell by 5.6 percent. Without caution, local economies may underperform, and regional governments may have to raise local taxes to cover the shortfall,” Vid told Beritasatu.com on Tuesday.

Vid added that although National Development Planning Minister Suharso Purbaya has proposed raising TKD from Rp 650 trillion to Rp 693 trillion, the figure remains about 20 percent lower than in 2025, as part of the budget is diverted to populist programs.

“If many people are starving, feeding them helps. But if most people already eat two to three times a day, extra meals won’t make them eat five or six times. This is why there’s a risk of inefficiency. The focus should be on the bottom 10 percent who truly need it,” Vid said.

Vid said about 73 percent of regional budgets still rely on central transfers.. “A 20 percent cut in central transfers would have a huge impact on regions,” he stressed.

He urged the government to review the 2026 APBN priorities to ensure it targets vulnerable groups while maintaining fiscal sustainability at the local level.