Jakarta. Secretary General of The International Economic Association (IEA) Lili Yan Ing acknowledged President Prabowo Subianto’s budget efficiency policy as a positive step but stressed the need for transparency in reallocating the savings.

“The goal is good, as it aims to cut spending on non-essential expenses like official travel, comparative studies, or ceremonial events. That’s a good step,” Lili said after attending a discussion session at the Indonesia Economic Summit at the Shangri-La Hotel in Jakarta on Wednesday.

However, the public’s main concern is where the savings will be redirected. “If the funds are allocated to productive activities that support society and businesses, this decision will have a positive impact. But if the direction is unclear, there is a risk of stagnation in development,” she said.

Government spending is a crucial component of Indonesia’s GDP, playing a significant role in strategic sectors such as infrastructure, education, and healthcare. Lili said ensuring clarity in the reallocation of funds is key to making the policy beneficial to the economy.

President Prabowo has ordered Rp 306.69 trillion ($18.9 billion) in budget cuts for 2025, with the funds redirected to priority programs. The efficiency measures are expected to continue through the end of 2025, targeting up to Rp 750 trillion in savings—21 percent of the 2025 state budget—including reallocating state-owned enterprise (SOE) dividends.

A significant portion of the savings will support the Free Nutritious Meals (MBG) program, which is projected to cost Rp 375 trillion ($24 billion) over Prabowo’s administration. Additionally, the government plans to direct around Rp 375 trillion into Danantara, a state-owned investment superholding set to launch on Feb. 24. Danantara will manage assets of major SOEs, including Bank Mandiri, BNI, PLN, Pertamina, MIND ID, and Telkom.