President Prabowo Defends Budget Cuts to Curb Misuse of State Funds

Jakarta: President Prabowo Subianto said Indonesia is cutting non-productive spending across ministries and agencies to close loopholes for misuse of state funds, as part of a broader push to improve fiscal efficiency.

“When we first carried out efficiency measures, we saved Rp308 trillion from the central government. Where did it come from? From expenditures that did not make sense. I believe that if this Rp308 trillion had not been cut, it would have led to corruption,” Prabowo said in a video statement released by the Presidential Secretariat in Jakarta on Thursday, as quoted from Antara, Friday March 20, 2026.

The president said the Rp308 trillion in savings resulted from an initial review of central government spending, aimed at identifying inefficiencies and unnecessary allocations.

He warned that leaving such funds unchecked would burden state finances without delivering tangible benefits to the public.

Prabowo also highlighted Indonesia’s high Incremental Capital Output Ratio (ICOR), currently at 6.5, significantly above levels seen in neighboring countries.

He said the elevated ICOR reflects inefficiencies of around 30 percent, equivalent to roughly USD75 billion from a state budget nearing Rp3,700 trillion.

Spending cuts are targeting items such as ceremonial events, office supplies, and off-site meetings and seminars, which the president said often fail to address core issues like poverty reduction and job creation.

The government is also reviewing routine procurement practices, including frequent purchases of computers and office equipment, which are often repeated annually.

Prabowo stressed that substantial savings remain possible by tightening control over such non-essential expenditures across government institutions.

To further reduce operational costs, the government is considering new working arrangements, including shorter workweeks and wider adoption of remote work.

“I see other countries reducing the workweek from five days to four, such as the Philippines and Pakistan. Then there is work from home. During COVID, we implemented it successfully. I think we can do that again. Perhaps 75 percent of employees could work from home,” he said.