24 July 2025

Prabowo’s economic agenda faces a fiscal stress test

Indonesian President Prabowo Subianto’s first 100 days have seen a shift towards initiatives driven by national security and ambitious populism, most notably the Free Nutritious Meals program, along with rice and fuel subsidies and tax breaks, all aimed at stimulating consumption and achieving self-sufficiency. Yet slowing growth, weak tax revenues and efforts to limit VAT increases are tightening the budget. Meanwhile, the creation of new ministries and the Danantara sovereign wealth fund have added overhead costs and off-budget spending. Together, these measures strain Indonesia’s fiscal space and raise concerns about the long-term sustainability of Prabowo’s security-focused agenda.