The Free Nutritious Meals (MBG) program is a priority of the Prabowo-Gibran administration, with a target of reaching 82 million beneficiaries, including schoolchildren, toddlers, and pregnant women. However, CELIOS warns that allocating IDR 71 trillion from the education budget to MBG could strain state finances and narrow fiscal space for other priority programs. Nailul Huda, CELIOS Director of Economics, stressed, “If the MBG program uses mandatory education spending, the quality of national education could be disrupted, and employment opportunities in the education sector could be reduced by up to 723,000 positions, including teachers and lecturers.”
The economic impact of MBG is also projected to be limited. Huda noted that using education funds would add only IDR 7.21 trillion to GDP, while the state budget deficit could balloon. Bhima Yudhistira stressed, “If this MBG program continues until it reaches 100% coverage in 2029, the state budget deficit is projected to reach 3.34% of GDP. Even assuming 7% economic growth, the deficit is still forecast to exceed the constitutional limit.” Dyah Ayu added, “The only options are to raise the tax ratio or take on more debt to fund MBG,” given that Indonesia’s projected tax ratio remains low compared with its long-term target.
As a solution, CELIOS advocates creative funding strategies. Huda recommends directing the program to families in need through the PKH scheme, while Bhima stressed, “Do not raise the VAT rate to 12% to fund priority programs. There are many things that can be done, including a wealth tax, which could contribute IDR 81.6 trillion in a single implementation. Do not sacrifice the already hard-pressed middle class to fund MBG.”
The Free Nutritious Meal (MBG) program is a flagship initiative of the Prabowo-Gibran administration, aiming to reach 82 million beneficiaries, including schoolchildren, toddlers, and pregnant women. However, CELIOS warns that allocating IDR 71 trillion from the education budget for MBG could strain state finances and limit fiscal space for other priority programs. Nailul Huda, CELIOS Director of Economics, emphasized, “If the MBG program uses mandatory education spending, the quality of national education is at risk and it could reduce employment opportunities by up to 723 thousand positions in the education sector, including teachers and lecturers.”
The economic impact of MBG is also projected to be limited. Huda noted that using the education budget would only add IDR 7.21 trillion to GDP, while the state deficit could expand significantly. Bhima Yudhistira stressed, “If this MBG program continues until it reaches 100% coverage by 2029, the state budget deficit is projected to reach 3.34% of GDP, even with an optimistic 7% economic growth assumption, the deficit would still exceed constitutional limits.” Dyah Ayu added, “The only options are to raise the tax ratio or increase debt to fund MBG,” given that Indonesia’s projected tax ratio remains far below long-term targets.
As a solution, CELIOS advocates for more creative funding strategies. Huda recommends targeting support to families in need through the Family Hope Program (PKH), while Bhima emphasized, “Do not raise the VAT to 12% to fund priority programs. There are many alternatives, such as a wealth tax, which could contribute IDR 81.6 trillion in a single implementation. The government should not burden middle-class citizens, who are already struggling, to finance MBG.”
Contact Person: Nailul Huda (0857-4223-2974)