A free school meal program pushed by the government of Indonesian President Prabowo Subianto is shaking the country's economy as a whole, straining public finances.
Free Meal Budget Snowballs Amid Corruption and Food Poisoning
According to Reuters on the 9th, the Jakarta Composite Index (JCI) closed the previous day at 5,873.37, down about 32% so far this year. The Indonesian currency, the rupiah, also weakened past 18,000 rupiah per dollar (about 1,510 won), sliding roughly 8% this year to fall below even its level during the 1998 financial crisis.
The free meal program of the Prabowo government is cited as the backdrop for this market instability. President Prabowo, who took office in October 2024, has since last year implemented a "Free Nutritious Meal Program" that provides one meal a day to as many as 83 million people, including students, infants and toddlers, and pregnant women. As the government pursued a rapid rollout, the number of students actually benefiting is reported to have swelled to 62.5 million within a year and a half of implementation.
But as the program's scale grew, the fiscal burden snowballed along with it. In the end, the government belatedly made adjustments in May, cutting the free meal budget from 335 trillion rupiah (about 27.805 trillion won) to 268 trillion rupiah (about 22.244 trillion won) and even considering suspending operations during school vacations.
Even so, critics point out that the post-cut budget still amounts to about 7.0% of the entire national budget, more than the infrastructure and health budgets.
Criticism also follows that the quality of the meals themselves is excessively low. The current per-meal cost of Indonesia's free meals is only 10,000 rupiah (about 860 won). In January, 16,109 people were harmed by mass food poisoning, and earlier this month Dadan Hindayana, head of the National Nutrition Agency who oversaw the meal program, was arrested by prosecutors on corruption charges of steering meal operation contracts to a foundation he owns.
War, Surging Oil Prices, and a Downgraded Credit Outlook
Rising international oil prices due to the U.S.-Iran war have increased the burden of energy subsidies, adding another strain on public finances. Investor anxiety has deepened further amid concerns that Indonesia's principle of keeping the deficit "within 3% of gross domestic product (GDP)," the foundation of the country's economic management, could collapse.
International credit rating agency Fitch recently lowered Indonesia's sovereign credit rating outlook from "BBB Stable" to "BBB Negative." Assessments follow that this is an unusually fast rating adjustment even among major Southeast Asian nations.
As the situation worsened, the government responded with measures such as cutting the meal budget and raising the base rate, but no clear effect has yet been seen.
Public opinion has also turned. In major cities including the capital Jakarta, university students are reported to have taken to the streets, continuing anti-government protests with slogans that "the nation is heading toward bankruptcy."
Why There? Government Clash Over 80 Trillion Won in Education Spending
