Indonesia's Prabowo Sets 2026 Growth Target at 5.4%, Boosts Free-Meal Spending.

Indonesian President Prabowo Subianto has outlined his budget plans for 2026, with a 7% increase in government spending and a 5.4% growth target. He is prioritizing free meals and defense, with plans to double spending on the program. The budget aims to address the country's economic challenges and support key sectors.

Indonesian President Prabowo Subianto has presented his budget plans for 2026, aiming for a 7% increase in government spending and a 5.4% growth target. The budget, which was announced on August 15, 2025, prioritizes social welfare programs such as the free meals initiative, while also allocating funds for defense and infrastructure development.

Prabowo's budget proposal includes a significant increase in spending on the free meals program, which aims to provide meals to 82.9 million students, children, and pregnant women. The program, which has already been implemented on a smaller scale, is expected to be expanded to reach the full-scale target. This initiative is part of the president's broader strategy to reduce poverty and improve food security in the country [1].

The budget also allocates funds for defense and infrastructure development. Prabowo has emphasized the importance of modernizing Indonesia's military hardware and utilizing the country's natural resources for economic growth. The budget includes provisions for the development of commodity-linked downstream industries and efforts to boost energy self-sufficiency [2].

Prabowo's budget proposal has been met with mixed reactions from investors and financial professionals. While some see the increased spending on social programs as a positive step towards addressing economic inequality, others are concerned about the potential impact on fiscal discipline. The budget aims to maintain a deficit of 2.48% of gross domestic product, which is below the 3% ceiling set in the aftermath of the financial crisis of the late 1990s [3].

The Indonesian rupiah has shown signs of recovery, gaining almost 4% from its April low. The budget should not negatively impact the currency as long as the government remains committed to maintaining fiscal discipline and keeping the deficit below 3% of gross domestic product [4].

In conclusion, President Prabowo Subianto's 2026 budget proposal aims to address Indonesia's economic challenges and support key sectors. The focus on social welfare programs and infrastructure development is expected to have a significant impact on the country's economic growth and poverty reduction efforts. However, the success of the budget will depend on the government's ability to maintain fiscal discipline and manage the increased spending effectively.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-15/prabowo-targets-narrower-deficit-while-touting-social-spending
[2] https://en.antaranews.com/amp/news/373521/indonasias-independence-aims-to-free-people-from-poverty-prabowo
[3] https://www.yahoo.com/news/articles/indonasias-2026-budget-designed-country-085913264.html
[4] https://www.bloomberg.com/news/articles/2025-08-14/a-trader-s-guide-to-president-prabowo-s-first-indonesian-budget