Indonesia’s Free Meals Programme

JAKARTA (Reuters) – Indonesia’s additional budget of 100 trillion rupiah ($6.14 billion) for its programme to give free meals to school children this year will add nearly 2 percentage points to the country’s growth, an aide to President Prabowo Subianto said on Friday.

Prabowo’s signature free meal programme began earlier this month and had initially targeted reaching about 17.5 million people this year, at a cost of 71 trillion rupiah ($4.36 billion).

Indonesia’s gross domestic product growth target this year is 5.2%.

Hashim Djojohadikusumo, Prabowo’s brother and close adviser, announced that the president had agreed to increase the budget by 100 trillion rupiah during a forum on Friday.

The finance ministry reported that the programme’s budget of 171 trillion rupiah will reach about 40 million people by 2025. Additionally, the head of the agency managing the project stated that Prabowo aims for the added budget to serve meals to nearly 83 million people by year-end, which is over 25% of the population.

The free school meals scheme has contributed to Prabowo achieving an 81% approval rating in a recent poll, reflecting his performance in the first 100 days of his presidency.

However, Indonesia’s financial markets are worried about the programme’s costs, a key element of Prabowo’s election campaign. Concerns loom that additional debt to fund it could undermine the country’s reputation for fiscal prudence.

Hashim reassured that the extra budget would come from spending cuts that Prabowo had commanded his government to implement earlier this month.

The finance ministry indicated these cuts would total 306.7 trillion rupiah, which is about 8% of the approved spending this year, estimated at 3,621.3 trillion rupiah.

Hashim mentioned that Prabowo’s other flagship initiative, the construction of 3 million affordable homes per year, could potentially be supported by investors through housing bonds, as well as involve state-owned banks offering mortgages with tenors lasting up to 30 years.

($1 = 16,295.0000 rupiah)