"Public Outcry Over Fiscal Crisis: Free Meal Program Shakes Economy, Puts Indonesia on High Alert"

National Finances Shaken by Free Meal Program
Stock Market Plunge and Rupiah Depreciation
Protests Spread with Chants of "The Country Is Going Bankrupt"

The free school meal policy promoted by Indonesian President Prabowo Subianto is turning into a fiscal burden and shaking the entire economy.

The ambitious welfare expansion policy was embroiled in corruption scandals from the outset, and, combined with the rise in oil prices due to the U.S.-Iran war, has led to an exodus of foreign investors, a plunge in the stock market, and a depreciation of the currency. In addition, growing conflict between the government and the business sector is rapidly undermining investment sentiment.

Indonesia President Prabowo Subianto's free meal policy is exacerbating fiscal deterioration and increasing the overall economic burden. Photo by EPA Yonhap News

Aftermath of Free Meals: 16,000 Food Poisoning Cases and Budget Corruption

According to Al Jazeera and Reuters on July 9 (local time), the previous day, the Jakarta Composite Index (JCI) closed at 5,873.37, having plunged about 32% so far this year. The Indonesian rupiah exchange rate also surpassed 18,000 rupiah per US dollar (about 1,510 won), dropping about 8% this year alone. This is even lower than during the 1998 currency crisis.

The Prabowo administration's free school meal policy is cited as one of the main factors fueling recent market instability. President Prabowo, who took office in October 2024, has promoted a "free nutritional meal program" since last year, providing one meal a day to up to 83 million people, including students, infants, and pregnant women. As the government rapidly expanded the program, the actual number of student beneficiaries reportedly increased to 62.5 million within a year and a half of implementation.

However, as the scale of the program grew, so did the fiscal burden. In May, the government belatedly responded by reducing the free meal budget from 335 trillion rupiah (about 27.805 trillion won) to 268 trillion rupiah (about 22.244 trillion won) and considering suspending the program during school holidays.

Even after the reduction, the budget still accounts for about 7.0% of the total national budget, which is considered excessive, surpassing the budgets for infrastructure and healthcare. In addition, a mass food poisoning incident in January affected 16,109 people, and last month, the head of the National Nutrition Agency was arrested for embezzlement of the meal program budget.

Free school meals provided at a school in Banda Aceh, Indonesia. Photo by EPA Yonhap News

Fiscal Burden Snowballs with Soaring Oil Prices... Protests Spread as "The Country Is Heading for Bankruptcy"

The rise in international oil prices due to the U.S.-Iran war has further increased spending on energy subsidies, adding to the fiscal burden. Fitch Ratings recently revised Indonesia's sovereign credit outlook from 'BBB Stable' to 'BBB Negative,' warning of potential fiscal deterioration.

Conflict between the Prabowo administration and the business sector is also weighing on investment sentiment. President Prabowo has pressed major companies to expand investment, but some firms are delaying new investments or moving capital overseas.

Public opinion has also shifted. In major cities such as the capital Jakarta, university students are holding anti-government protests, chanting slogans that "the country is heading for bankruptcy." Experts point out that the combination of fiscal burdens and a worsening business environment is increasing the economy's vulnerability to external shocks.

This content was produced with the assistance of AI translation services.