Budget efficiency is being widely discussed, especially in relation to government policy. This efficiency policy is stated in Presidential Instruction (Inpres) Number 1 of 2025 concerning Expenditure Efficiency and the Implementation of the State and Regional Budget for the 2025 Fiscal Year, issued on January 22, 2025.
The Head of the Presidential Communications Office (PCO), Hasan Nasbi, said that efficiency was not applied to the basic needs of employees, public services, and social assistance. However, budget cuts were made for ceremonial offices, overseas seminars, and year-end agendas that the public viewed as budget-consuming. Hasan dared to ensure that tuition fees, college operating costs, scholarships, and KIP (Student Identity Card) for college students were not reduced from the budget.
Implementation of the Budget Efficiency Policy
The latest news, as quoted by kompas.id, Prabowo is targeting a budget efficiency of up to 44 billion US dollars. It’s equivalent of 750 trillion IDR in the first year of his leadership. The purpose of this efficiency is to finance the Free Nutritious Meals and “inject” BPI Danantara. He said that this efficiency would be carried out in three rounds.
The first round is savings from the State Treasurer Budget Section (BA BUN) item amounting to IDR 300 trillion. BA BUN is a budget item that is directly managed by the Minister of Finance and is not under the budget item of a particular ministry or agency (K/L).
The second round comes from the results of budget cuts across all ministries and agencies. That were just completed as of February 14, 2025. This is in accordance with Presidential Instruction Number 1 of 2025. The budget sweep was carried out down to unit 9 or detailed expenditure items. The budget efficiency was initially targeted at IDR 306.7 trillion, but increased to IDR 308 trillion. Later, IDR 58 trillion from the efficiency will be returned to 17 Ministries/Institutions. It is not yet known which Ministries/Institutions will receive the budget return. Thus, the efficiency that Prabowo pocketed from the second round left IDR 250 trillion.
The third round is additional targeted revenue from state-owned enterprise (SOE) dividends. In this round, the efficiency target is to reach IDR 300 trillion by 2025. Of this amount, IDR 100 trillion will be returned to SOEs in the form of state capital participation (PMN).
Objectives and Responses to Budget Efficiency Policies
Wihadi Wiyanto, Deputy Chairman of the Budget Committee of the House of Representatives from the Gerindra Party faction, explained that the budget efficiency results would not only be used for MBG and Danantara. The government would “return” a budget of IDR 58 trillion to 17 Ministries/Institutions. This is come from the efficiency results that had been carried out in the second round. Wihadi explained that the funds would be used to increase the budget for school improvement programs. They would also support food security and more.
In response, Paramadina University economist Wijayanto considered the budget savings figure that Prabowo presented in his speech to be very confusing because it came out of nowhere, thus questioning the source of the massive savings. Wijayanto is also worried that these massive and sudden budget savings will have a negative impact on the Indonesian economy.
Assessing Budget Efficiency Policies
In fact, budget efficiency in an organization, as is done at the level in Presidential Instruction Number 1 of 2025, has a good purpose: so that resources are managed more wisely, not squandered. Thus, the expenses incurred will be more productive for the progress of the organization.
On paper, budget efficiency is ideal. Cuts are made to things that are considered to have no direct impact on progress and welfare, such as ceremonial events, overseas seminars, and year-end agendas.
In practice, obstacles are often encountered. For example, even though education costs are not cut, the efficiency policy can have an impact on other aspects, such as research or institutional development. In fact, research and development have many benefits for organizations, especially in increasing competitiveness through innovation and also improving the quality of products and services. Besides, changing the figures for efficiency in a short period of time will create uncertainty for long-term planning.
Important Considerations Before Implementing an Efficiency Policy
Before implementing budget efficiency, careful analysis is needed. Innovation should not be hampered by reduced operational costs. An organization consists of interrelated units. This means that before deciding to save, the domino effect on various units in the organization must be considered.
However, efficiency should not only focus on cost reduction. Organizations must look for new sources of income. Organizations must balance savings with investment for growth.
Every saving must have a clear strategic purpose. Otherwise, efficiency will only be a reduction in costs without real benefits for the company or stakeholders. Organizations must seriously sort and choose between what cannot be absent to achieve strategic goals and what is simply a luxury of desire. Thus, existing resources can be used effectively and efficiently.
Efficiency should be the momentum to change the bureaucratic culture which is often considered wasteful and ineffective. Cutting budgets for things that are considered non-essential, such as office ceremonies, overseas seminars, and year-end agendas, shows an effort to shift the focus from symbolic and ceremonial activities to more substantive activities with a direct impact on the welfare of the community.
For a company, budget efficiency is the right time to evaluate whether activities that have been carried out periodically add value or not. If not, they should be abolished.
# Budget Efficiency # Presidential Instruction (Inpres) Number 1 of 2025 #Budget Cutting #Free Nutritious Meals (MBG) #BPI Danantara #innovation #culture
