Indonesia’s Austerity Measures Spark Protests Amid Concerns Over Budget Cuts and Sovereign Fund

Thousands of Indonesians, led by students, took to the streets of Jakarta on 21 February, voicing their frustration with President Prabowo Subianto’s government over sweeping budget cuts and the redirection of billions to a new sovereign wealth fund, Danantara. The protests, marked by placards and chants demanding a review of fiscal policies, unfolded against a backdrop of growing public unease about the administration’s austerity measures and its flagship free nutritious meals programme.

The demonstrations, captured in stark images of crowds facing police barricades, reflect a deepening divide between the government’s long-term economic ambitions and the immediate needs of a population grappling with unemployment and shrinking purchasing power. At the heart of the discontent is a plan to save US$44 billion through state budget cuts, with a significant portion—$20 billion—earmarked for Danantara, a fund touted as a driver of megaprojects in renewables, manufacturing, and food production. Meanwhile, $24 billion is allocated to the free meals initiative, a key campaign promise of Prabowo’s presidency.

A Fiscal Tightrope: Cuts and Contradictions

President Prabowo announced the fiscal consolidation plan on 15 February, outlining a multi-phase approach to achieve the ambitious savings target. The first phase saw Rp 300 trillion (US$18.4 billion) slashed from a discretionary fund intended for unforeseen events in the 2025 state budget. An additional Rp 250 trillion was cut from the budgets of ministries and agencies, while Rp 200 trillion is expected to come from dividends of state-owned enterprises (SOEs). These measures, ordered early in the year, caught many by surprise, especially given Prabowo’s earlier signals of pursuing an expansionary fiscal policy.

Analysts note that the government faced limited options to fund its priorities. Raising tax revenue would require extensive reforms—a slow and complex process—while increasing debt issuance risked exacerbating the Rp 800 trillion in maturing public debt that Prabowo must address in his first year. Austerity, though a pragmatic choice, has been described by critics as overly harsh, with potential ripple effects on public services and economic stability.

“We didn’t expect the cuts to be this severe,” said Dedi Santoso, a 22-year-old student protester in Jakarta. “Efficiency is one thing, but when basic needs are at stake, people feel abandoned.” The sentiment is echoed across social media, where hashtags like #KaburAjaDulu (“just flee already”) have gained traction, reflecting public disillusionment with the government’s priorities.

Danantara: A Vision for Tomorrow or a Risky Gamble?

Central to the controversy is Danantara, the sovereign wealth fund set to launch on Monday, which the government envisions as a catalyst for long-term economic growth. With $20 billion diverted from budget savings, the fund aims to bankroll 15 multibillion-dollar projects across sectors critical to Indonesia’s future, including renewable energy and food security. Prabowo has drawn comparisons to Singapore’s Temasek, promising that Danantara will replicate such success by fostering sustainable development and attracting global investment.

Yet, for many Indonesians, these promises ring hollow. The immediate benefits of such megaprojects remain unclear, with sceptics questioning how much will “trickle down” to ordinary citizens. “The government talks of prosperity, but we’re struggling to afford food today,” said Mira Widjaja, a small business owner in Jakarta. “How does a fund help us now?”

Concerns are compounded by governance issues surrounding Danantara. A recently revised State-Owned Enterprises Law grants legal immunity to the fund’s administrators and other SOE leaders for business decisions made in good faith and without conflicts of interest. While intended to encourage bold decision-making, this provision has raised alarms about accountability, particularly given Indonesia’s history of weak anti-corruption measures and the frequent use of SOE positions for political patronage.

Comparisons to Malaysia’s 1MDB scandal, which saw billions siphoned off through mismanagement and corruption, are increasingly cited by critics. The fallout from 1MDB severely damaged Malaysia’s fiscal health and investor confidence, and many fear Danantara could follow a similar path if oversight remains inadequate. “Without robust checks and balances, this fund risks becoming a liability rather than an asset,” warned economist Rina Hartono in a recent commentary.

Free Meals Programme: A Promise Under Scrutiny

Alongside Danantara, Prabowo’s administration has allocated $24 billion to its free nutritious meals programme, a cornerstone of his campaign aimed at addressing malnutrition and supporting vulnerable communities. While the initiative has been welcomed in principle, its rollout amidst budget cuts to other essential services has sparked debate. Protesters argue that the programme’s funding should not come at the expense of broader public welfare, with some alleging that it serves more as a political tool than a genuine solution.

“We support feeding children, but not if it means hospitals or schools lose funding,” said Ani Lestari, a teacher who joined the Jakarta protests. The government has yet to provide detailed plans on how the programme will be implemented without straining already stretched resources, leaving room for speculation about its effectiveness.

Economic Fallout and Public Trust

The austerity measures have also drawn concern from the business community, which fears that economic growth could slow further without a robust stimulus from the administration. Indonesia’s economy, already grappling with global headwinds, faces additional pressure as consumer spending weakens. “The government needs to balance fiscal discipline with measures that protect jobs and purchasing power,” said Arif Budiman, a chamber of commerce representative. “Half-hearted efforts won’t cut it.”

If confirmed, the redirection of savings to Danantara and the meals programme may reshape Indonesia’s economic landscape in the long term. However, as of now, there is no concrete evidence to suggest that these initiatives will deliver the promised benefits soon enough to alleviate public hardship. The government’s commitment to fiscal discipline is evident, but its ability to maintain public trust while pursuing such ambitious—and divisive—projects remains in question.

As protests continue and public discontent simmers, President Prabowo faces a critical test of leadership. Balancing the immediate needs of Indonesians with the long-term vision of economic transformation is no easy feat, and the administration’s early missteps in communication have only deepened the rift. The promise of Danantara’s megaprojects and the free meals programme may hold potential, but without transparent governance and a clear plan to address short-term pain, public support could erode further.

For now, the streets of Jakarta remain a battleground of ideas and frustrations, with students and citizens alike calling for a government that prioritises their struggles over distant dreams. Whether Prabowo can bridge this gap—or whether austerity will define his presidency—remains to be seen. As one protester’s sign read, “Tomorrow’s wealth means nothing if we starve today.”