On August 15, 2025, Indonesian President Prabowo Subianto took center stage in Jakarta, unveiling his administration’s bold vision for Southeast Asia’s largest economy. In a pair of closely watched speeches—a State of the Nation address and his first budget proposal—Prabowo outlined sweeping plans to wield state power against corruption, invest in social welfare, and steer Indonesia toward a future defined by both fiscal discipline and ambitious growth.
Prabowo, who assumed office in October 2024, addressed parliament with a $234 billion budget proposal for 2026, a 7.3% increase over the previous year’s spending. The budget targets a 5.4% GDP growth rate, with inflation projected at 2.5% and the rupiah expected to average 16,500 per US dollar. According to Reuters, Prabowo forecasted a deficit of 2.48% of GDP for 2026, pledging to eliminate the budget shortfall and achieve a balanced budget within three years. “We want to reduce this deficit to as small as possible and it is my hope that one day, in 2027 or 2028, I will stand before this assembly to convey we have succeeded in having a state budget with no deficit,” he told lawmakers, signaling his intent to maintain financial guardrails even as he pursues populist policies.
Yet, Prabowo’s vision isn’t confined to numbers and fiscal targets. He declared his intention to unapologetically use the power of the state to crack down on corruption and illegal activities that have long plagued Indonesia’s resource-rich economy. According to The Straits Times, he promised a broad crackdown on illegal mining and oil palm plantations, revealing that 1,063 illegal mines are operating without proper licenses and that powerful individuals—including active and former military or police generals—are implicated. “There is no reason the government wouldn’t take action for the sake of the people,” Prabowo asserted, earning a standing ovation from parliament.
Corruption has been a persistent thorn in Indonesia’s side, and Prabowo made it clear that his administration would not hesitate to pursue major cases. The government, he revealed, has already saved about 300 trillion rupiah by slashing expenses prone to corruption, such as unnecessary overseas junkets and excessive meetings. “We will not hesitate in unravelling major corruption cases,” he said during his budget announcement, a message that resonated with citizens weary of graft and mismanagement.
The president’s anti-corruption drive is closely linked to his broader economic strategy, which seeks to harness Indonesia’s abundant natural resources for national benefit. Prabowo outlined plans to spur downstream industries in critical minerals like nickel and copper—key ingredients in renewable energy projects—aiming to boost export proceeds and reduce reliance on raw commodity exports. As The Straits Times noted, this approach could help Indonesia capture more value from its natural wealth, though some economists cautioned that sectors like nickel processing may not generate as many jobs as hoped. “We have to do more to drive the sectors that absorb a lot of labour, such as agriculture,” observed Dr. Ninasapti Triaswati of the University of Indonesia.
In a nod to the country’s farmers, fishermen, and rural communities, Prabowo announced plans to provide ample financing support through the establishment of 80,000 cooperatives nationwide, ensuring that small producers obtain the best prices for their goods. He also proposed expanding edible crops to improve food self-sufficiency and establishing 20 “gifted schools” for the top 1% of Indonesia’s students, signaling a commitment to both economic inclusion and educational excellence.
One of the most ambitious—and controversial—components of Prabowo’s agenda is his flagship free meals program. Launched in January 2025, the initiative aims to combat malnutrition and stunted growth by providing meals to children and pregnant women. The president pledged to fully implement the program for 82.9 million beneficiaries, up from the current 20 million, with a budget allocation of 335 trillion rupiah (about $20.74 billion). “Our goal... is to be free from poverty, free from hunger, free from suffering,” Prabowo declared in response to critics who have questioned the program’s sustainability.
Defence spending is also set to rise sharply, with a 37% increase to 335.3 trillion rupiah in 2026 earmarked for modernizing Indonesia’s military hardware. Prabowo highlighted the country’s deposits of rare earths—critical for modern defense technologies—as a strategic asset. Meanwhile, he announced a bold ambition to transition Indonesia entirely to renewable energy within the next decade, or sooner, moving away from coal and other fossil fuels that currently supply more than half of the nation’s power. To support this shift, the budget includes 402.4 trillion rupiah for energy resilience, encompassing subsidies and incentives for renewables.
Notably, Prabowo’s budget proposes a 25% reduction in cash transfers to provincial and local governments, down to 650 trillion rupiah, a move likely intended to create more fiscal space for his signature programs. To bridge the budget gap, the administration plans to encourage “creative financing,” leveraging the newly established sovereign wealth fund Danantara and greater private sector involvement—though details remain sparse.
One conspicuous omission from Prabowo’s speeches was a renewed commitment to the capital relocation project, Nusantara, which was championed by his predecessor Joko Widodo. While the continued construction of Nusantara is included in the budget proposal, Prabowo’s silence on the issue has fueled speculation about the project’s future, especially as he prepares to host Indonesia’s 80th independence day celebrations in Jakarta rather than the new capital.
Indonesia faces economic headwinds, including US-imposed tariffs on imports and uncertainties in global markets. Yet, Prabowo’s administration appears determined to chart an independent course, balancing populist social spending with pledges of fiscal restraint. According to Maybank Indonesia economist Myrdal Gunarto, the budget is “structurally prudent,” though questions remain about how the projected surge in revenue will be realized. Bank Permata economist Josua Pardede noted that the 5.4% GDP growth target “assumes aggressive growth in investment and exports” despite ongoing geopolitical uncertainties.
For Prabowo, the stakes are high. His administration must deliver on ambitious promises while keeping Indonesia’s finances on solid ground. As Professor Wibisono Hardjo Pranoto of Surabaya University put it, “Spending more than the revenue number is fine. We need... to do effective allocation of the funds so we can service the debts.”
With a sweeping agenda, a hefty budget, and a pledge to root out corruption, President Prabowo Subianto’s first major policy rollout signals a new era for Indonesia—one that promises both opportunity and challenge as the nation charts its course into the future.