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INDEF economist says free meal program better than continuing new capital development

INDEF economist says free meal program better than continuing new capital development

TIME.CO, JakartaExecutive Director of the Institute for the Development of Economics and Finance (INDEF), Esther Sri Astuti, said the construction of Nusantara Capital City, or IKN, is a burden on the state budget. Esther said other programs, such as President-elect Prabowo Subianto’s free meal program, are also a burden on state funds, but no more than the new capital project.

“If I had a choice between the free lunch program or IKN, I would choose the free lunch,” she said on Wednesday, July 10, 2024.

Esther explained that the Prabowo-backed program will at least boost public consumption, which could improve GDP or economic growth.

The Indef Big Data team’s analysis found that 78 percent of Internet users said that IKN is a burden on the state budget due to the slow progress of private investment. The government initially promised to spend only about 20% of the state funds of the total Rp466 trillion needed for IKN.

However, the number will potentially increase as the IKN authority has submitted an additional financing of Rp29.8 trillion for 2025. Esther said the government should reconsider the capital transfer. She doubts whether the project proposed by President Joko Widodo or Jokowi will push Indonesia to finally become a developed country.

She also highlighted Jokowi’s statement that he would postpone the transfer of his position to IKN due to the unfinished infrastructure construction. Esther said that investors may be reluctant to invest in Nusantara if the construction of public facilities is not yet completed.

Esther urged the government to be cautious in managing the state budget, given the current decline in revenues. In addition, there is a debt maturity of Rp800 trillion during the government’s transition period from 2025 to 2027. The budget should be allocated to programs and projects that support economic growth.

Earlier, Finance Minister Sri Mulyani Indrawati explained that the government has allocated more than Rp72.5 trillion for the development of IKN. She hoped that the new capital would be ready to host the commemoration ceremony for Indonesian Independence Day on August 17.

ILONA ESTHERINA

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