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Rp30 Trillion Cash Aid: The Role of Stimulus Amid Economic Slowdown

The Prabowo administration is expanding fiscal stimulus by launching additional cash aid worth Rp30 trillion (approximately USD 1.8 billion) to be distributed from October through December 2025.
This programme targets 35 million beneficiary families, covering approximately 140 million people, as an effort to sustain consumption amid economic pressures and a slowdown in government spending.

Ongoing Stimulus Package
This additional stimulus complements the Rp61 trillion fiscal package rolled out in the first half of 2025, which includes electricity discounts, rice assistance, and insurance for gig economy workers.
Furthermore, the government is also preparing internship funding for 100,000 fresh graduates to ease pressure in the weakening labour market.

The primary objective is straightforward: to sustain consumer purchasing power to prevent further decline amid global pressures and stagnant budget absorption.

Execution Challenges and Effectiveness
The launch of this stimulus occurs amid complex political and bureaucratic dynamics.
Following the change of Finance Minister last month, government spending realisation has reached only about 60% of the budget target by September 2025, with several major ministries such as Public Works, Agriculture, and the National Food Agency having absorbed less than 50% of their respective budgets.

This delay demonstrates that execution constraints remain a weak point in Indonesia's fiscal policy, despite relatively ample budgetary space.
The additional Rp30 trillion stimulus will help arrest the decline in consumption; however, its actual impact on growth depends heavily on the speed and precision of disbursement.

Regional and Global Context
Indonesia's step aligns with several other Southeast Asian countries that are beginning to return to expansionary fiscal policies to support domestic economies.
Thailand, for instance, has just prepared a USD 1.4 billion package for food subsidies and household assistance, amid cost-of-living pressures and slowing exports.

Globally, trade tensions between the United States and China continue to weigh on the manufacturing and export sectors in the region.
Indonesia, with considerable dependence on commodities and foreign demand, is seeking to rebalance sources of growth through domestic consumption and investment.

Growth Prospects and Policy Direction
The government is targeting economic growth in the range of 6–8% during President Prabowo's term through 2029.
However, projections from international institutions remain more conservative, with the IMF estimating 4.9% growth for 2025–2026, in line with the historical average of the past decade.

To drive near-term momentum, the government has also channelled a liquidity injection of USD 12 billion to state-owned banks, with the aim of accelerating credit disbursement and maintaining GDP growth of around 5.5% in the fourth quarter.

This step underscores pro-growth fiscal policy direction; however, it also highlights that structural challenges such as formal job creation, productivity improvements, and accelerated budget execution remain key to achieving sustainable growth above 5%.