The State’s Fiscal Capacity to Finance Government Programs

The State’s Fiscal Capacity to Finance Government Programs

The state’s capacity to finance various government programs faces significant challenges. On the one hand, fiscal space must be maintained to ensure fiscal sustainability, while on the other hand, the government is implementing major priority programs that require substantial funding, such as the Free Nutritious Meals (Makan Bergizi Gratis/MBG) program, defense equipment expenditure, and the Red-and-White Village/Urban Village Cooperatives (Koperasi Desa/Kelurahan Merah Putih). In 2026, state expenditure is allocated at approximately IDR 3,842.7 trillion, while Transfers to Regions (Transfer ke Daerah/TKD) have declined significantly from the previous year to approximately IDR 692.9 trillion. This situation occurs amid continued economic pressures, while the government is expected to sustain economic growth and meet the needs of public services.