JAKARTA (Reuters) -Indonesia’s additional budget of 100 trillion rupiah ($6.14 billion) for its programme to give free meals to school children this year will add nearly 2 percentage points to the country’s growth, an aide to President Prabowo Subianto said on Friday.
Prabowo’s signature free meal programme began earlier this month and had initially targeted reaching about 17.5 million people this year, at a cost of 71 trillion rupiah ($4.36 billion).
Indonesia’s gross domestic product growth target this year is 5.2%.
Hashim Djojohadikusumo, Prabowo’s brother and close adviser, on Friday told a forum the president had agreed to top up the budget by 100 trillion rupiah.
Indonesia’s finance ministry said on Thursday the programme’s budget of 171 trillion would reach about 40 million people in 2025. The head of the agency running the project said two weeks ago that Prabowo wanted the additional budget so that meals could be served to nearly 83 million people by year-end, more than a quarter of the population.
The free school meals scheme helped deliver Prabowo an approval rating of nearly 81% in poll this month, based on his first 100 days in office.
But financial markets in Indonesia have been concerned about the cost of the programme, the centrepiece of Prabowo’s election campaign, warning additional debt to fund it could affect the country’s recent hard-won reputation for fiscal prudence.
Hashim said the extra budget would come from spending cuts that Prabowo had ordered his government to make earlier this month.
Indonesia’s finance ministry said the spending cuts would amount to 306.7 trillion rupiah, equivalent to about 8% of the total approved spending this year of 3,621.3 trillion rupiah.
Hashim said Prabowo’s other flagship programme of building 3 million affordable homes per year could be funded by investors through the issuance of housing bonds as well as involving state-owned banks to provide mortgages with longer tenors of up to 30 years.
($1 = 16,295.0000 rupiah)
(Reporting by Stanley Widianto; Additional reporting by Stefanno Sulaiman; Editing by Martin Petty)
