Accelerated Government Spending Could Boost Indonesia's Economy

Accelerating government spending on priority programs is considered a solution to boost the national economy amidst sluggish economic conditions.

According to Telisa Aulia Falianty, Professor of the Faculty of Economics and Business, University of Indonesia (FEB UI), the government must focus on accelerating spending realization in sectors whose impact is directly felt by the community.

"Priority government programs must be pushed forward immediately. This is related to accelerating spending," he told Beritasatu.com on Sunday (May 25, 2025).

The Double Effect of Accelerating Government Spending

Telisa explained that accelerated spending would stimulate public consumption and have a multiplier effect on gross domestic product (GDP).

Although government spending contributes only around 8-10% to GDP, Telisa said this component plays a significant role in driving public consumption.

"Government spending is a driver of economic growth because it creates a ripple effect across other sectors," he explained regarding the acceleration of government spending to boost the Indonesian economy.

Budget Efficiency Considered to Have a Negative Impact

However, Telisa warned that budget efficiency policies actually put pressure on sectors that directly impact people's lives. She cited, for example, cuts to official travel, which also weakened the hotel and transportation sectors.

"What we know is that budget efficiency has a significant impact because much of the public's spending is driven by government spending," he said.

New Programs Have Not Yet Had a Real Impact

Telisa highlighted that the cut spending budget was actually diverted to new programs, such as Danantara and free nutritious meals (MBG), which to date have not had a real impact on economic growth.

"Programs like Danantara and MBG haven't had an immediate impact. In fact, the items they've reduced, such as business travel, have significantly stimulated economic activity," Telisa concluded, referring to the accelerated government spending to boost the Indonesian economy.

Source: Berita Satu

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