Indonesia’s Prabowo to present high-stakes budget plans as support slips

Indonesian President Prabowo Subianto is set to unveil his 2027 budget proposals on Friday, amid falling approval ratings and increasing investor skepticism. The former special forces commander took office in October 2024, promising to combat corruption, boost economic growth, and provide free meals to millions of children. However, his administration has faced challenges with a weakening currency, poor stock market performance, and concerns over overspending and central bank independence.

Prabowo's flagship free meals program has also been plagued by budget cuts and allegations of mismanagement.

The 2027 budget is a critical test of Prabowo's credibility in the eyes of global investors, especially after two years of policy uncertainties. Irman Faiz, an economist at Bank Danamon, noted that the market's tolerance for policy uncertainty has been diminishing. A recent poll revealed that Prabowo's approval rating has plummeted by 30 percentage points to 51% in just eight months, largely due to economic concerns and dissatisfaction with law enforcement.

One of the most significant policy announcements in Prabowo's tenure was his plans to centralize exports of critical natural resources under a new state-run entity, Danantara Sumberdaya Indonesia. However, his administration has since suggested that the entity might only have a supervisory role rather than taking full control, leaving investors uncertain about its precise function. Commodities traders and palm oil analysts will be closely watching Prabowo's address for any further clarification on the entity's role.

Prabowo's approval ratings have continued to decline, falling to 51%, according to a recent poll. The drop in support can be attributed to deteriorating economic conditions and concerns over the impact of his priority programs. Arya Fernandes, head of politics and social change at CSIS, emphasized that Prabowo will need to address these doubts and concerns, making the upcoming budget presentation a challenging task.