Indonesia's President Draws Criticism for Economic and Democratic Governance Failures

Indonesia's president, Prabowo Subianto, took office in October 2024 promising 8% GDP growth, the eradication of child malnutrition, and continued democratic governance. By mid-2026, each of those pillars is under strain. The fiscal deficit has ballooned to its highest non-pandemic level in two decades [1]. The rupiah has fallen to a record low of 17,513 per US dollar [2]. Democracy watchdogs have downgraded the country to the edge of electoral autocracy [3]. And in August 2025, at least 11 people died during anti-government protests — the deadliest since the fall of Suharto in 1998 [4].

The question facing Southeast Asia's largest economy is whether these are the growing pains of an ambitious new administration or signs of structural failure across both economic management and democratic governance.

The Fiscal Reckoning

Prabowo entered office with an audacious economic target: 8% annual GDP growth, nearly double the 5% rate that Indonesia has sustained for over a decade [5]. Economists at BMI (a Fitch Solutions unit) and the East Asia Forum have called the target "quixotic," noting that Indonesia has not achieved growth above 6.2% since 2010 [6].

Source: World Bank Open Data

Data as of Dec 31, 2024CSV

The more immediate concern is the government's fiscal position. In 2025, Indonesia's budget deficit hit 2.92% of GDP — approaching the 3% legal ceiling imposed after the 1997 Asian financial crisis [1]. Revenue came in 8% below projections, and total tax receipts actually fell 1% year-over-year despite 5% economic expansion [7]. Indonesia's tax-to-GDP ratio remains stuck at roughly 10%, far below the ASEAN average [8].

The spending side tells an equally striking story. In early 2026, the cumulative deficit through February surged 342% compared to the same period in 2025, with year-over-year spending growth of 41.9% [9]. The 2026 budget was built on assumptions — oil at $70 per barrel and the rupiah at 16,500 per dollar — that were already outdated by the time it was enacted [10].

Source: Bloomberg / Ministry of Finance

Data as of Jan 1, 2026CSV

The single largest driver of new spending is the Makan Bergizi Gratis (MBG) free school meals program, Prabowo's signature campaign promise. The program's 2026 allocation of Rp 335 trillion ($20.3 billion) consumes approximately 44% of the entire education budget [11]. It targets 82.9 million beneficiaries and claims to have created over 600,000 jobs through a supply chain of 61,000 small and medium enterprises [12]. But the program has faced serious operational problems: food safety failures prompted the development policy blog Devpolicy to describe the initiative as going "from nutritious to poisonous," and at one point budget utilization stood at just 7% [13][14].

To fund MBG and other social programs, the Ministry of Public Works budget was cut by more than 70% [15] — a decision that directly undermines the infrastructure development that had been the cornerstone of Jokowi-era economic policy.

Debt Service: The Quiet Crisis

While Indonesia's total government debt of 40.46% of GDP remains moderate by regional standards — lower than Malaysia's 64% or Thailand's 63.5% — the debt service ratio tells a different story [16].

Source: FULCRUM / Ministry of Finance

Data as of Mar 1, 2026CSV

In 2014, debt service consumed 23.9% of state revenue. By 2024, that figure had risen to 42.3%, and projections for 2026 exceed 47% [9]. The international safe threshold is generally considered 25-30%. Debt interest payments alone are budgeted at Rp 599.4 trillion for 2026, up 13% from 2025 [10]. Each $1 increase in oil prices adds Rp 10.3 trillion in spending but yields only Rp 3.5 trillion in revenue — a structural vulnerability in a commodity-dependent economy [9].

Finance Minister Purbaya Yudhi Sadewa has maintained that the debt remains "within a safe threshold" [16]. Critics counter that this framing ignores the trajectory: the ratio has nearly doubled in a decade, and Prabowo's spending plans provide no clear path to reversal.

The Rupiah Under Pressure

The currency has become the most visible barometer of investor confidence. The rupiah depreciated roughly 8-10% against the dollar in the first half of 2025, briefly breaching 17,000 per dollar in June 2025 [2]. By mid-May 2026, it plunged to 17,513 — its weakest level in history [2].

Source: World Bank Open Data

Data as of Dec 31, 2024CSV

Several forces are driving the decline. US Federal Reserve interest rates have drawn capital toward dollar-denominated assets globally. The Trump administration's imposition of 32% "reciprocal" tariffs on key Indonesian exports has compounded the pressure [17]. But domestic policy decisions have contributed as well: the $30 billion free meals program, moves perceived as weakening central bank independence, and new restrictions on foreign companies have all shaken investor sentiment [18]. In May 2026, MSCI deleted 18 Indonesian equities from its index, triggering additional foreign selling [2].

For Indonesia's urban middle class — savers, importers, and anyone with dollar-denominated liabilities — the currency erosion translates directly into higher costs. Inflation climbed to 5.2% year-over-year in June 2025, breaching Bank Indonesia's 2-4% target band [18].

Democratic Institutions Under Strain

The economic picture, however contested, involves metrics that can be debated. The democratic picture involves structural changes to institutions that are harder to reverse.

The KPK

The Corruption Eradication Commission (KPK), once considered one of Indonesia's most trusted institutions, was substantially weakened by a 2019 law that removed many of its powers, converted its investigators to civil servants, and created a government-appointed supervisory body [19]. Under Prabowo, the erosion has continued: a 2025 law shielding state-owned enterprise executives from corruption charges further narrowed the KPK's jurisdiction [20]. In 2025, 15 KPK detention center staff were arrested for extorting detainees — an episode that illustrated how far the institution has fallen from its reformist origins [20].

The Constitutional Court

The Constitutional Court's credibility suffered a major blow in 2023, when it lowered the minimum age for vice-presidential candidates, enabling Gibran Rakabuming Raka — President Jokowi's son and Prabowo's running mate — to join the ticket. Chief Justice Anwar Usman, who presided over the case, is Jokowi's brother-in-law and Gibran's uncle [21]. Usman was removed as chief justice but retained his seat on the bench [21].

The TNI Military Law

On March 20, 2025, parliament passed amendments to Law No. 34/2004 on the Indonesian military (TNI), allowing active-duty officers to hold civilian government positions without resigning their commissions [22]. The original law limited military personnel to 10 security-related posts; the amendment expanded this to include the Attorney General's Office, the National Disaster Mitigation Agency, the National Counterterrorism Agency, the State Intelligence Agency, and others [23]. The Civil Society Coalition for Security Sector Reform warned the law "risks undermining civilian supremacy" [22]. Human Rights Watch called the amendments a direct threat to rights [24].

The law was passed behind closed doors with minimal public deliberation [22]. Within days, protests erupted across 69 locations. Between March 21 and 28, 2025, at least 83 people were injured and 161 arrested [4].

Press Freedom

National Police Regulation No. 3 of 2025, issued on March 10, requires foreign journalists to obtain police clearance before reporting in Indonesia — a measure widely seen as targeting coverage of West Papua [25]. ASEAN Parliamentarians for Human Rights called it "a direct attack on press freedom" [25].

The domestic press environment has deteriorated in parallel. Indonesia's Journalist Safety Index fell to 59.5% in 2025, down from the prior year, with 67% of surveyed journalists reporting some form of violence — up from roughly 40% in 2024 [26]. During the TNI Law protests alone, 18 journalists experienced violence. Reporter Rama Indra of Beritajatim was beaten by police while filming officers attacking protesters; his phone was confiscated [27]. At the offices of Tempo, one of Indonesia's most respected investigative outlets, journalist Francisca Christy Rosana received a pig's head and decapitated rats as intimidation [27].

A revised Broadcasting Law includes Article 50B(2)(c), which prohibits the exclusive airing of investigative journalism — a provision critics say directly undermines public accountability reporting [27].

The Democracy Scorecard

Source: Freedom House

Data as of Mar 1, 2025CSV

The cumulative effect of these changes shows up across international democracy indices. Freedom House scored Indonesia at 56 out of 100 in 2025, down from 65 in 2015 — a steady nine-point decline over a decade [3]. The country is classified as "Partly Free." Its Political Pluralism and Participation sub-score dropped from 4 to 3 points in the most recent assessment, driven in part by a 60% rise in unopposed regional election candidates [3].

The V-Dem Democracy Report for 2025 places Indonesia in what it calls a "grey zone" — no longer meeting minimum standards of electoral democracy [28]. Scholars Jaffrey and Warburton have argued Indonesia is edging toward "competitive authoritarianism," a system where elections occur but the playing field is systematically tilted toward incumbents [4].

For context, Indonesia's 2015 Freedom House score of 65 placed it solidly in the "Free" category — a status earned through the reformasi movement that followed Suharto's fall in 1998 and produced five peaceful transfers of presidential power. The current trajectory represents a reversal of those gains.

The Case for the Defense

Prabowo's supporters and administration officials advance several counterarguments. Extreme poverty has fallen to its lowest level in Indonesian history [29]. The MBG program, whatever its implementation challenges, has built a supply chain involving 61,000 MSMEs and cooperatives, directing government spending toward small businesses rather than large contractors [12]. At the World Economic Forum in Davos in January 2026, Prabowo delivered a special address signaling Indonesia's continued engagement with global institutions [29].

The Danantara sovereign wealth fund, which consolidates state-owned enterprise assets under a single holding entity, is projected to manage assets potentially exceeding $1 trillion [29]. Proponents argue it will allow more strategic deployment of state capital. The government has also announced an MSME debt write-off program targeting small businesses that collectively account for roughly 61% of GDP, and set a target of 3 million affordable housing units per year [29].

On regional security, Indonesia has maintained its traditional role as a consensus-builder within ASEAN, and Prabowo's military background is cited by supporters as lending credibility to defense partnerships [29].

Critics of the criticism also note the external headwinds. US tariffs, the Federal Reserve's rate cycle, and post-pandemic demand contraction in key commodity markets are all factors beyond Jakarta's control [6]. Some analysts argue that judging a presidency barely 18 months old by the standards applied to Jokowi's full decade is premature [30].

External Shocks vs. Policy Choices

Disentangling global headwinds from domestic policy failures is central to any fair assessment. The rupiah's weakness is partly a function of dollar strength and US monetary policy — pressures felt across emerging markets [17]. Commodity price volatility, particularly in palm oil and coal, affects Indonesian revenues regardless of who occupies the presidential palace.

But several fiscal stresses are clearly policy-driven. The decision to nearly double MBG spending to Rp 335 trillion while cutting infrastructure by 70% was a domestic choice [11][15]. The creation of Danantara, which diverts state-owned enterprise dividends away from the Ministry of Finance, directly reduced government revenue [7]. The decision to limit a planned 1% VAT increase to luxury goods — along with implementation problems in the new Coretax digital tax system — contributed to the 2025 revenue shortfall [7].

The TNI Law, the police regulation on foreign journalists, and the SOE immunity law are not responses to external shocks. They are deliberate legislative choices with clear institutional consequences.

Who Can Check the President?

Indonesia's 1945 constitution, as amended during reformasi, provides several institutional checks on presidential power. The DPR (parliament) can impeach a president for violations of law, but Prabowo commands an overwhelming legislative coalition — the largest in post-Suharto history [4]. The Constitutional Court can review legislation, but its independence has been compromised by the 2023 age-limit ruling and subsequent appointment dynamics [21].

The military, historically the kingmaker in Indonesian politics, is now being integrated more deeply into civilian governance through the TNI Law rather than serving as an independent check [22]. Civil society organizations and the press, while active, face increasing legal harassment through the ITE (Electronic Information and Transactions) Law — a statute used to charge students for posting memes and journalists for critical reporting [27].

That leaves the street. The August 2025 protests, in which motorcycle taxi driver Affan Kurniawan was killed by a police tactical vehicle, drew comparisons to 1998 [4]. But the state's response — police violence, mass arrests, and military intimidation that left 11 dead and hundreds injured — suggests a government prepared to absorb the political cost of repression rather than make concessions [4].

The realistic precedents are 1998, when economic collapse and mass protests forced Suharto's resignation, and 2004, when Indonesia's democratic institutions were strong enough to produce a genuine electoral rotation. The current situation falls between these extremes: the economy is strained but not collapsing, and democratic institutions are weakened but not abolished. Whether the trajectory leads to stabilization or further deterioration depends on decisions — about spending, legislation, and the treatment of dissent — that remain within the president's control.

What Comes Next

Indonesia's 270 million citizens — including the smallholder farmers affected by commodity policy reversals, urban savers watching their purchasing power erode, and civil society actors facing legal threats — are living with the consequences of these choices in real time. The country's next major political test is the 2029 presidential election, which will determine whether the democratic infrastructure built over a quarter century of reformasi retains enough integrity to produce a meaningful contest.

The economic and democratic pressures are not separate stories. Fiscal mismanagement erodes the legitimacy that democratic leaders need to govern; democratic erosion removes the accountability mechanisms that might correct fiscal mismanagement. In Indonesia, both processes are now underway simultaneously.