How Does Indonesia’s 2025 Budget Reform Reflect the Logic of Austerity Governance?

Mujibur Rahman Khairul Muluk Muluk; Sajida Sajida

doi:10.64423/arpa.v33i1.76

Authors

Mujibur Rahman Khairul Muluk Department of Public Administration, Faculty of Administrative Science, Universitas Brawijaya, Indonesia Author https://orcid.org/0000-0002-5562-8263
Sajida Sajida Department of Public Administration, Faculty of Social and Political Science, Universitas Sebelas Maret, Indonesia Author

DOI:

https://doi.org/10.64423/arpa.v33i1.76

Keywords:

austerity governance, budget efficiency, public service reform

Abstract

The year 2025 saw Indonesia enacting a very authoritative presidential directive through Presidential Instruction No. 1/2025, encompassing a huge efficiency boost on the part of government ministries and intergovernmental transfers alike. While this drastic measure is couched in the language of technocratic necessity, it also relates to larger global trends in austerity governance-were decline in state expenditure is legitimized by notions of management and modernization. This article analyses the construction of budget efficiency as a priority strategy in the area of fiscal discourse and its implications for nonprioritized state actors such as provincial governments, law enforcement agencies, and actors in the MSME sector. The study does a selective review of approximately thirty articles from reputed journals to derive credible insights into the context around important national policy documents, centers its discussion on the Nota Keuangan APBN 2025 and Presidential Regulation No. 12/2025 on RPJMN 2025-2029. These documents are considered discursive materials that do not simply elaborate fiscal preferences but also constitute overarching principles of efficiency within governance. Some results show bifurcated pathways: In flagship programs and strategic sectors, protection and growth occur, while non-priority expenditures face restrictive contraction. This reallocation may present opportunities for several short-term efficiency gains, but it has the adverse effect of centralizing fiscal authority, limiting local discretion, and narrowing institutional capacity in components of utmost importance to inclusion and accountability. These processes are aggressively defined as coercive efficiency in the paper, whereby austerity is secondarily entrenched through technical discourses and rearrangement of institutions. This means that Indonesia’s post-2025 reform is not just a temporary adjustment but an actual structural embedding of austerity within governance along the fiscal trajectory of the country.

Author Biography

Mujibur Rahman Khairul Muluk, Department of Public Administration, Faculty of Administrative Science, Universitas Brawijaya, Indonesia

Lembaga Akreditasi Mandiri Bidang Ilmu Sosial, Politik, Administrasi dan Komunikasi;

Department of Public Administration, Faculty of Administrative Science, Universitas Brawijaya

Jl. MT. Haryono No.163, Ketawanggede, Kec. Lowokwaru, Kota Malang, Jawa Timur 65145

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