The government’s move to push through regional budget cuts is drawing heat across the country, with demonstrations breaking out in several provinces. For many Indonesians, the issue is not just about numbers on a page—it’s about the survival of basic services and the risk of higher local taxes at a time when household budgets are already stretched.
Jakarta has argued that the cuts are necessary to keep the national deficit under control. The 2026 budget, announced earlier this month, promises fiscal discipline and avoids the introduction of new nationwide taxes. That reassurance, however, is of little comfort to local governments, which depend heavily on central transfers. With less money arriving from Jakarta, regional officials warn that they may have no choice but to hike local levies.
Public Outcry Over Regional Budget Cuts
Protests erupted soon after the announcement, with citizens voicing anger over the possible loss of school funding, health programs, and infrastructure projects. In many towns, regional budgets pay for the most visible parts of daily life, road repairs, clinics, and subsidies. Cuts in these areas are quickly felt, which explains why the backlash has been so immediate.
Local leaders have added their voices to the criticism. They argue that the policy risks widening the gap between Jakarta and the provinces. Some governors have openly questioned whether they can maintain services without either scaling back projects or leaning harder on taxpayers.
A Question of Priorities
The uproar comes at the same time the government is making bold spending promises elsewhere. Just last week, the Ministry of Cooperatives and SMEs announced a Rp335 trillion budget allocation to boost micro, small, and medium businesses. It was hailed as the largest commitment yet for the sector, expected to help create jobs and drive entrepreneurship.
That contrast has not gone unnoticed. On one hand, the state is cutting back transfers to local administrations. On the other, it is pouring money into specific national programs. Economists note that this reflects shifting priorities, but they also caution that the uneven spread of benefits may deepen frustration outside the capital.
