ECONOMIC OPPORTUNITIES AND FISCAL CHALLENGES OF INDONESIA'S FREE NUTRITIOUS MEAL PROGRAM (MBG)

Abstract

The Free Nutritious Meal Program (Program Makan Bergizi Gratis/MBG), Indonesia's most ambitious social nutrition intervention since independence, was launched by President Prabowo Subianto in January 2025 with an initial budget of IDR 71 trillion (approximately USD 4.4 billion). Targeting 466 million beneficiaries at full scale by 2028 at an estimated cost exceeding IDR 820 trillion annually (23.4% of the state budget), MBG represents a paradigm shift in Indonesian social policy with profound economic and fiscal implications. This study employs a mixed-methods approach—combining fiscal impact modeling, computable general equilibrium (CGE) simulation, and qualitative policy analysis—to examine the program's economic opportunities across agricultural value chains, employment generation, human capital formation, and regional development, as well as its fiscal sustainability challenges including crowding-out effects, inflationary risks, and debt sustainability concerns. Drawing on international comparative evidence from Brazil, India, Ghana, Japan, and Mexico, the study finds that MBG's fiscal multiplier (1.21–1.52) justifies significant economic returns, but the program's unprecedented budgetary scale (2.7–23.4% of APBN across phases) creates structural fiscal risks requiring immediate institutional safeguards. A policy optimization framework—the Sustainable Nutritious Meal Investment (SNMI) model—is proposed, recommending phased implementation, mandatory local procurement, independent quality monitoring, and fiscal ceiling mechanisms to balance economic opportunity realization against long-term fiscal integrity