Prabowo chairs limited cabinet meeting on inflation, manufacturing PMI and state budget efficiency
President Prabowo led a limited cabinet meeting discussing inflation, the manufacturing PMI, foreign capital flows and efficiency of state budget spending at the end of 2026.
On Tuesday, 3 November 2026, President Prabowo Subianto chaired a limited cabinet meeting of the Kabinet Merah Putih (the Red-and-White Cabinet) at Istana Merdeka (the Merdeka Palace) in Jakarta, according to a report by Setkab RI (the Cabinet Secretariat). The session focused on inflation, strengthening manufacturing, foreign capital inflows and management of the APBN (state budget) as the year draws to a close.
Finance Minister Suahasil Nazara said realization of state revenue and spending through the end of October was on plan. The government needs to collect more than roughly 600 trillion rupiah (about US$36 billion) in November and December, while state spending of about 990 trillion rupiah (about US$60 billion) still needs to be executed. Prabowo asked all ministries and agencies to accelerate budget absorption while maintaining efficiency and good governance.
He said inflation stood at 3.23%, within the government's target of 2.5% with a one-percentage-point tolerance. The Purchasing Managers' Index (PMI) for manufacturing rose from around 52 to 54 in October 2026, signaling businesses were starting to add production as demand was projected to increase.
Foreign capital continued to flow into domestic financial markets through Surat Berharga Negara (SBN, government bonds) and Sekuritas Rupiah Bank Indonesia (SRBI, Bank Indonesia rupiah securities).
How inflation and PMI read the economy
The 3.23% inflation figure matters because it reflects how quickly prices for goods and services bought by households are rising. When inflation stays within the target band, the government and the central bank have room to protect purchasing power without resorting to emergency measures that could weigh on growth. A narrow inflation target also signals that fiscal and monetary policy coordination is aimed at stabilizing prices, especially for food commodities, energy and goods distribution. In practice, inflation control depends not only on interest rates but also on product availability, smooth distribution and market confidence in the rupiah.
The manufacturing PMI is an index compiled from surveys of business operators in the industrial sector. Readings above 50 are usually interpreted as expansion, while readings below 50 indicate contraction. The rise from around 52 to 54 means respondents expect orders, production, raw material purchases and labor needs to move upward. Investors often use the index as an early reflection of factory conditions, exports and domestic demand before official economic growth data are released.
Foreign capital flows through SBN and SRBI are linked to rupiah stability and the country's financing needs. SBN are government debt securities, while SRBI are used by Bank Indonesia (the central bank) to manage rupiah liquidity. Inflows can support financing and improve risk perception, but they also make financial markets sensitive to global interest rates, geopolitical sentiment and policy shifts by central banks in advanced economies.
State budget absorption in November and December is a routine agenda that always attracts scrutiny. In many fiscal years, government spending rises toward the end of the period because programs, procurement and transfers to regions must be completed. The challenge is not simply to spend the budget, but to ensure spending produces measurable outputs, avoids inefficiency and remains consistent with work plans set at the start of the year. Year-end meetings therefore serve as checkpoints on whether priority programs are running, whether budget absorption matches results, and whether the risk of work piling up in December can be avoided.
What it means for prices and public spending
For the public, the news touches everyday concerns: food prices, transport tariffs, production costs and jobs in factories. Contained inflation helps households avoid sudden spikes in the cost of living. But if price pressures come from energy, food or supply chains, the effect can be felt immediately in daily spending. Coordination among the government, the central bank and regional authorities is therefore important to keep supply steady and prevent excessive price increases.
For businesses, a stronger PMI signal may mean demand is beginning to recover and investment can be planned more easily. For investors, foreign capital flows and the state of the APBN are inputs for assessing rupiah risk and returns on financial instruments. For taxpayers and recipients of state programs, efficiency in year-end spending determines whether the budget truly delivers public services, infrastructure or social assistance, rather than merely exhausting allocations. Public oversight of state spending also matters so society can judge whether funds produce schools, roads, health services or aid programs that actually reach their intended recipients.
What matters next is consistency in data and execution. Inflation can change if global food prices rise or the exchange rate comes under pressure. November and December spending must be supervised so procurement quality is not sacrificed. Meanwhile, sustaining foreign capital inflows depends on fiscal policy credibility, political stability and the direction of global interest rates.
