OECD urges Indonesia to raise tax ratio to fund free meal program

The Organisation for Economic Co‑operation and Development (OECD) said on 7 December 2025 in Jakarta that Indonesia needs to improve its tax‑to‑GDP ratio to support government priorities. Cyrille Schwellnus, head of the OECD desk for Indonesia and the Philippines, made the remarks.

Indonesia’s tax ratio is around 10 % of Gross Domestic Product (GDP), which the OECD considers low for financing public investment and expanding social assistance such as the free nutritious meal (Makan Bergizi Gratis, MBG) program. The OECD suggested widening the tax base by cutting value‑added tax (VAT) exemptions and, if needed, modestly raising rates to increase revenue without harming growth.

Broadening the tax base and modest rate adjustments would allow the government to meet spending needs without increasing the debt‑to‑GDP ratio or budget deficit, according to the OECD. The organization noted that Indonesia’s fiscal discipline has kept macro‑economic stability, but cautioned against letting debt ratios rise.