# Indonesia Slashes Nusantara Capital Budget by 85% for 2026, Funds Shift to Welfare

> Indonesia's planned new capital, Nusantara, faces a sharp budget cut for 2026, with funds redirected to social welfare programs amidst skepticism and slower private investment.

By PrimaryBrief newsroom · Published 2026-10-21T11:59:39.198539Z
Canonical: https://primarybrief.com/article/indonesia-slashes-nusantara-capital-budget-by-85-for-2026-funds-shift-to-welfare-83a673d9

Indonesia's new capital project, Nusantara, saw its 2026 budget reduced to 6.3 trillion Indonesian rupiah, approximately $387 million USD, from 43 trillion rupiah, about $3.5 billion USD, allocated in 2024 [2][10][11][13]. This 85% decrease reallocates funds to social welfare initiatives, including a nationwide school meal program [2][13][20][21][22][23].

This shift in funding under President Prabowo Subianto's administration signals a change in financial priorities for the ambitious capital relocation. The budget reduction also highlights ongoing challenges for the project's funding model and its public perception, with some critics labeling Nusantara a "ghost city" due to low population and slow private investment [2][4][10][37].

## What the records show

The 2026 budget for Nusantara is approximately 6.3 trillion Indonesian rupiah, which is about $387 million USD [2][10][11][13]. This figure is a significant drop from the 2024 budget of 43 trillion rupiah, or about $3.5 billion USD [2][10][11][13]. The reallocated funds are now primarily designated for social welfare programs, such as a nationwide school meal initiative [2][13][20][21][22][23]. Presidential Regulation Number 79 of 2025 formally reclassified Nusantara from a "national capital" to a "political capital" [2][3][35]. This regulation aims for Nusantara to become the seat of government by 2028, and civil servant relocations are already underway [2][3][36][38]. The project intends to source 80% of its funding from private sector investment, but investor reluctance remains a concern [2][32]. As of mid-2025, around $4 billion in private sector investment or cooperation deals had been secured [2][31].

## Timeline

Presidential Regulation Number 79 of 2025 was issued, changing Nusantara's designation and establishing a goal for it to serve as the seat of government by 2028 [2][3][35][36][38]. By mid-2025, approximately $4 billion in private sector investment had been realized for the project [2][31]. The 2026 budget reflected a reduction in funding for Nusantara [2][10][11][13]. Civil servant relocations are currently in progress [2].

## What changed and for whom

Under President Prabowo Subianto's administration, the budget for Nusantara saw a substantial cut, a departure from earlier allocations [2][10][32]. This change means funds have been redirected to social welfare programs, including school meals, directly affecting citizens who benefit from these initiatives [2][13][20][21][22][23]. The reclassification of Nusantara from a "national capital" to a "political capital" by Presidential Regulation Number 79 of 2025 also altered its official status and future function [2][3][35]. Private investors continue to show reluctance, which affects the project's reliance on their financial contributions [2][32].

## What the subject has said publicly

Vice-President Gibran Rakabuming Raka and Finance Minister Purbaya Yudhi Sadewa have publicly denied claims that Nusantara is becoming a "ghost town," stating that development is on track [2][4][5][14]. President Prabowo Subianto has reiterated his commitment to the project [2][6][15][16][17][18][32]. Basuki Hadimuljono, the Head of the Nusantara Capital Authority, described the project as "irreversible" [2][7][8][9][19][24][25].

## What we could not confirm

PrimaryBrief could not confirm the specific breakdown of the 2026 budget reallocation beyond general social welfare programs, nor the detailed impact on particular construction phases in Nusantara. The exact number of civil servants who have already relocated to Nusantara could not be verified from the provided records. Specific names of private investors or detailed commitments beyond the aggregate $4 billion figure were also not available.

## Evidence cited
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31. (May 23 2025) Indonesia's ambitious relocation of its capital to Nusantara in East Kalimantan has transitioned from vision to visible progress. As of May 2025, the project has attracted over US$4 billion in private-sector investment, marking a decisive shift from planning to construction. This milestone signals growing investor confidence in what will become the country's new administrative and economic hub. A diverse investment base powering growth. The Nusantara Capital City Authority (OIKN) r (aseanbriefing.com) — https://aseanbriefing.com/
32. (July 17 2025) President Prabowo Subianto, who assumed office in October 2024, has left the budget for Nusantara unchanged and signalled broad commitment to the project, despite broader cuts to government expenditure in February 2025 and a 70% reduction in the budget for the Ministry of Public Works, which oversees infrastructure. The government aims to eventually source 80% of the capital's funding needs from private‑sector investments. Of this, they aim to raise  ... (hktdc.com) — https://hktdc.com/
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35. (June 29 2025) Infografis Regulasi · Simplifikasi Regulasi · Direktori Regulasi · Program Perencanaan · Penelitian/Pengkajian Hukum · Video Sosialisasi · Kamus Hukum. Informasi Penunjang. Tarif Bunga · Kurs Pajak · Berita · Jurnal HKN · Statistik · Penghargaan JDIH. Perihal. Tentang Kami · Struktur Organisasi · Anggota JDIHN · Prasyarat · Kebijakan Privasi · FAQ · Website Lama · Hubungi Kami. Logout. Beranda · Dokumen; PERPRES 79 TAHUN 2025. PERPRES 79 TAHUN 2025. Indonesia; 29 Jun 2025; Berlaku (kemenkeu.go.id) — https://kemenkeu.go.id/
36. (December 29 2025) Nusantara to function as Indonesia's political capital by 2028. December 29, 2025 | Indonesia, Key Developments. Indonesia's Nusantara Capital City (IKN) in East Kalimantan is on track to begin operating as the country's political capital by 2028, according to the Indonesia Nusantara Capital Authority. All ongoing and planned development works are being directed toward ensuring that the new capital is ready to host core national government functions within the targeted timefra (southeastasiainfra.com) — https://southeastasiainfra.com/
37. (October 28 2025) Indonesia's new capital, Nusantara, in danger of becoming a 'ghost city'. This article is more than 11 months old. State funding for the project has plunged, while construction has slowed and few civil servants have been eager to move away from Jakarta. Supported by. theguardian.org. About this content. Michael Nielson in Nusantara ... The government has denied those claims. Still, the community wants Nusantara to succeed, hoping it could bring more awareness of Balik culture a (theguardian.com) — https://theguardian.com/
38. (December 12 2025) The under-construction city of Nusantara is set to be inaugurated as Indonesia's political capital in 2028, having been scaled back from its original plan to replace Jakarta as the country's new capital city. Masterplanned by Indonesian studio Urban+, a number of government buildings and apartment blocks have been constructed at Nusantara, but the city's development has fallen behind its planned 2024 inauguration. Located on the east coast of the island of Borneo, plans to bui (dezeen.com) — https://dezeen.com/
39. (January 13 2026) Indonesia's new president, Prabowo Subianto, made his first overnight visit to the planned capital city of Nusantara, reiterating his administration's commitment to the $32 billion project originally initiated by his predecessor, Joko Widodo.
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40. (August 14 2024) Indonesia's President-elect, Prabowo Subianto, has reaffirmed his commitment to the development of Nusantara, the country's future capital city, signaling a continuity of the ambitious project initiated by outgoing President Joko "Jokowi" Widodo. During a recent visit to the under-construction city, which coincided with President Jokowi and his cabinet's first-ever meeting at Nusantara's newly completed Garuda Palace, Prabowo emphasized his determination to see the project throu (business-indonesia.org) — https://business-indonesia.org/
41. (August 18 2025) The government has allocated Rp6.26 trillion (US$387 million) for two development programs of the Nusantara Capital City (IKN) Authority for 2026, down by more than half from the Rp13 trillion allocated in 2025. Some Rp5.71 trillion of the budget for the new capital city development, stipulated in Book II of the Financial Note and the Draft State Budget (RAPBN) for the 2026 Fiscal Year, is allocated for the Strategic Area Development Program, and the other Rp553 billion for the  (indonesiabusinesspost.com) — https://indonesiabusinesspost.com/
42. (August 13 2024) Minister of Defense, which is also the President-elect for 2024-2029 Period Prabowo Subianto, Monday (08/12) reaffirmed his commitment to completing the construction of the new capital of Nusantara (IKN) in North Penajam Paser regency, East Kalimantan province. “Previously, President Joko “Jokowi” Widodo conveyed the issue of equality and our desire to ease the burden of Java from population concentration and economic activity,” Prabowo said at the Garuda Palace, Nusantara. Prab (setkab.go.id) — https://setkab.go.id/
43. (November 03 2025) Indonesia's Finance Minister Purbaya Yudhi Sadewa has assured that the development of the new capital Nusantara (IKN) will continue as planned and will ...
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(November 03 2025) Indonesia dismisses "ghost city" fears over Nusantara project ... Jakarta (ANTARA) - Indonesia's Finance Minister Purbaya Yudhi Sadewa has assured that the development of the new capital Nusantara (IKN) will continue as planned and will not turn into a "ghost city."
"It depends on the government's fut (antaranews.com) — https://antaranews.com/
44. (November 12 2025) JAKARTA: Private investors are reluctant to engage in the development of Nusantara, the future capital city under construction in East Kalimantan, balking at its sparse population and a string of policy pivots that have eroded confidence in the project's long-term commercial prospects.
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(November 12 2025) Stay signed in to save your points and redeem your rewards at Nexus. featured_seasonal_and_gifts +0. ×. Your Rewards are Waiting! Stay signed in to save the points you've  (thestar.com.my) — https://thestar.com.my/
45. (September 22 2026) By Krittabhorn Sirichaichingkun. Executive Summary. The relocation of Indonesia's capital to Nusantara (IKN) was envisioned as a key solution to ease overcrowding in Jakarta, the country's current capital. However, IKN development has fallen behind schedule due to several constraints, particularly financing challenges. Private investment remains far below target, while the fiscal burden on the government has risen beyond the level initially planned. These challenges have beco (krungsri.com) — https://krungsri.com/
46. (July 22 2026) The budget for the program for this year has been cut from Rp 268 trillion ($14.9 billion) to Rp 229 trillion, the National Nutrition Agency secretary Lili Khamiliyah told a news conference on Tuesday. The administration of President Prabowo Subianto originally allocated Rp 335 trillion for the program this year, but it had been reduced following several budget-saving measures  ... (thejakartapost.com) — https://thejakartapost.com/
47. (October 19 2026) In Indonesia, the annual budget for developing the new capital, Nusantara, was cut to 6.3 trillion Indonesian rupiah in 2026. About 10,000 people currently live in the city, which is being built in the tropical forests of Borneo as the country's future capital, although it was designed for 1.2 million residents by 2029, ABC News Australia reports. Funding cuts. Construction of Nusantara in East Kalimantan province began in 2022. The project, initiated by former president Joko W (ua.news) — https://ua.news/
48. (November 03 2025) Jakarta. Finance Minister Purbaya Yudhi Sadewa tries to ease concerns that Indonesia's new capital Nusantara could become a “ghost city," saying the massive East Kalimantan development remains firmly on track and is backed by binding medium-term state planning. Speaking after a meeting with the Regional Representatives Council (DPD) in Jakarta on Monday, Purbaya said there was no need for public anxiety over the project's continuity. “Nusantara will not become a ghost city,” h (jakartaglobe.id) — https://jakartaglobe.id/
49. (July 06 2026) Fuad Iqbal Abdullah, Jakarta – The House of Representatives has approved a Rp 6 trillion ($333.5 million) budget allocation for the development of the country's future capital, Nusantara, in 2027, significantly below the Rp 15 trillion requested by the Nusantara Capital Authority. The funding approval signals that construction of the new capital will continue despite lingering skepticism over the megaproject, which critics have at times labeled a "ghost town." Nusantara Capital Au (asia-pacific-solidarity.net) — https://asia-pacific-solidarity.net/
50. (January 30 2026) Indonesia's future capital, Nusantara, is progressing as planned and is far from a “ghost town”, Vice-President Gibran Rakabuming Raka said, dismissing negative international media reports. In an interview on Jan 29, Gibran confirmed that construction and the phased relocation of civil servants are on schedule, with around 4,000 government employees expected to move this year, with facilities for his own office nearing completion. Gibran highlighted the infrastructure already i (businesstoday.com.my) — https://businesstoday.com.my/
51. (January 30 2026) JAKARTA: Indonesia Vice-President Gibran Rakabuming Raka has dismissed claims that Nusantara - the country's future capital in East Kalimantan - is becoming a “ghost town”, saying the construction and phased relocation of civil servants are progressing according to plan. In an interview on Thursday (Jan 29) with B-Universe Media Holdings, Gibran said negative portrayals in some international media reports did not reflect conditions on the ground. Advertisement. “Many ... Nusant (channelnewsasia.com) — https://channelnewsasia.com/
52. (October 30 2025) Drastic funding cuts, construction delays and dwindling population cast doubt on future of megaproject, say media reports. Merve Berker. 30 October 2025•Update: 30 October 2025. Indonesia's ambitious new capital Nusantara faces 'ghost city' fears. ANKARA. Indonesia's futuristic new capital, Nusantara, once envisioned as a model green city to replace overcrowded and sinking Jakarta, is now facing growing concerns it may become a “ghost city,” amid funding cuts, sluggish construc (aa.com.tr) — https://aa.com.tr/
53. (February 14 2025) The Prabowo Subianto administration begins 2025 with a massive Rp 306 trillion fiscal spending cut, representing over 8% of this year's state budget, delivered by Presidential Instruction 1/2025. The policy, Prabowo claims, is primarily meant to help finance the free nutritious meal (MBG) program, the centrepiece of his election campaign, and rebuild the nation's dilapidated schools. While a spending cut is necessary on some occasions, the way in which the Prabowo government p (unimelb.edu.au) — https://unimelb.edu.au/
54. (November 04 2025) Menteri Keuangan Purbaya Yudhi Sadewa menanggapi dengan santai pemberitaan media asing yang menyebut Ibu Kota Nusantara (IKN) berpotensi menjadi 'kota ... (youtube.com) — https://youtube.com/
55. (November 04 2025) Jakarta, CNBC Indonesia - Menteri Keuangan Purbaya Yudhi Sadewa merespons sorotan media asing perihal nasib Ibu Kota Nusantara (IKN). Dalam tulisan the Guardian "Indonesia's new capital, Nusantara, in danger of becoming a 'ghost city'", IKN dikhawatirkan berpotensi menjadi 'Kota Hantu' yang terbengkalai. Artikel yang ditulis ini menyebutkan bahwa anggaran IKN turun dari semula 2 miliar poundsterling atau sekitar Rp 43,8 triliun (kurs Rp 21.900) menjadi 700 juta poundsterling a (cnbcindonesia.com) — https://cnbcindonesia.com/