"Heading to Bankrupt Indonesia": A Protest Under Economic Pressure
Jakarta's students are sounding the alarm: Indonesia's fiscal cracks — from a collapsing rupiah to populist spending scandals — may be too deep to ignore.
On June 12, 2026, the streets of Jakarta became a theater of socio-political tension. Hundreds of university students, clad in alma mater jackets — most notably the iconic yellow of the University of Indonesia (BEM UI) — marched toward the Hotel Indonesia (HI). The protest is named “Menuju Indonesia Bangkrut”* (Heading to Bankrupt Indonesia). This coordinated demonstration was not a sudden burst of youthful idealism. Instead, it represented a calculated, systemic response to mounting macroeconomic instability, a currency collapse, and polarizing domestic expenditure policies under President Prabowo Subianto.
Indonesia is currently facing a range of domestic challenges, including global energy pressure shocks and weaknesses in domestic fiscal management, which have contributed to worsening socio-economic conditions. This trend has been driven as a critical warning structural indicator: marked by the depreciation of the rupiah against the dollar, global economic instability, a persistent current account deficit, rising domestic inflation, a high dependence on imported goods, and capital outflows from Indonesia’s financial markets. These pressures have led to noticeable adjustments in domestic policy, particularly the 32.11% increase in non-subsidized fuel prices, a measure that provoked public backlash and intensified socio-political tensions.
To evaluate this policy shift, it is necessary to trace its origins to broader global geopolitical instability, particularly the US-led conflict involving Iran that began three months earlier. The conflict generated significant disruptions in the global oil supply chain, causing crude oil prices to surge sharply in international markets. This situation affected not only Indonesia but also several countries in the region, including the Philippines and Cambodia, both of which experienced fuel price increases of up to 42%. Likewise, Singapore, Malaysia, and Thailand were compelled to adjust domestic fuel prices early. In contrast, Indonesia had initially managed to withstand these external pressures and delay price adjustments.
Meanwhile, at the domestic level, pressure for this policy shift was largely driven by the state budget (APBN), which has long relied heavily on energy subsidies to shield the population from global energy price volatility. Historically, these subsidies functioned as an implicit social contract, ensuring affordable transportation and electricity while preserving social stability. However, by mid-2026, the fiscal architecture sustaining this protective mechanism began to weaken significantly. This vulnerability was further exacerbated by several domestic policy decisions perceived as ineffective, including the controversial reallocation of budget toward the free school meals program.
At the same time, the depreciation of the rupiah substantially increased the cost of oil imports in local currency terms. Indonesia’s foreign exchange reserves, managed by Bank Indonesia, continued to decline, ultimately forcing the Ministry of Finance to confront a difficult and aggressive policy choice: either allow domestic fuel prices to rise sharply or risk a broader balance-of-payments crisis. The decision to pursue the former option immediately triggered a domino effect of inflationary pressures across the economy, driving up transportation costs and raising the prices of essential goods.
Populism vs. Fiscal Sustainability
The “Heading to Bankrupt Indonesia” movement sparked public anger over the government’s domestic budget allocation. Youths called it a “waste of state spending” on ambitious, multibillion-dollar populist programs. This action was seen as a protest that the government had broken the social contract between the government and the people, posing a challenge to democracy.
This fiscal debate lies in President Prabowo Subianto‘s initiative, the Free Nutritious Food Program — estimated to require approximately 268 trillion rupiah (USD 15 billion) by 2026. The program was designed to address structural social challenges, particularly child stunting, malnutrition, and poverty reduction. Despite its ambitious developmental objectives, however, its implementation has encountered significant obstacles. Most notably, the program was recently shaken by a high-profile corruption investigation that resulted in the dismissal of its director, intensifying public concerns over systemic leakages, weak governance mechanisms, and broader inefficiencies in state budget management.
In addition to growing economic pressures, widespread public dissatisfaction is increasingly articulated through five major demands voiced by Indonesian youth toward the government.
First*, a demand to halt what is perceived as wasteful state budget (APBN) spending, particularly as the national budget recorded a deficit within the first five months of the fiscal year. Government expenditure priorities have been widely criticized as insufficiently people-centered, with several pivot programs failing to generate immediate and tangible public benefits.
Second*, public pressure has intensified over the rising prices of necessities and fuel. The 32 percent increase in fuel prices has generated broader inflationary spillover effects, particularly on staple food commodities, thereby weakening household purchasing power and disproportionately burdening lower-income groups.
Third*, significant criticism has emerged against the continuation of the Free Nutritious Food Program and the development of the Red and White Village Cooperative initiative. The Free Nutritious Food Program has remained highly controversial due to concerns over unequal distribution, governance failures, and corruption allegations. At the same time, the development of the Red and White Village Cooperative has faced criticism for diverting village funds, while many projects are viewed as lacking strategic economic value.
Fourth*, growing concerns have been raised regarding the increasing involvement of the military in civilian affairs. Critics argue that recent government policies have expanded military influence into bureaucratic institutions, education, and other non-defense sectors, leading to demands that the armed forces refocus exclusively on their primary role in national defense.
Fifth*, there is increasing public pressure on President Prabowo Subianto to acknowledge policy failures and improve communication quality with the public. This demand reflects broader expectations for greater governmental accountability, particularly in recognizing and correcting policy decisions perceived as ineffective or detrimental to public welfare.
From the perspective of youth movements, the government has failed to adequately protect middle- and lower-income groups from the adverse effects of inflation, while simultaneously promoting policies perceived as creating new opportunities for corruption and fiscal mismanagement. There is a growing perception that the state is risking long-term fiscal sustainability, including the possibility of future debt distress, to finance short-term political promises. Historically, Indonesia’s youth movements have played a decisive political role, most notably during the Indonesian Reformasi in 1998, which successfully contributed to the collapse of the New Order regime. In this context, the June 12 Movement emerged as a form of collective protest intended to prevent the government from pursuing misguided policies while resisting attempts to suppress public dissent. The widening cracks in the democratic social contract must be openly addressed before they deepen further and ultimately generate broader failures in state policy management.
By framing the movement around warnings of potential national bankruptcy, the youth movement articulated a direct critique of the government’s fiscal priorities and broader governance strategy. The path forward requires a highly complex balancing act: maintaining international fiscal credibility, stabilizing a vulnerable national currency, and delivering meaningful social protection without triggering large-scale domestic unrest. As argued in the book “Why Nations Fail”*, countries risk entering a vicious cycle of institutional decline when political elites controlling extractive institutions use their authority to manipulate laws, suppress political opposition, and monopolize economic resources for narrow interests. To prevent this trajectory toward state failure, effective checks and balances remain essential, particularly through active civic participation and critical engagement from youth movements. Such participation serves as a corrective mechanism against institutional capture, helping prevent societies from becoming trapped in persistent underdevelopment and structural poverty.
About the Author: Sellita, Lecturer, International Relations, Bakrie University, Jakarta, Indonesia
📌 Subscribe to Think BRICS for weekly geopolitical video analysis beyond Western narratives. Follow also our new channels BRICS Business and Think BRICS Chronicles.
Are you sure this is not an organized color revolution by the multitude of soros type ngo aiming to destabilize the region and weakening China?