This is not as crazy as it sounds at first glance. The % is less important than where they are spending that money.

An "economy" is just a measure of the overall movement of money. If the bulk of that spending is internal, then that is contributing to the economy. Govt workers are consumers, local companies are providing goods to govt etc.

USaid for example spent a lot of money on food. And a lot of that was purchased from US farmers. Killing USaid "saves a lot of money" but also costs a lot of producers their income.

As long as the bulk of spending is local, govt spending is an excellent way of keeping money moving.