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Indonesia Moves to Curb Regional Government Funds Held in Banks, Reaching IDR 234 Trillion
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Indonesia’s Ministry of Finance is taking steps to address the notable amount of regional government funds held in bank deposits, a practice that currently totals IDR 234 trillion (approximately $14.6 billion USD). The move comes as concerns grow over the economic impact of these funds sitting idle instead of being utilized for public services and infrastructure projects.
The issue gained prominence following reports that the DKI Jakarta Provincial Government alone held IDR 14.6 trillion in bank deposits. When questioned about a direct solution, a senior official stated bluntly, “Ther is no solution, they just have to absorb it quickly,” during a press conference at the Ministry of Finance Office in Central Jakarta on Thursday, October 23, 2025.
Addressing a Systemic Issue
The official explained that regional governments (Pemda) often accumulate funds towards the end of the year to finance activities in the following January and February. This practice,while common,effectively removes considerable capital from circulation within the economy. to combat this, the Ministry of Finance plans to implement a new system designed to accelerate fund transfers to regional governments.
“Later like this, usually they need to save money until the end of the year for January-February. I will start next year, we will develop a system where the transfer can be done quickly. On January 1-2 it will be out, send it to the Regional Government, so that the Regional Government doesn’t have to pile up any more money,” the official elaborated.
Potential for Economic boost
Currently, regional government deposits in banks at year-end typically reach IDR 100 trillion. the new system aims to drastically reduce this figure, freeing up capital for immediate economic use. “The money is used for the economy. So in the current year the status is to spend directly,” the official emphasized. “As for other planning, they have to be more diligent in learning how to plan spending on time and on target, that’s all.”
The Ministry of finance acknowledges that improved financial planning is crucial for regional governments to effectively manage their budgets and avoid unnecessary accumulation of funds.
Oversight and Accountability
The Financial Audit Agency (BPK) will be responsible for auditing the deposited funds. The official noted that regional governments are already subject to regular audits, and the BPK will scrutinize the placement of funds, interest rates earned, and overall financial prudence.
Drawing on past experience as Head of the Board of Commissioners of the Deposit Insurance corporation (LPS), the official recounted instances where discrepancies between bank accounts triggered investigations. “As soon as there are several accounts, one bank and another bank are different, we are called to explain why they are different. If they are different and we can’t explain it, it is considered detrimental to the state, something like that.So regional governments also have that risk if they are not careful in managing their money.”
This heightened scrutiny underscores the government’s commitment to ensuring responsible financial management at the regional level and maximizing the economic benefit of public funds.
You can also watch a related video discussing a meeting between the Pertamina President Director and the Ministry of Finance: https://www.example.com/
