A staggering Rp234 trillion in idle regional government funds is sitting in Indonesian banks, prompting calls for urgent fiscal synchronization between central and local authorities. As the 2025 fiscal year nears its end, policymakers warn that delayed spending could undermine public services, infrastructure development, and job creation. The issue highlights deeper structural challenges in budget execution and intergovernmental coordination.
Key Facts & Background
- Rp234 trillion in idle regional funds was recorded in Indonesian banks as of September 2025, according to Bank Indonesia.
- The funds represent unspent cash reserves from provincial, regency, and city governments across the country.
- Mukhamad Misbakhun, Chair of Commission XI of the House of Representatives (DPR RI), has called for fiscal synchronization between central and regional governments to address the issue.
- The idle funds are linked to Transfer to Regions (TKD) allocations, which are intended to stimulate local economic growth and improve public service delivery.
- Misbakhun emphasized that TKD should be managed efficiently and promptly to generate multiplier effects in regional economies.
- He cautioned against blaming local governments outright, suggesting the need for a comprehensive diagnosis of root causes, including:
- Misalignment between regional and national budget planning (APBD vs APBN)
- Regulatory delays
- Procurement bottlenecks
- Overly cautious fiscal management by local governments.
- He urged the Ministry of Finance and Ministry of Home Affairs to enhance guidance, coordination, and monitoring of regional budget execution.
Strategic Insights
The revelation of Rp234 trillion in idle regional funds underscores a persistent challenge in Indonesia’s fiscal decentralization framework. While the Transfer to Regions (TKD) mechanism is designed to empower local governments, its effectiveness hinges on timely and strategic budget absorption. When funds remain parked in bank accounts, the opportunity cost is immense—delayed infrastructure projects, underfunded public services, and missed chances for job creation.
This issue is not merely administrative; it reflects a deeper need for institutional alignment. The disconnect between central budget cycles (APBN) and regional planning (APBD) often leads to mismatches in timing, priorities, and execution capacity. Without synchronized fiscal calendars and streamlined regulatory processes, even well-intentioned transfers can stall.
Moreover, the tendency of some local governments to hoard cash reserves—whether due to risk aversion, unclear guidelines, or procurement hurdles—can inadvertently stifle local development. While fiscal prudence is important, excessive caution in disbursing funds can undermine the very purpose of decentralization: empowering regions to respond swiftly to local needs.
To address this, Indonesia must strengthen intergovernmental coordination, possibly through real-time budget tracking systems, capacity-building programs, and performance-based incentives. Enhanced transparency and accountability mechanisms can also help ensure that funds are not only spent but spent effectively and equitably.