Assisting Local Governments, Purbaya Prepares BPD Financing Scheme

Finance Minister Purbaya Yudhi Sadewa is currently preparing a new financing scheme to assist local governments in continuing development amidst limited fiscal space. The scheme is titled BPD Financing.

BPD Financing will provide funds to Regional Development Banks (BPD) to support development projects. The central government will subsequently repay these obligations gradually over several years.

According to Purbaya, this scheme is being prepared as part of the government’s efforts to seek innovative financing sources without burdening the State Budget (APBN) all at once.

“For regional development, we will use BPD Financing. As I mentioned earlier, I also need the assistance of BPDs to socialise this programme,” said Purbaya during a Working Meeting with the DPD RI on Monday (14/09/2026).

With BPD Financing, Purbaya stated that regions will be able to proceed with development projects even if their fiscal capacity is limited. The initial financing will be provided by BPDs, while the repayments will be handled by the central government in stages over the coming years.

He assessed that this scheme could serve as a safer alternative compared to local governments issuing regional bonds to fund development.

“There are regions that want to issue bonds to fund their areas. If I were being unkind, I would just let them be, but those that come due in a few years will face difficulties,” said Purbaya.

Through the BPD Financing scheme, he noted, regions will not have to face the risk of large debt repayments in a short period.

“But by using this scheme, it is settled; they can proceed with regional development peacefully, and then we will pay it back over several years,” he continued.

Purbaya acknowledged that the programme is still relatively new and the detailed mechanism is still under discussion. However, he ensured that the central government intends for regional development to continue without disrupting fiscal sustainability.