Finance Minister Explains Why Hundreds of Regions Struggle to Pay Civil Servant Salaries
Finance Minister Purbaya Yudhi Sadewa has revealed that the government plans to inject additional funds for 490 regions that are struggling to pay the salaries of state civil servants (ASN). He explained that the difficulties stem from the recent cuts to the regional transfer budget (TKD). “Since the TKD cuts, we have calculated that some regions may not be able to survive,” Purbaya said in Jakarta on Tuesday, 28 July 2026. He noted that the TKD cuts have not only affected salary payments but have also prevented local governments from carrying out operational activities. Consequently, the Ministry of Finance intends to provide extra funds to these hundreds of regions. However, Purbaya stressed that this fresh injection of funds can only be realised with permission from President Prabowo Subianto. “The opportunity is there, it just depends on what the President’s instructions will be,” he stated.
Previously, the Ministry of Home Affairs had urged local governments to carefully mitigate the impact of the TKD cuts. Deputy Minister of Home Affairs Bima Arya advised regional heads not to dismiss civil servants or other government employees as a result of the budget reductions. Bima described termination of employment as a drastic measure. “We ask that regional heads do not too easily resort to drastic steps such as dismissals and layoffs,” Bima said at the Presidential Palace in Central Jakarta on Tuesday. He suggested that local governments facing difficulties with personnel spending due to the central government’s TKD cuts could adopt other strategies, such as implementing fiscal efficiency measures. Bima added that the Ministry of Home Affairs is currently mapping the list of local governments struggling to pay the salaries of civil servants and contract employees. The ministry is also coordinating with the Ministry of Finance and Commission II of the House of Representatives, which oversees governance, to resolve the issue.
The central government has implemented a budget-cutting policy since 2025, which includes reductions to the TKD. The total cut to regional transfer funds in 2025 amounted to IDR 50.59 trillion. In 2026, the government further reduced the TKD budget ceiling compared to previous years. The TKD allocation for 2026 is set at IDR 650 trillion, a 24.7 percent decrease from the previous year’s ceiling. As a result of these TKD cuts, several regions have planned to dismiss employees, particularly those with the status of government employees with work agreements (PPPK).