Home Affairs Ministry Urges Regions Not to Sack Staff Amid Transfer Fund Cuts
The Ministry of Home Affairs has requested that regional governments carefully mitigate the impact of the cuts to the General Transfer Fund (TKD). Vice Minister of Home Affairs Bima Arya expressed hope that regional heads would not dismiss state civil apparatus (ASN) or other government employees as a result of the TKD cuts.
According to Bima, terminating employment is a drastic step. “We ask that regional heads do not too easily take drastic steps such as dismissals and terminations,” Bima said at the Presidential Palace in Central Jakarta on Tuesday, 28 July 2026.
He stated that regional governments facing difficulties with personnel spending due to the central government’s TKD cuts could adopt other strategies. One option is to implement fiscal efficiency measures. The Ministry of Home Affairs is currently mapping a list of regional governments that are struggling to pay the salaries of their state civil apparatus 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.
“We are still finalising and communicating with Commission II of the DPR and the Ministry of Finance regarding many matters,” said the National Mandate Party politician.
The central government has implemented a budget cutting policy since 2025, including reductions to the TKD. The total cut to regional transfer funds in 2025 amounted to Rp50.59 trillion. In 2026, the government reduced the TKD budget ceiling compared to previous years. The TKD allocation for 2026 is Rp650 trillion, a 24.7 percent decrease compared to the 2025 budget ceiling.
As a result of these TKD cuts, several regions had planned to dismiss employees, particularly those with the status of Government Employees with Work Agreements (PPPK). Last week, Minister of Home Affairs Tito Karnavian stated that regional governments must not furlough ASN or PPPK staff. The Ministry has asked regional governments to implement budget efficiencies, the savings from which can be used to pay employee salaries.
“So the principle is, there must be no furloughing of PPPK. It is not allowed, as it would increase unemployment,” Tito said at the Parliament Complex in Jakarta on Thursday, 9 July 2026. Tito noted that some regional heads are not aware of the details of their regional budgets, typically those who are newly appointed. He urged regional heads not to simply accept reports from their subordinates.
According to Tito, regions can still pursue budget efficiency measures rather than choosing to dismiss employees. For example, several unproductive budget items can be streamlined, such as reducing spending on official travel, meetings, and consumables. In the short term, these efficiency savings can be used to pay PPPK salaries. He confirmed that he has deployed a team to check which regional governments have or have not implemented budget efficiencies.
However, he said that if a region still faces difficulties after implementing efficiencies, the Ministry of Home Affairs will assist by communicating with the Ministry of Finance to accelerate the disbursement of Revenue Sharing Funds (DBH). The Ministry will first check the status of the DBH.