Purbaya: Regional Infrastructure Development Can Be Funded Through SMI

To provide a solution for local governments wishing to build infrastructure, we are providing funds through PT SMI.

Jakarta (ANTARA) - Finance Minister Purbaya Yudhi Sadewa stated that regional infrastructure development is guaranteed not to be disrupted despite cuts to revenue sharing funds (DBH), as regions can borrow through PT Sarana Multi Infrastruktur (Persero)/PT SMI.

“To provide a way out for local governments that want to build infrastructure, we are providing funds through PT SMI,” said Purbaya in Jakarta on Thursday, while serving as a speaker at the Sarasehan 100 Indonesian Economists event.

According to him, by using this financing, regional infrastructure can be constructed even in the presence of DBH reductions.

He explained that loans disbursed by PT SMI can be well-monitored, ensuring that the quality of the existing infrastructure is truly guaranteed.

Purbaya noted that regions can borrow from PT SMI, and repayments will subsequently be deducted from a portion of the regional DBH; thus, funds are distributed to the regions and the infrastructure is realised.

“We know that PT SMI is quite professional; they assess the projects they intend to undertake with great care, much like a professional private entity. Therefore, we hope that with such an approach, regions will not lack the funds to build their infrastructure,” he said.

Furthermore, Purbaya urged local governments planning to issue debt securities to be cautious, as the central government would bear the consequences if they fail to repay.

He cited examples such as Brazil and Argentina, where the central government had to shoulder the debts of local governments.

“We must be careful in making policies. If we are not careful, we will end up like Brazil or Argentina back then; in Brazil, when the regions could not pay, it ultimately destabilised their entire economy,” he added.