Purbaya Reveals Potential for Regional Transfer Funds to Increase by IDR 90 Trillion

Finance Minister Purbaya Yudhi Sadewa has confirmed that the budget for regional transfers (TKD) will increase next year. However, the rise depends on the condition of the 2027 State Budget (APBN) while still considering the fiscal deficit. The statement was made by Purbaya in response to local government inquiries regarding the fate of next year’s transfer budget. “For the time being, TKD has an increase of around IDR 40 trillion for the regions, but the range could go up to IDR 90 trillion, depending on the discussions in the APBN,” he said during a working meeting with Committee IV of the Regional Representative Council (DPD) in Senayan, Jakarta, on Monday, 22 June 2026. The state treasurer assured that there is room for additional transfer funds. However, he could not yet guarantee that larger additional requests would be accommodated, as the government will be very careful to keep the APBN deficit below 3 per cent of gross domestic product. Caution is necessary because the government’s budget deficit is currently under the spotlight of global rating agencies. “We are being watched by world institutions to see whether we can run prudent policies or not. If not, they will punish us,” Purbaya said. Beyond the transfer budget, the strengthening of regional fiscal policy will focus on optimising revenue, strengthening quality spending, and encouraging creative and innovative financing. In the same meeting, the Director General of Fiscal Balance at the Ministry of Finance, Askolani, explained that regions can use other sources of financing, one of which is through loans from the Ministry of Finance’s Special Mission Vehicle (SMV). “With relatively low interest rates, many projects can be undertaken by local governments, ranging from building schools, hospitals, water utilities, to roads, which we will certainly support going forward,” Askolani said. Through loan support, regions can continue to develop even with limited budgets. It is hoped that regional fiscal capacity will strengthen to support sustainable economic growth, equitable development, and improved community welfare in the regions. Previously, the Chairman of Committee IV of the DPD RI, Ahmad Nawardi, conveyed the aspirations of regional head associations to the DPD. They expressed pessimism that the 2027 budget would be higher compared to this year and 2025. Regional heads stated that infrastructure development in the regions is stagnant due to budget efficiencies. “Several regional heads have been forced to raise local taxes and levies to support development in their areas,” Ahmad told Purbaya. Therefore, local governments hope that next year’s transfer budget will increase again as in previous years.