Village Fund Slashed by 58 Per Cent for Merah Putih Cooperative Programme, Apdesi Warns Development Could Grind to a Halt

The government has allocated 58.03 per cent, or Rp34.57 trillion, of the total 2026 Village Fund for the Merah Putih Village Cooperative (KDMP) programme. The policy follows Minister of Finance Regulation (PMK) No. 7 of 2026, issued by Finance Minister Purbaya Yudhi Sadewa.

In response, the Association of Village Governments across Indonesia (Apdesi) at the provincial level has called for an increase in Village Fund allocations going forward. The aim is to ensure that infrastructure development continues despite the budget cuts imposed by the Merah Putih Village Cooperative programme.

Rafik Rahmat Taufik, Acting Chairman of the Apdesi Provincial Board for Banten, stated that additional allocations would provide a solution so that village administrations retain adequate budgets to address basic infrastructure issues in their respective areas.

“Village road construction, suspension bridges, drainage systems and the rehabilitation of substandard housing are now at risk of being delayed because the bulk of the funds are being absorbed by the cooperative programme,” Rafik said on Monday, 23 February 2026.

Rafik explained that villages which typically receive around Rp1 billion per year now have only approximately Rp300 million left for operational costs after more than 60 per cent is deducted. With the cooperative construction instalment scheme projected to run for six years, he expressed concern about the long-term impact on physical development in villages.

“We hope there will be a budget adjustment so that community aspirations regarding infrastructure can still be accommodated. Village development will be affected for the entire duration of the instalment period,” he added.

Apdesi Banten has been maintaining intensive communication with the central government to convey technical constraints and aspirations from the village level. According to Rafik, the central government remains open to discussion and evaluation of the policy’s impact on the ground.