Finance Minister Purbaya Warns of Sluggish Regional Spending, Finds Rp 18 Trillion Data Gap in Local Deposits

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JAKARTA, Investortrust.id — Finance Minister Purbaya Yudhi Sadewa warns that Indonesia’s regional economies are moving slowly as local spending realization under the 2025 Regional Revenue and Expenditure Budget reaches only Rp 712.8 trillion, or 51.3% of the Rp 1,389.3 trillion allocation as of September.

“This is 13.1% lower than the same period last year. Clearly, regional economic circulation is running slower,” Purbaya said during the 2025 Regional Inflation Control Coordination Meeting, monitored online on Monday, Oct 20, 2025.

The Ministry of Finance recorded slower realization across four major spending categories: personnel, goods and services, capital, and other expenditures. Personnel spending stood at Rp 310.8 trillion, or 60.9% of the Rp 510.5 trillion budget, down 0.7% from Rp 313.1 trillion last year.

Goods and services spending reached Rp 196.6 trillion, or 48.2% of the Rp 407.9 trillion allocation, 10.5% lower year-on-year. The sharpest decline came from capital spending, with only Rp 58.2 trillion, or 28.5% of the Rp 203.5 trillion budget realized, marking a 31.3% drop compared to last year.

Purbaya emphasized that capital expenditure directly impacts development and job creation. “This is the kind of spending that immediately benefits construction and employment,” he said.

Other regional spending also weakened. As of September, only Rp 147.2 trillion, or 55.1% of the budget, had been disbursed — down 27.5% from last year. “This shows many areas are executing their budgets too slowly. I urge faster realization, especially for productive spending, in the last three months of the year,” Purbaya stressed.

He cautioned local governments against keeping funds idle in cash or deposits. “Money must circulate for the economy to grow and the benefits to reach the people,” he said.

Purbaya also questioned why some regional funds were deposited in development banks located in Jakarta. “We wonder why money keeps piling up in central accounts. If funds sent to regions only flow back to Jakarta, it defeats the purpose,” he said.

He urged local administrations to ensure that central funds stay and circulate in their regions, while also improving the performance of regional development banks (BPD).

Data Discrepancies

Meanwhile, discrepancies have emerged between data from the Ministry of Finance and the Ministry of Home Affairs regarding local government deposits.

Kemenkeu data shows Rp 234 trillion in idle local government funds — rounded from Rp 233.97 trillion — while Kemendagri reported Rp 215 trillion based on direct checks of local government bank accounts, resulting in an Rp 18 trillion difference as of Oct 17, 2025.

Home Affairs Minister Tito Karnavian explained that his ministry obtained the Rp 215 trillion figure by checking actual regional accounts, not Bank Indonesia (BI) data. “It’s not Rp 233 trillion. That’s BI’s figure. We verified the accounts directly and found Rp 215 trillion,” Tito said during the same coordination meeting.

The breakdown of the Rp 215 trillion includes Rp 64.95 trillion from provincial governments, Rp 119.92 trillion from regencies, and Rp 30.13 trillion from cities. Tito noted some inconsistencies in BI’s data, such as for Banjar Baru City, where the reported figure exceeded the city’s total annual revenue.

Finance Minister Purbaya questioned the Rp 18 trillion gap, saying BI’s data should be accurate since it is aggregated from all banks nationwide. “If the government’s number is off by Rp 18 trillion, perhaps there was a counting or recording mistake,” he said.

Nonetheless, Purbaya said he would investigate the discrepancy but underscored that the key issue is ensuring funds circulate in the regions. “As long as the money is being used in the regions, that’s good. The important thing is not to transfer it back to central banks in Jakarta. Keep it in regional banks so it truly benefits local economies,” he said.