Purbaya Considers Reclaiming Local Funds Sitting Idle in Banks

JAKARTA, DDTCNews - Minister of Finance, Purbaya Yudhi Sadewa is considering reclaiming local government funds that continue to sit idle in banks through to the end of the year.

Purbaya estimates that local government funds lying dormant in banks could reach IDR100 trillion per year. He, however, stressed that he would not indiscriminately claw back those idle funds.

"Those IDR100 trillion — I was going to take it back, but I can see we are not yet ready to run such a system," he told members of the media, as quoted on Thursday (10/9/2026).

Purbaya lamented the persistently high level of local government funds sitting in banks and not being spent optimally to meet regional needs.

On the other hand, he believes the government also needs to improve the transfers-to-regions (transfer ke daerah/TKD in Indonesian) mechanism to make it faster and more practical. That way, local governments would not need to hold or set aside large sums as reserves.

"Once the transfers-to-regions system is fast enough [to enable a fund withdrawal], local governments should not need as large a cushion. But the system has not been tested yet, so I do not yet dare to take [those funds]," said Purbaya.

Simply put, idle local government funds sitting in banks are a problem because the state budget (anggaran penerimaan dan belanja negara/APBN in Indonesian) has already disbursed transfers for regions to local governments and those funds are expected to be used to finance various local needs.

When funds merely sit in bank accounts and go unspent, the disbursement of funds from the state budget becomes less than optimal. Yet those funds are expected to be spent to boost local economic activities.

To that end, Purbaya wishes to address the issue of local government funds lying dormant in banks by accelerating transfers from the state budget to local governments. He promised that the governance of transfers to regions would improve going forward, thereby, local governments would not need to accumulate large reserves and could instead spend those funds to support local development.

"Next year, if everything is in order, I am making a one-year promise; there should be no remainder [of funds sitting idle in banks]. So we will reclaim the IDR100 trillion, then in January we will disburse [the transfers to regions] again so they are not short of money and do not need large reserves," he said. (rig)