Arnoldus Kristianus, Jakarta – The Finance Ministry has raised the alarm over more than Rp 254.3 trillion ($15.3 billion) in unused regional funds sitting in bank accounts. The ministry is pushing for faster and more productive local government spending, warning that delayed budget realization is hindering the flow of money back into the economy.
The latest Finance Ministry data show that as of August 2025, regional government deposits amounted to Rp 188.9 trillion ($11.4 billion) in current accounts, Rp 8 trillion ($482.8 million) in savings, and Rp 57.5 trillion ($3.47 billion) in time deposits.
Finance Minister Purbaya Yudhi Sadewa said the large pile of idle funds reflects the slow execution of local government budgets, not a lack of fiscal capacity.
"Regional budget realization up to the third quarter of this year remains slow," Purbaya said. "Low spending absorption has added to the amount of government money sitting idle in banks. This is not about funding shortages, it's about execution speed." He made the remarks during the 2025 Regional Inflation Control Coordination Meeting at the Home Affairs Ministry on Monday.
The Finance Ministry has launched an investigation to determine why local governments have been slow to spend their budgets. Purbaya said there are suspicions that some regions deliberately keep funds in banks to earn interest income, though further review is needed.
"We'll look into what kind of funds these are, where they're stored, and why so much is placed in deposits. Regional administrations should also take this seriously," he added.
Purbaya emphasized that neither the central nor local governments have any interest in keeping excessive funds in banks. Every rupiah, he said, should circulate back into the economy through public projects, infrastructure development, and social programs.
"Our job isn't to collect interest. It's to make sure every rupiah contributes to growth, both nationally and locally," he said.
He also outlined three key principles for local governments in managing public funds. First, keep only what's needed for short-term operations, but ensure optimal spending to drive local economic activity. Second, accelerate productive spending evenly throughout the year instead of rushing expenditures at year-end. Third, maintain integrity and transparency in regional financial management.
"Public and investor trust is our greatest asset. Once lost, it takes years to rebuild," Purbaya warned.
To prevent similar buildups of idle funds in the future, Purbaya proposed creating a faster and more flexible fund transfer system between the central and regional governments.
"Ideally, transfers could be made within days. Local governments wouldn't need to hoard money; they could spend what's allocated and quickly request more if needed," he said.
The ministry hopes that better coordination and faster disbursement will ensure public money works as intended, to stimulate growth and strengthen economic resilience across Indonesia's regions.