Zhulfakar, Jakarta – Deputy Home Affairs Minister Bima Arya Sugiharto clarified on Thursday that the large amounts of regional government funds held in banks are not the result of hoarding or attempts to gain interest, but rather part of normal cash management practices.

Speaking at Beritasatu TV dialogue titled "Regional Funds Parked, Minister Purbaya Responds," Bima said regional governments keep money in various instruments such as current accounts, savings, deposits, and public service agency (BLUD) funds.

"Funds for operational needs like salaries or healthcare are usually kept in current accounts, which offer low interest since they're used for daily expenses," he said.

Bima explained that high end-of-year balances often reflect delayed spending, as many projects are realized in the second half of the fiscal year.

"Payments usually take place toward the end of the year because many activities are executed only during that period," he added. He stressed that large cash positions are cyclical, not deliberate. "This pattern is common in major provinces. The figures may look big, but it doesn't mean there's intentional hoarding," Bima said.

The Home Affairs Ministry, he added, continues to evaluate and coordinate with regional governments to ensure timely and effective budget execution.

"The key is accelerating spending. The faster funds circulate, the quicker the regional economy grows," he concluded.

The clarification followed remarks from Finance Minister Purbaya Yudhi Sadewa, who earlier identified several local administrations, including Jakarta, with Rp 14.68 trillion ($882 million) and East Java with Rp 6.8 trillion, among the regions keeping large sums idle in banks.

According to Purbaya, a total of Rp 234 trillion ($14 billion) in regional funds currently sits in Bank Indonesia accounts: Rp 134.2 trillion from regencies, Rp 60.2 trillion from provinces, and Rp 39.5 trillion from cities.

Earlier this week, West Java Governor Dedi challenged the minister to present concrete evidence, accusing him of "spreading baseless claims." Purbaya responded that his data came directly from Bank Indonesia, which updates its records every few weeks.

Source: https://jakartaglobe.id/business/regional-funds-in-banks-not-hoarding-says-deputy-minister-bima-ary