Indonesia’s Minister of Finance, Purbaya Yudhi Sadewa, has raised concerns over the large amount of regional government funds remaining idle in banks and regional treasuries, even as the national economy needs stronger spending to sustain public purchasing power. Each year, the unspent budget surplus continues to accumulate to the tune of trillions of rupiah, reflecting a low effectiveness in channeling regional spending toward productive sectors that directly benefit communities.
The central government is currently accelerating economic growth amid various global challenges.
Therefore, regional spending is expected to be realized more swiftly to strengthen business activities and maintain household consumption, one of the key pillars supporting Indonesia’s GDP.
Responding to the issue of idle regional funds in banks, Dr. Evi Noor Afifah, lecturer at the Department of Economics, UGM Faculty of Economics and Business (FEB UGM), explained that the phenomenon of unspent funds is not entirely new and should be viewed as part of an annual pattern.
“We need to closely examine the data series. If the pattern is consistent, it likely reflects the cycle of fund transfers to the regions and their subsequent spending. Many projects follow an S-shaped pattern according to their payment terms,” she said on Friday, Oct. 24, 2025.
According to Dr. Afifah, accelerating budget realization is not only crucial for short-term economic activity but also ensures that development programs truly reach and benefit the public.
“The function of government spending is to channel funds into various economic activities. When funds are used as intended, their multiplier effects will stimulate other sectors,” the scholar explained.
However, she emphasized that rapid budget absorption alone is not enough.
To achieve the desired development outcomes, budget allocation is indeed essential, but not the sole factor.
“Government spending must be of high quality, timely, well-targeted, and capable of delivering tangible benefits to the public,” she asserted.
By promoting effective and strategic acceleration of regional budget realization, the government is expected to strengthen economic stability while enhancing the welfare of communities across Indonesia.
Author: Kezia Dwina Nathania
Editor: Gusti Grehenson
Post-editor: Lintang Andwyna
Illustration: Freepik