No Further Cuts to Regional Funds Planned for 2026 Budget, Finance Minister Confirms
Jakarta, Indonesia - Finance Minister Purbaya Yudhi sadewa announced wednesday that the government will not implement additional cuts to regional transfer funds (TKD) as it finalizes the 2026 state budget bill (RAPBN). The confirmation came during a press conference at the Presidential Palace following a meeting with President Prabowo to discuss the budget’s progress.
“We will not make any more cuts,” Minister Sadewa stated, responding to a question about potential reductions to funds allocated to regional governments.
While ruling out further cuts, Sadewa indicated that discussions with the House of Representatives (DPR) are ongoing regarding the possibility of additional transfers. He emphasized the government’s commitment to utilizing fiscal policy to stimulate economic growth.”We will be inclined to pursue fiscal policies that encourage economic growth,” he said.
The Minister highlighted the importance of efficient budget absorption and improved financial management as key priorities. “The key is improving budget absorption so it does not disrupt the conditions and limitations of our financial system,” Sadewa explained.
Earlier Wednesday morning, Sadewa briefed President Prabowo on the outcome of a working meeting with Commission XI of the DPR, where the Finance Ministry’s 2026 budget work plan – valued at Rp52.16 trillion – was reviewed. He noted that figures within the RAPBN are still under discussion and no final decisions have been made, but progress was reported to the President.
The 2026 draft state budget currently projects Indonesia’s gross domestic product (GDP) growth at 5.4 percent, an increase from the 5.2 percent target set for 2025. This growth is anticipated to be driven by a rise in household consumption (from 5.0 to 5.2 percent) and exports (from 5.4 to 6.7 percent), despite a projected slowdown in investment growth (from 5.5 to 5.2 percent). Sectorally, growth is forecast at 4.1 percent for agriculture, 5.2 percent for manufacturing, and 8.0 percent for information and communication in 2026.
