Jakarta. Indonesia's planned debt interest payments will reach Rp 650.31 trillion ($36.7 billion) in 2027, approaching the Rp 735 trillion the government has allocated in transfers to regional administrations, drawing criticism from the Regional Representative Council (DPD).

Ahmad Nawardi, chairman of the DPD Budget and Finance Committee, said the size of the government's interest bill was among the council's major concerns over the 2027 state budget.

“There is one figure that particularly caught our attention: debt interest payments in 2027 amount to Rp 650.31 trillion. That is nearly as much as the entire Rp 735 trillion allocated for transfers to the regions,” Ahmad told a DPD plenary session in Jakarta on Wednesday.

He argued that funding distributed among regional governments should not be only modestly higher than the amount the central government spends servicing interest on its debt.

“Transfers to the regions have to support 38 provinces, more than 500 regencies and cities, and more than 75,000 villages,” Ahmad said.

Under the 2027 state budget, government spending is set at Rp 4.0972 quadrillion, comprising Rp 3.3622 quadrillion in central government expenditure and Rp 735 trillion in transfers to the regions.

Ahmad said the share of regional transfers in total government expenditure had declined to 17.94% in 2027 from 28.24% in 2023.

Over the same period, the share allocated to central government spending increased to 82.06% from 71.76%, he said.

According to Ahmad, the shift reflects an increasing concentration of state expenditure at the central government level relative to funding transferred to regional administrations.

DPD Seeks Rp 45 Trillion Increase
The DPD has proposed raising transfers to the regions to at least Rp 780.22 trillion, which would represent an increase of Rp 45.22 trillion from the current allocation.

Ahmad said the additional funding could be drawn from the central government's reserve expenditure without increasing borrowing or widening the targeted budget deficit.

Responding to the proposal, Finance Minister Suahasil Nazara said the government would take the DPD's recommendations into consideration during deliberations on the 2027 budget with the House of Representatives.

“The considerations that have been presented and that we have heard today will become input that we will pay very close attention to and will form part of our discussions with the House,” Suahasil said.

Add as a preferred source on Google +