Jakarta. The Indonesian government on Wednesday confirmed it will use the state budget to repay roughly $7 billion in debt owed to China for the Jakarta–Bandung high-speed rail project, bringing clarity to weeks of debate over how the obligation would be settled.

The decision ends uncertainty over whether the debt would be covered by Indonesia’s sovereign wealth fund Danantara, the national budget, or operational revenue from the rail service, known as Whoosh.

State Secretary Prasetyo Hadi said technical discussions on the repayment mechanism are still underway, with negotiations being led by Danantara Chief Executive Officer Rosan Perkasa Roeslani.

“The latest report I received from Danantara shows the negotiations are already in the final stage,” Prasetyo told reporters in Jakarta.

Earlier, Kereta Api Indonesia (KAI) President Director Bobby Rasyidin said the long-running issue over repayment of the Jakarta–Bandung high-speed rail debt had been resolved.

“The most important thing is that the problem has been settled. The repayment method is still being discussed by the government, but essentially it’s done,” Bobby said.

The project cost $7.27 billion to build, with around 75% financed through a loan from China Development Bank, carrying an annual interest rate of about 2%.

The railway was developed by a consortium of Indonesian and Chinese state-owned enterprises. With Indonesian SOEs now under Danantara’s oversight, the fund has assumed responsibility for managing the project’s outstanding liabilities.

Danantara, however, has resisted absorbing the full debt burden and previously explored returning ownership of the Whoosh project — along with its liabilities — to the government. That proposal was rejected by Finance Minister Purbaya Yudhi Sadewa.

Purbaya argued that Danantara receives hundreds of trillions of rupiah in annual dividends from state-owned enterprises, funds he said could be used to refinance the rail project’s debt.