Jakarta. Jakarta provincial administration is set to issue a Rp 3.5 trillion ($193.49 million) municipal bond after regional transfers from the central government were cut by Rp 15 trillion, falling from Rp 27.5 trillion in 2025 to Rp 11 trillion in 2026, as the city turns to alternative financing to fund infrastructure and public services.

Governor Pramono Anung said the planned bond issuance would not burden future administrations, stressing that Jakarta's strong fiscal capacity would allow the debt to be repaid comfortably over its seven-year tenor.

"A Rp 3.5 trillion bond is not a burden for Jakarta. The city will be able to repay it properly, regardless of who serves as governor in the future," Pramono told reporters at Jakarta City Hall on Tuesday.

His remarks came in response to Home Affairs Minister Tito Karnavian, who cautioned that regional bonds are essentially debt and urged local governments to ensure they can meet future repayment obligations without burdening their successors.

Pramono said the bond is part of Jakarta's broader creative financing strategy rather than a response to fiscal distress. He added that the seven-year maturity was designed to keep the financing healthy and sustainable, and that the provincial administration had secured preliminary support from the Coordinating Ministry for Economic Affairs.

"That's why we chose a seven-year tenor. This regional bond is one form of creative financing that we are pursuing. We have also received support, or in-principle approval, from the Coordinating Ministry for Economic Affairs," he said.

He added that the Jakarta administration would still take into account recommendations from the Home Affairs Ministry before moving ahead with the issuance.

The provincial government plans to launch the Rp 3.5 trillion municipal bond in 2027 as an alternative funding source for infrastructure development and public services.

Pramono has repeatedly emphasized that the bond is intended to diversify Jakarta's financing sources and maintain fiscal sustainability, not to address financial difficulties.

The proceeds are expected to fund long-term public projects, including transportation infrastructure, hospitals, schools, reservoirs, polders, and other essential facilities, reducing reliance on the regional budget alone.