IDR 220 Trillion in Regional Government Funds Idle in Banks as of June 2022

Economics & Macro

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Cindy Mutia Annur 29/07/2022 18:30 WIB

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Regional government funds deposited in banks reached Rp220.95 trillion in June 2022, a 10.6% increase from the previous month.

Local Government Fund Deposits in Banks (June 2021 - June 2022)

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IDR 220 Trillion in Regional Government Funds Idle in Banks as of June 2022

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Local Government Fund Deposits in Banks (June 2021 - June 2022)

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According to a report by the Ministry of Finance (Kemenkeu), regional government (pemda) funds deposited in banks reached Rp220.95 trillion in June 2022. This amount increased by 10.6% from the previous month, marking the highest level since the beginning of the year.

East Java had the highest deposit balance at Rp29.82 trillion, while the lowest was Kepulauan Riau at Rp1.17 trillion.

Finance Minister Sri Mulyani attributed the high deposit of regional government funds to suboptimal regional spending. The realization of the Regional Revenue and Expenditure Budget (APBD) until June 2022 decreased by 7.7% compared to the same period last year.

"This situation always creates a dilemma. If (the regional governments) are given transfers quickly, we must ensure that (the funds) don't just sit in bank deposits," Sri said during the July edition of the KiTA State Budget Press Conference on Wednesday, July 27, 2020.

Separately, the Director General of Fiscal Balance at the Ministry of Finance, Astera Primanto Bhakti, stated several reasons behind the high deposits of regional government funds in banks, one of which is related to spending patterns.

"Regional governments have yet to change their spending patterns. Based on bank balances, the funds are usually highest in October. So, this will continue to increase until October, and then decrease in November and December," said Astera, as quoted by *Kompas.com* on Thursday, July 28, 2022.

Another reason is that some regions have not yet completed project bidding contracts, preventing them from spending.

To improve this, Astera believes that structural reforms are needed, ranging from improving spending patterns to the stages of planning and executing projects.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."