Indonesia Implements Debt Relief Measures for Disaster-Affected Regions

Comprehensive Support Package for Affected Areas

The Indonesian government is taking significant steps to support regions affected by natural disasters through comprehensive financial relief measures. The Ministry of Finance has announced plans to restructure or potentially forgive outstanding PEN loans for affected local governments that are still carrying these debts from the COVID-19 recovery period ¹

Key Components of the Relief Package

1. Debt Restructuring for PEN Loans: The Ministry will assess infrastructure projects funded by these loans. If the infrastructure remains usable, the government will offer extended repayment periods and reduced installments to ease the financial burden on affected regions. This measure aims to help local governments focus on recovery efforts without the immediate pressure of debt servicing ¹

   Source 1

   https://nasional.kontan.co.id/news/kemenkeu-siap-restrukturisasi-hingga-penghapusan-pinjaman-pen-pemda-terdampak-bencana
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2. Unconditional Regional Transfer Funds (TKD) for 2026: The government has decided to disburse TKD for 2026 without any conditionality for regions affected by disasters. This policy relaxation is designed to enable local governments to respond quickly to recovery needs without administrative delays. The decision reflects the government's commitment to supporting regional resilience and reconstruction ²

   Source 2

   https://nasional.kontan.co.id/news/kemenkeu-pastikan-tkd-2026-tanpa-syarat-bagi-daerah-bencana
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Implementation and Impact

These measures represent a significant policy shift towards supporting disaster-affected regions. By providing both debt relief and unconditional funding, the government aims to create an enabling environment for effective recovery and reconstruction. The Ministry of Finance will work closely with local governments to implement these measures, ensuring that resources are deployed efficiently to areas of greatest need.