Indonesia's Regional Budget Guidelines for 2026: A New Directive

Joint Circular Emphasizes Mandatory Expenditures

In a significant policy move, Indonesia's Finance Minister Purbaya Yudhi Sadewa and Home Affairs Minister Tito Karnavian have issued a joint circular (SEB) providing comprehensive guidelines for regional governments regarding their 2026 budget allocations. The SEB, numbered SE-3/MK.08/2025 and 900.1.1/9902/SJ, dated December 9, 2024, addresses all governors, regents, and mayors across Indonesia.

Key Budget Priorities for 2026

The circular emphasizes that regional budgets (APBD) for the fiscal year 2026 must prioritize mandatory and binding expenditures. This directive is part of a broader national strategy to stimulate economic growth, reduce unemployment and poverty levels, and enhance overall societal welfare. The 2026 national budget (APBN) is designed to support government priority programs while strengthening the synergy between central and regional government expenditures.

Implementation and Implications

The joint circular comes after the determination of the 2026 Regional Transfer Allocation (TKD) to regional governments. By establishing clear guidelines for mandatory spending, the central government aims to maintain fiscal discipline while addressing critical development needs at the regional level. This move is expected to have significant implications for regional budget planning and execution in 2026, ensuring that essential services and obligations are adequately funded.