Indonesia Implements New Regulations for Managing Delayed Government Projects

Enhanced Budget Management Framework

The Indonesian government, through Finance Minister Purbaya Yudhi Sadewa, has introduced new regulations to improve the management of government projects that extend beyond the fiscal year. The new rules, encapsulated in PMK No. 84/2025, focus on creating a more transparent and accountable budget execution process by establishing a specific mechanism for handling delayed projects.

Key Features of the New Regulation

1. Retention Account Mechanism: The new regulation introduces a retention account system to manage funds for projects that are not completed by year-end. This mechanism is designed to prevent the misallocation of budget funds and ensure that resources remain dedicated to their intended projects.
2. Update to Previous Guidelines: The new PMK updates and refines the previous regulation (PMK No. 109/2023), reflecting the government's commitment to improving budget management practices.
3. Effective Date: The regulation is effective from 26 November 2025, giving relevant stakeholders time to adapt to the new framework.

Implications for Government Projects

The introduction of this new regulation is expected to have several positive impacts on government project management:

• Improved Budget Discipline: By providing a clear mechanism for handling delayed projects, the government aims to enhance overall budget discipline and reduce the likelihood of fund misallocation.
• Enhanced Transparency: The use of a retention account is likely to increase transparency in budget execution, as funds will be managed more systematically.
• Better Project Continuity: The new rules should help ensure that projects are not abruptly halted due to budgetary constraints at the end of the fiscal year, promoting continuity and completion of ongoing initiatives.

Conclusion

The issuance of PMK No. 84/2025 represents a significant step towards improving the management of government projects in Indonesia. By addressing the challenges associated with delayed projects, the Finance Minister's regulation is poised to enhance the overall efficiency and accountability of public expenditure.