Indonesia's Finance Ministry Gains New Authority in Currency Management

Enhanced Fiscal Flexibility Introduced in APBN 2026

The Indonesian government has introduced a significant policy shift in the 2026 State Budget (APBN) through Law No. 17/2025, granting the Finance Ministry new powers to manage currency composition. This development allows the ministry to recompose rupiah and foreign currency positions, a capability previously held by Bank Indonesia (BI).

Key Features of the New Policy

1. Expanded SAL Management: The State General Treasury (SAL) funds can now be placed outside BI, enabling more flexible financial management.
2. Currency Recomposition Authority: The Finance Ministry can adjust the currency composition to better manage exchange rate risks.
3. Fiscal Risk Mitigation: The new policy aims to enhance fiscal sustainability and reduce vulnerability to market uncertainties.

Implications for Financial Management

This policy change represents a strategic move to improve Indonesia's fiscal resilience against currency fluctuations and debt servicing costs. By allowing the Finance Ministry to actively manage currency exposure, the government can potentially reduce the impact of exchange rate volatility on the national budget.

Market and Economic Context

The introduction of this new authority comes at a time when global economic conditions remain uncertain, with currency markets experiencing significant volatility. The Indonesian government's proactive approach to fiscal management demonstrates its commitment to maintaining economic stability while pursuing development objectives.