Indonesia's Regional Finances: Surging Deposits and Declining Revenue

Regional Government Deposits Reach Record High

The Ministry of Finance has reported that regional government deposits in Indonesian banks have reached Rp218 trillion in 2025, indicating significant liquidity in the banking system ¹

. This substantial amount has raised concerns about the underutilization of these funds for regional development projects.

Decline in Local Government Revenue

In a related development, the Directorate General of Fiscal Balance (DJPK) at the Ministry of Finance reported that local government revenue (PAD) declined by 2.8% to Rp375.50 trillion in 2025 compared to the previous year ²

. The decrease was primarily attributed to reduced performance in managing regional assets and other local revenue sources. Director General Askolani highlighted that this decline occurred in many regions, emphasizing the need for improved financial management at the local level.

Implications for Regional Development

The combination of high regional deposits and declining local revenue presents a complex challenge for Indonesia's regional development. While the high deposits indicate available funds that could be channeled into development projects, the decline in local revenue suggests that many regions are facing fiscal constraints. The government is expected to provide guidance and support to help regions optimize their financial resources.