TEMPO.CO, Jakarta - Indonesian Finance Minister, Purbaya Yudhi Sadewa, plans to inject additional funds for 490 local governments that are having trouble paying civil servant salaries. "Since the TKD reduction, we have calculated that there might be regions that cannot survive," said Purbaya in Jakarta on Tuesday, July 28, 2026.
Aside from the inability to pay salaries, Purbaya stated that the reduction of the TKD has hindered local governments from conducting operational activities. Therefore, Purbaya mentioned that the Ministry of Finance will add funds for hundreds of these regions.
However, the disbursement of new funds can only take place with the permission of President Prabowo Subianto. "There is a possibility, it depends on the guidance from the President," he said.
Prior to this, the Ministry of Home Affairs urged local governments to carefully mitigate the impact of the reduction in the transfer of funds to the regions. Deputy Minister of Home Affairs, Bima Arya, hopes that the regional heads do not lay off civil servants or other government employees due to the reduction in TKD funds.
According to Bima, termination of employment is a drastic step. "We request that regional heads refrain from taking drastic measures such as layoffs and terminations," said Bima at the Presidential Palace in Central Jakarta on Tuesday, July 28, 2026.
He stated that regional governments facing difficulties in personnel expenditures due to the reduction in TKD from the central government can explore other strategies. One option is to implement fiscal efficiency measures.
At present, Bima stated that the Ministry of Home Affairs is still mapping out a list of regional governments struggling to pay the salaries of civil servants and contract employees. The Ministry of Home Affairs is also coordinating with the Ministry of Finance and the House of Representatives Commission II, which oversees the government, to resolve the issue.
The central government has been implementing budget reduction policies since 2025, including cutting TKD funds. The total reduction of transfer funds to the regions in 2025 amounted to Rp50.59 trillion.
In 2026, the government reduced the budget for TKD compared to previous years. The allocation for TKD in 2026 is Rp650 trillion, a decrease of 24.7 percent compared to a similar budget allocation in 2025.
As a result of the TKD reduction, several regions are planning to lay off their employees, especially government employees with work agreements or PPPK status.
Sultan Abdurrahman contributed to the writing of this article.
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