Indonesia approves 2027 budget shifts for PPPK salaries and energy subsidies

The Indonesian government and DPR RI have reached several key agreements regarding the 2027 State Budget (APBN). A major policy shift involves transferring the responsibility for paying Government Employees with Work Agreements (PPPK) salaries from regional governments to the central government. An allocation of Rp 23 trillion has been prepared in the 2027 Draft State Budget (RAPBN) to cover these costs, primarily targeting educators and healthcare workers. This move is expected to reduce the fiscal burden on regional budgets, allowing local governments to redirect funds toward infrastructure and other priority programs.

Additionally, the 2027 energy subsidy budget has been set at Rp 261.50 trillion, a decrease from the previous allocation of Rp 272.94 trillion. This reduction aims to improve targeting through improved data systems. The subsidy includes allocations for fuel (BBM), LPG, and electricity.

Regarding regional development, the Transfer to Regions (TKD) allocation is set to increase to Rp 735 trillion in 2027. Minister of Home Affairs Tito Karnavian stated this amount is sufficient to meet minimum regional needs, including education, health, and infrastructure. The budget also introduces innovative financing solutions, allowing regional governments to access central government investment operators to accelerate local development projects.