Finance Minister Purbaya extends US$11.86 billion surplus budget placement in state banks

Indonesia’s Finance Minister has extended the placement of Rp 200 trillion (US$11.86 billion) from the government’s Surplus Budget Balance (SAL) in state-owned banks (Himbara) until after March 13, 2026, as a liquidity support measure.

Liquidity Support Amid Slowing Credit Momentum

The policy contributed to 11.7 percent growth in base money (M0) through the first week of February 2026. Average bank loan rates have eased, declining to 8.80 percent at the beginning of the year from 9.12 percent in August 2025.

Under the arrangement, banks must pay a yield equivalent to 80.476 percent of the BI 7 Day Reverse Repo Rate on rupiah placement accounts if the government withdraws the funds. Minister of Finance Decree No. 276/2025 provides the legal framework for the SAL placement, but does not specify how banks should deploy the funds.

Bank lending has continued to expand since the transfer of SAL funds, though at a moderated pace. Full year credit growth in 2025 was 9.96 percent, slightly below the 10.39 percent recorded in 2024.

In January 2026, undisbursed loans reached Rp 2,506.47 trillion (US$148.63 billion), equivalent to 22.65 percent of total available credit ceilings, up from Rp 2,439.2 trillion (US$144.64 billion), or 22.12 percent in December 2025. This indicates that while liquidity has improved, credit absorption by businesses remains cautious.

Demand Side Constraints and Risk Considerations

Credit composition in late 2025 was largely supported by investment loans, which grew 17.98 percent year-on-year in December. However, broader demand dynamics remain uneven.

Extending the tenor of SAL placements may support liquidity stability, particularly ahead of seasonal cash demand during Eid al-Fitr. Ample liquidity can help reduce deposit rates, which in turn may lower lending rates.

However, credit growth ultimately depends on demand conditions and borrower confidence. Weak demand may increase non-performing loan (NPL) risks if businesses face declining revenues and repayment capacity.

Analysts caution that sustained liquidity support could place pressure on state-owned banks to accelerate lending, and that growth targets should not lead to a relaxation of credit standards.

The Role and Limits of SAL

The Surplus Budget Balance (SAL) functions as a fiscal buffer, designed to manage uncertainty, maintain the State Budget (APBN) deficit within statutory limits, and provide resilience against external shocks. It may also be used to finance programs deemed productive and capable of generating significant multiplier effects.

The use of SAL is governed by Minister of Finance Regulation (PMK) No. 147/PMK.05/2021 on SAL Management. The regulation stipulates that SAL may be deployed to meet temporary cash shortfalls, finance budget deficits, or support stabilization measures.

Article 10 of the regulation allows SAL to be used to finance deficits exceeding APBN targets, cover expenditure shortfalls if revenue realization falls below projections, and fulfill other financing needs as stipulated in the annual budget law.

Given Indonesia’s current fiscal pressures, including debt obligations and development financing needs, the deployment of SAL requires careful calibration. The effectiveness of the extended placement will likely depend on whether it strengthens credit transmission to the real economy rather than remaining as excess liquidity on bank balance sheets.