Analysis: SAL new rulebook: Where the money should go

The Indonesian government has recently altered how it handles budget surplus funds, formally revising the rules that govern the management of approximately Rp 400 trillion (US$22.4 billion) in excess cash. This change, outlined in Finance Ministry Regulation (PMK) No. 67/2026, now allows the government to place surplus funds with commercial banks or invest them in government securities (SBN), granting the Finance Ministry enhanced flexibility in managing its cash reserves.

The new policy expands upon a strategy introduced by former Finance Minister Purbaya Yudhi Sadewa in September 2025, who began transferring surplus funds from the central bank, Bank Indonesia (BI), into state-owned banks (Himbara). The aim was to boost banking liquidity and encourage lending. However, this move sparked a power struggle between the Finance Ministry and BI over the management of the surplus funds, with the government temporarily withdrawing some of the funds from Himbara amid pressure on the rupiah's value.

Despite this temporary setback, the government chose to formalize the flexibility to allocate surplus funds outside BI through PMK 67/2026, avoiding the need for a new Finance Minister Decree (KMK) for each placement. This change transforms the previous requirement of individual decisions into a more streamlined cash-management mechanism.

Proponents of returning the surplus funds to BI argue that it would give the central bank more access to liquidity as it manages external pressures and the rupiah's value. However, critics point out that the placement of surplus funds with Himbara has achieved significant results, with the government's total placement reaching nearly Rp 400 trillion by August, extending the original Rp 200 trillion placement until July 2027.