JAKARTA - Finance Minister Purbaya Yudhi Sadewa officially issued Minister of Finance Regulation (PMK) Number 101 of 2025 which regulates the maximum cumulative limit of the Regional Revenue and Expenditure Budget (APBD) deficit, the APBD deficit limit, and the cumulative limit of regional debt financing for the 2026 Fiscal Year.
The new rules also revoke PMK Number 75 of 2024 which previously regulated similar provisions for the 2025 Fiscal Year.
The main difference in PMK Number 101 of 2025 lies in the determination of the maximum limit of the 2026 APBD deficit which is uniformly applied to all regions, without distinguishing the fiscal capacity of each region.
In the regulation enacted on December 31, 2025, the government set a maximum cumulative deficit limit for the 2026 APBD of 0.11 percent of the Gross Domestic Product (GDP) which is the basis for the 2026 State Budget.
The cumulative limit of the APBD deficit is the maximum total deficit of all APBD in one budget year. This figure is lower than the cumulative limit of the APBD deficit in the 2025 State Budget which reaches 0.20 percent of GDP.
Meanwhile, for each local government, the maximum limit of the 2026 fiscal year APBD deficit is set at 2.50 percent of the estimated regional revenue for the year concerned.
For comparison, in PMK Number 75 of 2024, the limit of the 2025 APBD deficit is determined based on the category of regional fiscal capacity, namely 3.75 percent for the very high category, 3.65 percent for the high category, 3.55 percent for the moderate category, 3.45 percent for the low category, and 3.35 percent for the very low category.
"The maximum limit of the 2026 APBD deficit as referred to in article 3 is a guideline for the Regional Government in determining the 2026 APBD," reads article 4 of PMK No. 101/2025, quoted Tuesday, January 6.
In addition, the policy also regulates the maximum limit of cumulative regional debt financing in Article 5 paragraph (1). For 2026, regional debt financing to support the respective regional APBD is limited to a maximum of 0.11 percent of the GDP projection used in the 2026 State Budget.
"Regional Debt Financing as referred to in paragraph (1) includes Regional Debt Financing used to finance financing expenditures," reads Article 5 paragraph (2).
The provisions regarding the maximum limit and the cumulative limit of debt financing are the basis for controlling the APBD deficit in the evaluation process of the draft regional regulations on the APBD by the Minister of Home Affairs and the governor.
In the event that the local government exceeds the maximum limit of the APBD deficit, it must obtain the approval of the Minister of Finance and the regional head must submit a written application to the Minister of Finance before the draft APBD Regulation is evaluated by the Minister of Home Affairs or the governor.
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