Kemenkeu caps 2027 APBD deficit at 2.5 percent
Local governments can exceed the limit only with approval from the finance minister and must meet a minimum DSCR of 2.5.
The government has set the maximum 2027 APBD deficit at 2.5 percent of projected regional revenue through PMK Nomor 76 Tahun 2026. The rule also sets the cumulative national APBD deficit and regional debt financing limits at 0.18 percent each of the GDP projection used in drafting APBN 2027.
Regional governments may still seek deficits above that threshold, but they must obtain approval from the Minister of Finance. Requirements include a debt service coverage ratio, or debt service coverage ratio, of at least 2.5, and total remaining debt plus planned new borrowing must not exceed 75 percent of APBD revenue from the previous year that was not earmarked.
For loans that extend beyond a regional head's term, as well as regional bonds and sukuk, approval also requires consideration from Kementerian Dalam Negeri and Bappenas.