Finance Minister Purbaya Yudhi Sadewa explained that Government Regulation Number 38 of 2025 was issued to help local governments address temporary funding shortages. The regulation also opens possibilities for long-term loans for clear projects. The Chairman of DPR RI Commission XI welcomed this step as a financing breakthrough.
Government Regulation (PP) Number 38 of 2025 on Loans Provided by the Central Government was signed by President Prabowo Subianto on September 10, 2025. The regulation governs loans from the central government to local governments, state-owned enterprises (BUMN), and regional-owned enterprises (BUMD).
Finance Minister Purbaya Yudhi Sadewa stated that the issuance of this PP aims to cover short-term funding shortages often faced by local governments, particularly at the beginning or end of the fiscal year. "Yes, sometimes at the start or end of the year, local governments sometimes lack funds, that's what it's for. Mainly to cover short-term cash shortages," said Purbaya at the Presidential Palace Complex in Jakarta on Wednesday.
Additionally, Purbaya mentioned that long-term loans could be considered if there are clear and viable projects. "But we also look if long-term needs arise, as long as the projects are clear, we can consider them," he said. However, discussions on the borrowing scheme have not yet been conducted in detail, and further provisions for loans to BUMN will be studied more deeply. "It will be reviewed later," he stated.
Chairman of DPR RI Commission XI Mukhamad Misbakhun welcomed the regulation positively. According to him, PP 38 of 2025 provides legal certainty and alternative financing access that is flexible. "PP 38 of 2025 is the answer to the need for a more flexible and managed funding scheme. With this regulation, the central government has a strong legal basis to support vital projects in regions and BUMN through direct loan mechanisms," Misbakhun said in his statement in Jakarta on Tuesday.