By Norman Harsono and Eddie Spence | Updated on Jun 12, 2026 at 12:17 PM
Jakarta aims to issue Indonesia’s first municipal bond within a year as part of efforts to diversify city revenue sources following budget cuts.
The administration is in talks with the Asian Development Bank and World Bank to prepare the securities, which could be used to finance a variety of infrastructure projects in the pipeline, Jakarta Governor Pramono Anung Wibowo said in an interview with Bloomberg News on Friday. He declined to specify a funding target.
Jakarta has gone back-and-forth over issuing a municipal bond for more than a decade. The plan recently found renewed political vigor after President Prabowo Subianto’s administration redirected many local budgets toward big-ticket government programs like free meals and village cooperatives. Budget transfers to Jakarta for this year were cut by around 15 trillion rupiah ($839.3 million), equal to about 16% of the initial budget.
That compelled Jakarta, which last year overtook Tokyo as the world’s most populous city, to explore other ways of financing public services. Local regulators are tapping private companies for money and are seeking to create a Jakarta wealth fund modeled after sovereign wealth fund Indonesia Investment Authority, Pramono said.
The challenge so far is regulatory, considering the Finance Ministry has yet to issue a letter approving both the municipal bonds and the wealth fund, he added.
Finance Minister Purbaya Yudhi Sadewa verbally approved Jakarta’s plan to issue municipal notes and create a wealth fund for the city after meeting Pramono in October.
“The issue is because, doing this for the first time, everybody doesn’t want to take on the risk of the policy. That’s the problem. But I have told them, the risk is not yours, it’s on Jakarta,” Pramono said. “Sometimes, we just need to be patient.”