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Public Sector Financing

A financing facility for regional governments providing medium- to long-term funding options beneficial in speeding up basic and social infrastructure, stimulating economic growth, and increasing social development in these regions.

Guidelines for the initiation of PT SMI regional loans can be found in the following:

The Benefits:

  • Accelerate local infrastructure development
  • Better public services for the local population
  • Potential to increase quality of life
  • Potential to increase the region’s revenue
  • Rapidly accelerate regional economic growth

Why PT SMI?

  1. A state-owned enterprise under the Ministry of Finance focuses on infrastructure financing 
  2. Has a unique financing system as an alternative to traditional funding cycles and is not bound by the fiscal year
  3. Has objectives to create and support sustainable infrastructure financing through making significant impact on economic, environmental, social, and more
  4. Provide alternative financing to accelerate infrastructure development in the region

Types of Regional Loans:

Short Term Loans

Regional Loans within a maximum period of 1 (one) fiscal year, where the obligation to repay (loan principal, interest, and/or other obligations) must be fully repaid in the relevant fiscal year. Short-term loans are used only to cover the lack of cash flow.

Medium Term Loans

Regional Loans in a period of more than 1 (one) fiscal year, where the obligation to repay (loan principal, interest, and/or other obligations) must be fully repaid within a period that does not exceed the remaining term of office of the governor, regent or mayor concerned. Medium-term loans are used to finance public services that do not generate revenue

Long Term Loans

Regional Loans in a period of more than 1 (one) fiscal year, where the obligation to repay (loan principal, interest, and/or other obligations) must be repaid following the terms of the agreement. Long term loans are used to finance investment activities for infrastructure and/or facilities in the context of providing public services with the following criteria: 

  1. Produce direct revenue in the form of income for the Regional Budget related to the construction of such infrastructure and facilities;
  2. Produce indirect income in the form of savings on APBD expenditure that should have been spent if the activity was not implemented; and/or
  3. Providing economic and environmental/social benefits.

* PT SMI provides medium and long-term loans for regional infrastructure development. All loans that have been approved are set out in loan agreements between PT SMI and the Regional Government.