Speaking to reporters after a meeting with Finance Minister Purbaya Yudhi Sadewa on Tuesday, Jakarta Governor Pramono Anung said the bond issuance was part of a “creative financing” measure to circumnavigate the massive funding cut imposed on the provincial budget.

“We’re asking for permission from the Finance Ministry to allow Jakarta to undertake creative financing, which includes the Jakarta Collaboration Fund [and] municipal bonds and whatnot, [measures] that have never been undertaken,” said Pramono.

He said the idea came about because central government transfers for Jakarta’s budget were cut from Rp 95 trillion (US$5.7 billion) to Rp 79 trillion for next year.

Purbaya called Pramono’s initiative “rather ambitious” but said he “will support the plan” and that the funds raised from the bond issuance would not be used exclusively in Jakarta “but also in other places”.

Indonesia has regulations on municipal bonds in place since 2019, with elaborate implementing rules in effect since last year, but no regional government has made use of them, until now.

The Jakarta Collaboration Fund is one of Pramono’s flagship programs peddled during his election campaign in October last year. The plan was to create an investment management body as a regional entity similar to Indonesia's sovereign wealth fund Indonesia Investment Authority (INA).