Municipal Financing is an infrastructure financing facility provided to Regional Governments in order to support the acceleration of the provision of basic and social infrastructure with medium and long term financing. This facility is very useful for accelerating infrastructure development in the region.
Benefits of Regional Loans
- Acceleration of infrastructure development in the region
- Accelerating the provision of public services
- Potential to increase local revenue
- Potential to accelerate regional economic growth
Why PT SMI?
- PT SMI is a State-Owned Enterprise under the Ministry of Finance that focuses on infrastructure financing
- PT SMI has a scheme and the financing cycle does not follow the fiscal year
- PT SMI has objective of sustainable infrastructure financing to obtain economic, environmental and social benefits and other benefits
- PT SMI can provide alternative financing to accelerate infrastructure development in the region
Types of Regional Loans
- Short Term Loan
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 in accordance with 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:
- Produce direct revenue in the form of income for the Regional Budget related to the construction of such infrastructure and facilities;
- Produce indirect income in the form of savings on APBD expenditure that should have been spent if the activity was not implemented; and/or
- 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.