The finance ministry will reallocate the funds for central government spending and transfers to regional administrations, finance minister Purbaya Yudhi Sadewa said on the sidelines of a market reopening event in Jakarta today.

“I’ll withdraw it from the system, but immediately spend it, straight back into the economy,” he told reporters.

“So it won’t disturb the amount of money in circulation and, in fact, will have a positive multiplier effect through government spending,” he added.

Purbaya, who took office four months ago, had placed Rp276 trillion of government cash reserves in six state-owned banks – including PT Bank Mandiri, PT Bank Rakyat Indonesia and PT Bank Negara Indonesia-— in a bid to encourage banks to extend more credit and support faster economic growth.

The funds are typically kept for the government’s liquidity needs, including urgent spending and budget deficit financing.

The minister said Wednesday that he planned to claw back part of the deposits, describing the initiative’s impact on lending as “not as optimal as expected due to lack of policy synergy with the central bank”.

Bank Indonesia has said that weak lending last year reflected demand-side constraints rather than banks’ capacity to lend, and has forecast full-year loan growth ending the year toward the lower bound of its 2025 target of 8%-11%. Loan growth was 7.74% year-on-year in November.

The central bank said last month that companies remained in wait-and-see mode, preferring to rely on internal funding amid persistently high borrowing costs.

“Redirecting this from state-bank placements into fiscal spending should be growth-supportive as government outlays typically have a larger economic multiplier than idle liquidity in the banking system,” said Mohit Mirpuri, a senior partner at SGMC Capital Pte.

Shares of Bank Rakyat fell as much as 1.1% this morning, while Bank Negara slid 2.5% and Bank Mandiri shed 1.5%.

Indonesia’s stock exchange was closed Wednesday and Thursday.