Indonesia’s Jakarta–Bandung high-speed rail project, known as Whoosh, has cost an estimated $7.27bn (around IDR120.7 trillion), with 75% of the investment financed by debt from China, CNBC Indonesia reports. The operator, PT Kereta Cepat Indonesia China (KCIC), now faces mounting pressure to service both principal and interest payments.

Amid scrutiny over the project’s financial strain, the state budget (APBN) has emerged as a possible source for debt repayments. President Prabowo Subianto hinted at this approach during a visit to Manggarai Station and the inauguration of the new Tanah Abang Station on November 4.

“Let’s not argue about this anymore. I’ve said it, the President of Indonesia will take responsibility. We are capable, we are strong, and the money is there,” Prabowo said, signalling readiness for government intervention in financing the project’s obligations.

However, economists have warned that using public funds to cover the railway’s debt would deviate from the project’s original business-to-business (B2B) structure. Bhima Yudhistira, Executive Director of the Centre of Economic and Law Studies (CELIOS), stressed that the venture was designed to be self-financing through KCIC’s consortium, not backed by taxpayers.

“If the APBN takes on this burden, it risks widening the fiscal deficit. Diverting public spending just to inject capital into KAI (Indonesia’s state railway firm) for Whoosh’s debt would effectively make it a publicly funded project from the start, defeating the purpose of partnering with China,” Bhima said. Back in October, Indonesia and China agreed to restructure the debt, extending the repayment period to 60 years to ease the project’s financial burden.

He added that the partnership should have eased fiscal pressure, not added to it. Using the national budget for debt servicing could, he warned, either increase the deficit or push up public debt, forcing taxpayers, including those who never use the high-speed rail, to bear the cost indirectly.

“State capital injections should prioritise regular railway development, especially in regions outside Java that still lack connectivity. It’s illogical for public funds to subsidise transport mainly used by the upper middle class,” he said.

Bhima proposed that the state holding company Danantara should assume responsibility instead, noting it holds about IDR80 trillion ($4.8bn) in dividends, most invested in government bonds. “Danantara exists to address BUMN project issues. The solution could involve creative restructuring, such as debt swaps or partial cancellations, rather than drawing on the APBN,” he suggested.

Echoing similar concerns, Muhammad Rizal Taufikurrahman, Head of Macroeconomics at INDEF, described the debt situation as a fiscal dilemma. While the Whoosh project is technically B2B, the involvement of state enterprises means that financial weakness could still translate into fiscal exposure.

“If the government refuses to use public funds, the project risks default, undermining investor confidence in Indonesia’s infrastructure policy. But if it uses the APBN, it creates a moral hazard, rescuing a commercial venture with taxpayer money,” Rizal explained.

Rizal suggested that restructuring the debt and improving KCIC’s business model would be the most balanced solution. Adjustments in loan interest rates, repayment terms, and revenue diversification through Transit-Oriented Development (TOD) and transport integration could sustain operations without straining public finances.