Utilization of Natural Resources Export Earnings for Green Infrastructure Financing

Indonesia has great potential in increasing foreign exchange reserves through natural resource exports, but the practice of storing export proceeds in foreign banks by exporters reduces domestic liquidity and weakens monetary stability. To overcome this, the Government issued Government Regulation Number 8 of 2025 which requires the placement of 100% of foreign exchange proceeds from natural resource exports in the national financial system for a minimum of 12 months (non-oil and gas) and 30% for 3 months (oil and gas). This doctrinal legal research analyzes the policy through a statutory and literature approach, concluding that this regulation not only strengthens foreign exchange reserves-which stood at USD144 billion (February 2024)-but also becomes a strategic instrument of green development funding. By diverting foreign exchange to domestic accounts, the policy creates fiscal-monetary synergies, increases Bank Indonesia’s intervention capacity in exchange rate stabilization, and opens up opportunities for funding green infrastructure projects such as renewable energy and green transportation. However, the main challenge lies in the fluctuation of global commodity prices and the green financing gap that reaches USD6.9 trillion/year to meet the Paris Agreement targets. The implication is that optimizing foreign exchange from natural resource exports has the potential to accelerate the green economy transition, although it requires downstream strategies, market diversification, and consistent regulatory enforcement to ensure ecological sustainability and intergenerational equity.