<![CDATA[This study analyzes the dynamics of regional debt and its implications for fiscal sustainability in the archipelago with a case study of Maluku Province. Although regional debt is increasingly playing a role as a development financing instrument, limited fiscal capacity and high dependence on central transfers pose a risk to medium-term fiscal sustainability. This study uses a descriptive-analytical quantitative approach based on APBD data and regional financial statements to examine the debt trajectory, fiscal structure, and fiscal space. The results show that regional debt develops through a dynamic trajectory, from the accumulation phase to the active amortization phase, where debt payment obligations become a fixed fiscal burden. Although outstanding debt has decreased, debt service expenses remain significant, ranging from Rp126-137 billion per year, thus limiting regional fiscal flexibility. The debt service to revenue ratio increased from 4.35–4.49 percent in 2023–2024 to 9.15 percent in 2025. In addition, low fiscal independence (PAD < 25%), high dependence on central transfers (>75%), and increasing spending rigidity reinforce fiscal pressures. Fiscal space analysis shows limited, even negative conditions in 2025. Debt additions simulations show that the debt service to income ratio can increase to about 35.8 percent, exceeding the high risk threshold (>20%). These findings confirm that a decline in debt stocks does not necessarily reflect reduced fiscal pressures, as the annual liability burden remains binding on the APBD. This research contributes by introducing a debt trajectory approach in the context of the archipelago, as well as emphasizing the importance of alignment between debt policy and fiscal capacity in supporting sustainable development financing.]]>
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