Local Governments Urged to Improve Budget Management for Better Early-Year Spending

STATE BUDGET – JAKARTA. Local governments in Indonesia have been urged to improve their budget management to achieve better early-year spending and avoid budget accumulation at the end of the year. This is seen as crucial to boosting domestic economic growth.

According to data from the Ministry of Finance, the realization of transfers to regions (TKD) reached Rp 134.7 trillion as of February 2024, an increase of 21.9% compared to the same period last year. This realization also represents 15.7% of the target.

Finance Minister Sri Mulyani Indrawati explained that the TKD consists of general allocation funds (DAU) of Rp 82.6 trillion or 19.3% of the budget. The realization of DAU was higher than in February 2023, mainly due to the increased realization of the Block Grant DAU portion.

The realization of non-physical special allocation funds (DAK) reached Rp 28.6 trillion or 21.4% of the budget.

This realization also increased from February 2023, mainly due to the recommendation for disbursement from the Ministry of Education, Culture, Research, and Technology (Kemendikbudristek) being delivered earlier than the previous year as a requirement for the disbursement of Fund I of the Operational Assistance for Education Units (BOSP).

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The realization of revenue sharing funds (DBH) reached Rp 16.2 trillion or 11.3% of the budget. This realization was also higher than in February 2023, in line with the increase in the DBH Minerba budget for 2024.

"DBH increased due to the increase in prices of commodities that we share, such as oil and gas. This year, we started with DBH for CPO," said Sri Mulyani during a Working Meeting with Commission XI of the DPR, Tuesday (19/3).

Furthermore, the realization of village funds reached Rp 7.4 trillion or 10.4% of the target. This realization also increased from last year due to increased compliance in the completion of the Village Budget (APBDes).

Finally, the realization of fiscal incentives reached Rp 30 billion, higher than last year because fiscal incentives have been disbursed to 3 regions that have met the disbursement requirements.

Sri Mulyani said that there has been no realization for physical DAK, special funds (Dais), special autonomy funds, and grants.

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Although the realization of transfers to regions has been expansive, the realization of the Regional Budget (APBD) as of March 21, 2024 is still low. Citing data from the APBD postal data page, the realization has only reached Rp 61.8 trillion or 4.67% of the budget.

The realization of APBD expenditure consists of employee expenditure which has only reached Rp 37.64 trillion or 8.38% of the budget, goods and services expenditure which has reached Rp 12.5 trillion or 3.34% of the budget, capital expenditure which has reached Rp 1.43 trillion or 0.7% of the budget, and other expenditures which have reached Rp 10.2 trillion or 3.54% of the budget.

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Key Points:

• Local governments urged to improve budget management for better early-year spending.
• Realization of transfers to regions (TKD) reached Rp 134.7 trillion as of February 2024, up 21.9% year-on-year.
• Realization of APBD expenditure still low at 4.67% of the budget as of March 21, 2024.
• Improved budget management and early-year spending seen as crucial to boosting domestic economic growth.