he central government’s move to cut regional transfer funds in the 2016 state budget will hit the economy in the regions as several ongoing budget allocations have been abruptly shut off, a local administration association has said.
Regency Administrations Association (Apkasi) secretary-general Muhammad Nurdin Abdullah said the government’s decision to slash regional transfer funds by Rp 73 trillion (US$5.49 billion) was counterproductive given its initial efforts to optimize the economy in the regions.
"With limited funds from the state budget, the finance minister's decision to cut the budget in the middle of the road has put a burden on us. It's hard to find a solution as we have promised to meet society’s needs, including in infrastructure," he said during a workshop on economic leadership for regional administrations on Wednesday in Jakarta.
Finance Minister Sri Mulyani Indrawati postponed the disbursement of regional transfer funds after she estimated a revenue shortfall in the 2016 state budget, prompting a second round of budget cuts.
The regional transfers include the General Allocation Fund (DAU), special allocation funds (DAK) and revenue sharing funds (DBH). After the cuts, the total amount of regional transfer funds this year will stand at Rp 659.2 trillion.
According to the plan, 187 regional administrations will see cuts to their DBH allocations — which are sourced from commodity tax paid to the government — while 169 administrations will see their DAU postponed. (ags)
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