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View all search resultsRegional leaders 'anxious' over transfer cuts, revenue-share delays
All eyes are on President Prabowo Subianto, who is set to unveil next year's state budget in two weeks, which will reveal whether transfers to regional governments will face another round of cuts.
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Regional leaders are seen on Feb. 25, 2025, during a week-long mountain glamping retreat at a military academy in Magelang, Central Java. (AFP/Aditya Aji)
R
egional leaders are calling for an overhaul of the fiscal transfer system, warning that shrinking transfers to the regions and delays in disbursing revenue-sharing funds (DBH) have left many administrations "anxious", as they struggle to pay civil servant allowances and finance infrastructure projects.
Experts say the austerity drive pursued over the past 18 months has pushed many regional governments close to their limits, leaving little room for further budget cuts.
The squeeze has sharpened the gap with the central government's continued lavish spending on flagship initiatives, which could widen further if President Prabowo Subianto opts to reduce transfers to regional governments again in next year's state budget, which is set to be unveiled within the next two weeks.
Several regions reported that DBH disbursements had been either delayed or partially released, disrupting budget execution and cash management, according to the Association of Indonesian Regencies (Apkasi).
"Frankly, anxiety and uncertainty have become widespread among us as we carry out our duties as regional leaders,” Apkasi chairman Bursah Zarnubi told a hearing with House of Representatives Commission II overseeing home affairs and civil service empowerment on Thursday.
“We want to accelerate development and support the President’s programs in our regions, but our fiscal space has been squeezed by budget cuts and mandatory spending efficiencies.”
To address the problem, regional leaders suggested three changes: improving governance and reconciliation of DBH data, ensuring certainty over disbursements and revising the palm oil revenue-sharing formula to give producing regions a larger share of proceeds.
