JAKARTA - A number of village heads are haunted by feelings of anxiety following the policy of cutting village funds 2026 by more than half from the previous year's amount.
News about the reduction of village funds began to emerge since the end of December 2025. Joko Lasmono, Kades Tijayan, Manisrenggo District, Klaten Regency, admitted that in 2026 village funds in his area had declined by more than 65 percent compared to the previous year. From Rp. 950 million village funds received in 2025, this year the Tijayan village will only receive Rp. 330 million.
According to his calculations, there will be a lot of village routine programs that will be affected by the village fund cuts, ranging from posyandu activities, health kade activities, and early childhood education programs managed by the village.
In addition, the activity of providing additional food to meet the nutrition of children and pregnant women whose children are at risk of stunting is also said by Joko to be hampered.
"It can be said that this pruning indirectly has the potential to hinder the handling of stunting. Yesterday we gave them additional food with a budget of Rp. 25,000 per portion, now reduced to only Rp. 15,000 per portion. That is, the nutritional value, right, so it is reduced," said Joko, quoted by Kompas.
Threatening Village DevelopmentMinister of Finance Purbaya Yudhi Sadewa issued a new regulation regarding the management of Village Funds through the Minister of Finance Regulation Number 7 of 2026. In the policy, the government requires 58.03 percent of the Village Fund to be allocated for the development of the Red and White Village Cooperative (KDMP).
In the regulation, the village fund ceiling in 2026 is IDR 60.57 trillion. That means, as much as IDR 34.57 trillion of it must be used by the village government to support the implementation of the Red and White Cooperative. Thus, the regular village fund that can be used flexibly for various needs is only around IDR 25 trillion. Meanwhile, the remaining IDR 1 trillion is an incentive budget that is disbursed based on the performance of the village.
This year, there are 75,260 villages that receive village funds. Therefore, on average each village will only receive an estimated budget of around Rp. 332 million. Whereas last year the average budget reached Rp. 1 billion.
President Prabowo Subianto said this policy was taken so that village funds were in line with national development goals. According to him, so far most of the village funds have not reached the community because they have been corrupted by village officials.
However, the reduction of village funds to more than half to be transferred to the KDMP has drawn sharp criticism. This policy is believed to have an impact on the development of local village priorities, as well as the risk of widening inequality and hindering village economic growth.
Melenceng from the Spirit of Village FundsPublic policy observer Agus Pambagio assessed that the policy has a high risk of affecting the effectiveness of village development and is prone to misuse of funds. He reminded that the spirit of cooperatives should come from members' dues, savings, and independent economic activities, not just a grant injection from the state budget. He is worried that the formation of cooperatives in these villages will only be a cover to absorb state funds without providing a real development impact for the villagers.
"The idea of a cooperative is built by members' dues, savings, and so on. It is allowed to grant, including donations. But the point is, according to Bung Hatta, it is the members' dues, not given the grant. If you give the grant, what is the cooperative for? I am afraid that the cooperative is built only to find money from the APBN, which in the end also does not make the development of the village," he said.
In addition, Agus also doubted that the village funds taken to build cooperatives would be effective, given the track record of managing funds at the village level which is still prone to leakage. He referred to the history where many cooperatives spend state budgets which lead to debt write-off and loss of funds without clarity of business.
"The government must be careful, it will eventually get stuck. What is the end of the effort, it is not clear. If cooperatives are built with grant funds from the state budget, I am 99 percent doubtful that the cooperatives will survive. Later who will be the chairman of the cooperative? Later the money will be embezzled. After about 2-3 years we will see whether my words are true or not," he said.
The Executive Director of the Committee for Monitoring the Implementation of Regional Autonomy, Herman N. Suparman, assessed that this policy has the potential to go beyond the original spirit of the village fund, namely recognition and subsidiarity.
From the beginning, village funds were designed to give villages the flexibility to recognize their own needs, prioritize, and manage spending according to the local context. When more than half of the budget is "locked" for one program, the village's room for maneuver is narrowed.
In addition, from the perspective of the cooperative concept, it is basically based on the principle of voluntary and member participation. If its formation is driven by policies that are mandatory and associated with budget cuts, the spirit of voluntariness will be eroded.
Prevent Budget AbuseA different argument was made by the Public Policy Observer from Trisakti University, Trubus Rahadiansyah, who assessed the allocation of village funds for the strengthening of the KDMP as a strategic step to prevent the misuse of the budget while strengthening the productivity of the village economy.
Trubus highlighted the many uses of village budgets that do not have a long-term impact on the welfare of residents.
"Many village funds are absorbed for short-term activities, are consumptive, and do not generate economic added value. In the context of governance, this condition also opens the door to misuse of the budget and legal risks for village apparatus," said Trubus in his statement.
According to him, it is not appropriate to say that village funds have been cut. Because in fact, village funds that have been spent for routine spending have been rearranged to provide a more sustainable impact. He emphasized the importance of clarifying information so that there is no misunderstanding at the community and village apparatus levels.
"The government does not reduce the allocation of village funds, but rather rearranges the direction of its use. This arrangement is carried out to ensure that village funds really become an instrument for sustainable village economic development, not just routine spending that quickly runs out," he said.
The reallocation of up to 58 percent of village funds for the strengthening of cooperatives, said Trubus, must be understood as part of a new policy design to strengthen the people's economy.
"Cooperatives do not take village funds, but rather become a vehicle for village funds to work more productively. Public funds are directed to strengthen village economic activities - from production, distribution, to strengthening local MSMEs," he said.
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