Sri Mulyani Ensures the HKPD Bill Will Not Revoke the Mandate of Fiscal Decentralization: What Should Be Improved Is The Governance, Not Taking Authorities

Minister of Finance Sri Mulyani while attending a Working Meeting with Commission XI DPR RI (Photo: Doc. Ministry of Finance)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said that the proposed Draft Law (RUU) on Financial Relations between the Central and Regional Governments (HKPD) was intended to address challenges and obstacles in the distribution of the state budget.

According to the Minister of Finance, the new regulation is expected to help further focus on efficiency and effectiveness, as well as governance based on transparency and accountability.

"To realize this goal, the financial relationship between the central government and regional governments is carried out based on four main pillars", she said when holding a Working Meeting (Raker) with Commission XI of the Indonesian House of Representatives (DPR RI) which was broadcast virtually, Monday, September 13.

The first, said the Minister of Finance, is to develop finances by minimizing inequalities both vertically, namely central, provincial, district/city, to the village, as well as horizontally between the same regional government in the same areas in various regions in Indonesia.

“Minimizing this inequality is done by transferring to the regions and financing regional debt. This is done, among others, by carrying out a precision DAU (general allocation fund) reformulation based on a better measure of basic service needs", she said.

Furthermore, the state treasurer said that the special allocation funds (DAK) were focused on achieving national priorities in the regions. In addition, expansion of regional debt financing schemes.

The second is the harmonization of fiscal policy between the central and regional governments in providing optimal public services and maintaining fiscal sustainability through a policy of synergy between the central fiscal and regional fiscal.

“This is felt very much when we are facing a pandemic, where synchronization and harmonization of policies are very much needed. Because, in tackling COVID-19 at this time the impact can be felt at the center, and the center-region", she explained.

Three improve the quality of regional spending through the implementation of performance-based TKD (transfer to regions) policies and strengthening regional spending discipline.

"So what is being repaired is the management, not the authority again", she said.

Meanwhile, the fourth is the regional tax and retribution system that supports the efficient allocation of national resources.

“The four pillars support the objectives of the HKPD Bill in order to ensure that national policies and objectives using fiscal policy instruments in the State Budget (APBN) remain in sync with those carried out by local governments. The APBN and Regional Budget (APBD) work together synergistically, harmoniously, and in harmony to maintain fiscal sustainability and the national economy", concluded the Minister of Finance.