Transfer To Pared Areas, CSIS: State Expenditures Become More Centralized

Senior Researcher of the Ministry of Economics CSIS Deni Friawan (Screenshot/YouTube CSIS Indonesia).

JAKARTA - The Center of Strategic and International Studies (CSIS) or CSIS Indonesia assesses that the state spending policy in 2026 will be more centralized. The reason is, the portion of Central Government spending increased significantly, while the portion of transfers to the regions was cut to lower than the previous year.

It is known, in the 2026 State Revenue and Expenditure Budget (RAPBN) draft, the Government set a state expenditure target of IDR 3.786.5 trillion or grew 7.3 percent from the outlook for spending in 2025. Central Government spending is targeted at IDR 3,136.5 trillion or grew 17.5 percent from the outlook in 2025.

Meanwhile, the transfer allocation to the regions was IDR 650 trillion, down 24.8 percent from the outlook in 2025.

"State spending has become more centralized, where the portion of Central Government spending has increased by 17.8 percent, while transfers to regions (TKD) have actually decreased by minus 24.8 percent," said Senior Researcher of the CSIS Department of Economics, Deni Friawan, in a media briefing entitled RAPBN 2026: Considering Political Promises in the Middle of Fiscal Constraints, monitored online, Monday, August 18, 2025.

According to Deni, with the reduction in the portion of transfers to these regions, it is as if the role of the Central Government will be greater in state spending. In other words, programs that consume a large enough budget will be managed by the Central Government.

"So, all of these programs will be driven and run mostly by the Central Government. Meanwhile, the Regional Government will only depend on the Special Allocation Fund (DAK) and the General Allocation Fund (DAU), all of which have been directed for expenditure," he said.

For the performance of Central Government spending, said Deni, if you reflect on the performance of spending in the last few years, the allocation of goods and other expenditures tends to increase, while capital expenditures continue to decline. In fact, according to him, capital expenditures have a bigger role in economic growth.

"The important capital expenditure has actually decreased drastically and this role in total state spending has continued to decline in recent years. This is a question of capacity, productivity or productivity capacity from this country because capital expenditures are getting smaller day by day," he said.