Adapting DPD, Sri Mulyani Explains The Role Of State Expenditures Through Transfers To Regions

Minister of Finance (Menkeu) Sri Mulyani said that fiscal decentralization is very important to create social justice and in order to improve services to the better community.

Therefore, the delivery of funding sources through transfers to the regions (TKD) and regional taxation, accompanied by discretion of spending management to carry out government affairs that are under regional authority, will continue to be improved and synergized between the center and the regions.

This is what the Minister of Finance said while attending the Committee IV DPD Working Meeting at the Senayan Parliament Complex, Jakarta today.

"In the HKPD Law (Financial Relations Between Central Governments and Regional Governments), regional tax systems, vertical and horizontal inequality, which have been often and continues to strive to decline, the quality of regional spending is of concern because the TKDD allocation is increasing, and the harmonization between central and regional spending must be higher," he said, Tuesday, June 13.

The Minister of Finance said that TKD had experienced a very significant increase. It was stated that in 2023 the TKD had reached IDR 814.72 trillion. This figure is much higher than 2005 of IDR 150.5 trillion when he first became Minister of Finance.

"So the increase from the nominal number every year illustrates that fiscal decentralization must further describe not only the increase in TKDD, but services to the community and prosperity felt by the people in the regions must be more real," he said.

The Minister of Finance explained that TKD is the main source of income for the APBD, which is 68 percent. However, the contribution of local revenue (PAD) also increased to 27.4 percent. This illustrates that the economy in the regions is increasing so that local original revenue sources also experience improvement.

We need to continue to increase local revenue without reducing investment opportunities. But at the same time, we also have to look at the quality of regional spending. This is often seen as one of the obstacles to continuously improving the effectiveness of the APBN and APBD in encouraging improvement in economic prosperity and performance," he stressed.

Meanwhile, employee spending is the highest expenditure with an average portion of 35.01 percent. However, the portion slowly decreased from 40.06 percent in 2013 to 34 percent in 2022. The Minister of Finance assessed that regions need to be encouraged to increase productive spending that can stimulate the economy.

"We see that in the regions, spending is still dominated by personnel spending, which in this case has experienced a downward trend but is still quite high, namely at 34 percent. We need to see so that APBD spending is more directly felt by the impact and benefits of the community," closed the Minister of Finance Sri Mulyani.