JAKARTA - Minister of Finance (Menkeu) Sri Mulyani officially inaugurated the socialization of the Law on Government and Regional Financial Relations (HKPD) today in Demak, Central Java.
In his statement, the Minister of Finance said that the HKPD Law was the answer to the implementation of 20 years of fiscal decentralization which still encountered various challenges, such as the suboptimal utilization of Transfers to Regions and Village Funds (KTDD), the structure of regional spending that was not satisfactory, and the low local tax ratio.
"The central government also assesses that the use of financing by the regions is still limited, so that the synergy between the central and regional fiscal policies is not optimal," she said through a virtual channel on Thursday, March 10.
For this reason, the Minister of Finance explained that the framework of the HKPD Law was designed to strengthen fiscal decentralization in order to achieve equal distribution of services and welfare.
"Through the HKPD Law, which is also Law Number 1 of 2022, it will be able to increase regional fiscal capacity and also improve the quality of spending," she said.
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In the editorial notes, the 2022 State Budget has determined an allocation of state expenditures of IDR 2.714.2 trillion and state revenues of IDR 1.846.1 trillion. Of this figure, IDR 769.6 trillion (28.35 percent) of which is the allocation for Transfer to Regions and Village Funds (TKDD) expenditure posts.
The Ministry of Finance itself said that there were still issues of inequality in the regions, both in terms of health services, education, and infrastructure. Therefore, it is hoped that with the existence of the HKPD Law, the budget allocation can be optimized so that local people can benefit from the State Budget (APBN).
Meanwhile, the socialization of the HKPD Law itself will be held in a number of big cities in the country in the near future.
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