This Is Why Sri Mulyani Asked The Local Government To Have A 'Minister Of Finance' Too

Illustration (Photo: Doc. Antara)

JAKARTA - Minister of Finance, Sri Mulyani, assessed that local governments (Pemda) actually have the potential to be able to optimize the management of the APBD (Regional Budget) in a better way.

The reason is, through the enactment of the Law on Central and Regional Financial Relations (HKPD), local governments have more room to be able to take strategic steps so they are not too dependent on central funding.

"We also ask the region to be better able to maintain the stabilization of the APBD (Regional Budget). Don't let the transfer to the area get disturbed, the local government will stay silent. The regional government must also have the ability to reduce the existing pressure", she said during a meeting with the Indonesian Regional Representative Council, quoted on Wednesday, June 8.

The Minister of Finance then compared it with the way the central government manages state finances which are summarized in the APBN (State Budget).

"If the center is under pressure, such as a tax drop or commodity prices fluctuating, the APBN will become a shock absorber. Now, every time the APBD  is reduced, the Revenue Sharing Fund (DBH) or Special Allocation Fund (DAK) cannot move", she said.

“This is actually why the region must have the ability to cope with pressure. This means that the regions need good finance ministers who can take care of what to do in case of shock", she stressed.

Furthermore, the Minister of Finance explained that local governments are currently required to be able to present solutions when facing shocks in financial management. One of the things she suggested was a financing scheme.

"That's why now in the HKPD Law there is a use of creative financing and integrated funding. This is the goal, the region does not always depend on it", she said.

VOI noted that the total budget disbursed by the central government to local governments this year reached IDR 769.6 trillion in the form of Transfers to Regions and Village Funds (TKDD). This figure represents 28.35 percent of the total state expenditures listed in the 2022 State Budget Law with a total of IDR 2,714.2 trillion.

As for the 2023 APBN draft, Minister of Finance Sri Mulyani allocates around IDR 800.2 trillion to IDR 832.4 trillion of the TKDD budget next year.