Indonesia stresses budget flexibility as ministries review regional finances
A joint technical team is examining support options for local governments, while Rp1 trillion has been allocated for regional incentives.
Indonesia designs its state expenditure to respond to changing conditions, Finance Minister Suahasil Nazara said in Jakarta, citing fluctuations in commodity prices and higher international interest rates among the challenges facing the budget.
Suahasil said the State Budget should support prosperity and economic growth, provide public protection and uphold financial credibility. Financing obtained by the government is intended to fund state expenditure, he said.
Separately, the Home Affairs Ministry and Finance Ministry have established a joint technical team to identify fiscal problems affecting local governments and consider solutions. Its work includes reviewing possible arrangements to strengthen regional finances and coordinate regional budgets with the national budget.
Home Affairs Minister Tito Karnavian said the first stage concentrates on regions where personnel expenditure absorbs 40 to 50 per cent of regional budgets, constraining priority development programmes.
Suahasil also highlighted a Rp1 trillion allocation for regional incentive funds. The funds are intended to encourage regional leaders to compete on inflation control, poverty reduction, environmental quality, budget implementation and reducing unemployment.
