Accelerating Revenue Sharing and Regional Transfers Seen as Driver for Local Economic Capacity
Jakarta (ANTARA) - Permata Bank Chief Economist Josua Pardede believes the government’s plan to accelerate the disbursement of revenue sharing (DBH) and regional transfers (TKD) is an appropriate step to strengthen local government cash flows and boost regional economic capacity.
“From the regional perspective, earlier disbursement can strengthen the ability to pay salaries, fund education and health services, meet obligations to goods and service providers, and accelerate infrastructure projects,” Josua stated when contacted by ANTENTARA in Jakarta on Friday.
However, he noted that the impact on the economy depends on the readiness of local regions to spend these funds. Rapid disbursement does not automatically generate growth; if procurement is not ready, projects lack mature designs, or spending is dominated by routine needs, funds will merely move from central coffers to regional accounts without immediately circulating in the economy.
“Regional growth is determined not only by the volume of spending but primarily by the precision and productivity of that spending. Thus, this policy increases regional fiscal capacity in the short term, but does not necessarily strengthen fiscal independence because the dependence on central transfers remains high,” Josua remarked.
Regarding the State Budget (APBN), accelerated disbursement does not automatically increase the deficit as long as it remains within the budget ceiling, given that the policy only changes the timing of expenditure. Josua argued that there is relatively available room to accelerate distribution because, as of the first semester of 2026, the APBN deficit is only around Rp196.5 trillion, while financing has reached Rp452 trillion, resulting in a budget surplus (SiLPA) of approximately Rp255.5 trillion.
“In a condition of high debt costs, using part of that cash to meet budgeted obligations is actually more efficient than letting funds sit idle after the government has already issued debt,” he added.
Nevertheless, Josua emphasised that disbursements should not be carried out all at once without considering the schedule of tax revenues, debt payments, subsidies, and other major cash requirements. The government must also maintain adequate cash levels and an Excess Budget Balance (SAL).
He also highlighted that the implementation of this policy must be aligned with Bank Indonesia to ensure it does not conflict with efforts to stabilise the rupiah and inflation, considering that fiscal disbursement will increase rupiah liquidity in the banking system. Josua noted that the Government and Bank Indonesia had previously agreed on managing government cash within Bank Indonesia so that fiscal and monetary operations support each other.
“Therefore, acceleration should be done selectively and gradually, prioritising DBH arrears, disaster-affected regions, basic services, and regions with productive projects ready for implementation,” he explained.
Furthermore, subsequent disbursements should be linked to contract realisation, physical progress, and fund usage, rather than just the completeness of documentation.
“In essence, this policy is worthwhile and can drive regional economies if it can shorten the gap between the transfer of money and the actual spending of that money; without improvements in the quality and speed of regional execution, acceleration will only move idle funds from the centre to the regions,” Josua concluded.