Finance Minister highlights State Budget flexibility amid challenges

“What is the financing used for? The financing we secure is intended for state expenditure. As I mentioned earlier, we always design state expenditure to be flexible enough to respond to unfolding developments,” Suahasil said in Jakarta on Friday.

He noted that the budget serves as a crucial tool to promote prosperity, foster growth, and protect the public while maintaining strict financial credibility.

To address structural challenges at the regional level, the central government—through the Home Affairs Ministry and the Finance Ministry—has established a joint technical team to map out and curate solutions for local governments experiencing fiscal difficulties.

Home Affairs Minister Tito Karnavian explained that the initial mapping focuses on regions where local budgets are severely constrained by high personnel expenditures, which account for 40 to 50 percent of total regional budgets and hinder priority development programs.

The joint technical team is evaluating potential schemes to restore regional financial health and align national and regional budgets to improve public welfare nationwide.

Suahasil highlighted that the central government has allocated Rp1 trillion (approximately US$55.56 million) for regional incentive funds.

This allocation aims to foster healthy competition among regional leaders in achieving key development indicators, such as controlling inflation, alleviating poverty, improving environmental quality, increasing budget realization, and reducing unemployment.

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Translator: Suharsana Aji Sasra J. C., Yashinta Difa