National Budget Flows to Regions: Fiscal Decentralisation and Eid Economic Momentum
Ahead of Eid al-Fitr each year, the Indonesian government relies almost invariably on fiscal policy to maintain public purchasing power. In 2026, the government has resumed stimulus consumption through Holiday Allowance (THR) payments, transport subsidy incentives for homecoming travel, and accelerated government spending to stimulate domestic consumption whilst simultaneously mobilising regional economies.
Nationally, the government has allocated approximately Rp55 trillion for THR payments to approximately 10.5 million recipients, comprising state apparatus personnel, military personnel, police officers, and pensioners. These funds originate from the State Budget (APBN) and represent one of the largest liquidity injections in early 2026.
Within Indonesia’s economic structure, household consumption accounts for more than 50 per cent of Gross Domestic Product (GDP). Consequently, fiscal stimulus that enhances public purchasing power, particularly during Ramadan and Eid, has become a standard government strategy for maintaining economic growth momentum in the early year.
This seasonal consumption momentum frequently drives economic activity during the first quarter. Significantly, the impact of this policy extends beyond the national level. Through fiscal decentralisation mechanisms, APBN stimulus flows directly into regional economies and stimulates local economic activity.
Fiscal Decentralisation in Practice
In public policy theory, fiscal decentralisation typically refers to the transfer of funds from central government to regional governments. In practice, however, this mechanism also occurs through the distribution of central government spending across regions.
Civil service salaries, ministry and agency programmes, and various national economic stimulus measures exemplify how the APBN operates directly at the regional level. The East Java case provides a clear illustration of this mechanism.
According to Ministry of Finance data, THR payments to central state apparatus, military, and police personnel stationed in East Java totalled approximately Rp16.7 trillion by 16 March 2026. This figure reflects the magnitude of government spending flowing directly into the regional economy within a relatively short timeframe.
From the regional economy perspective, this figure is highly significant because these funds directly enter the household sector and swiftly circulate through community consumption activities.
Economic Mobility Stimulus Package
This fiscal stimulus is reinforced by various transport policies supporting public mobility during the homecoming period. The government provides numerous national transport incentives, including sea crossings, air transport, railways, and maritime transport.
Through PT ASDP Indonesia Ferry, the government provides free ferry services for approximately 403,000 passengers and approximately 945,000 vehicles during 12-31 March 2026. The government also provides stimulus through approximately 17-18% airfare reductions for approximately 3.3 million passengers, with ticket purchase period from 10 February to 29 March 2026.
Additional stimulus is provided through transport operators including PT Kereta Api Indonesia and PT Pelayaran Nasional Indonesia with ticket discounts of approximately 30%. This policy combination demonstrates a sufficiently comprehensive fiscal approach, whereby the government simultaneously increases public income whilst reducing mobility costs during the extended holiday period.
Benefits for Regional Economies
From the regional economy perspective, this policy generates relatively rapid multiplier effects. THR funds received by state apparatus personnel are typically immediately used for various needs, including Ramadan and Eid necessities, homecoming travel costs, food and retail consumption, and household goods purchases.
When state apparatus personnel in East Java receive THR simultaneously, money circulation in the real sector increases sharply. Sectors experiencing the quickest impact typically include retail trade, micro and small enterprises, the culinary sector, local transport, and domestic tourism. With robust economic structure spanning manufacturing to trade sectors, East Java possesses substantial capacity to absorb this fiscal stimulus.
Benefits for the Nation
From the national perspective, this stimulus policy serves two primary objectives. First, maintaining public purchasing power amid various global economic uncertainties. Secondly, maintaining national economic growth momentum, which remains heavily dependent on household consumption. Within Indonesia’s economic structure, household consumption accounts for more than half of economic activity.
Consequently, maintaining public purchasing power becomes crucial for growth stability. Through fiscal policies such as THR payments and transport subsidies, the government seeks to ensure that consumption momentum during Ramadan and Eid can be maximised.
Mobilising the Economy from Centre to Regions
The East Java case demonstrates how national fiscal policy can translate into local economic activity. When APBN funds are paid to state apparatus personnel distributed across various regions, money immediately enters local markets from food stalls and traditional markets to shopping centres.
In this context, fiscal decentralisation is not merely an administrative mechanism but an economic instrument driving regional activity. It becomes a strategic instrument ensuring that national economic stimulus is genuinely experienced by communities in the regions.
With Rp16.7 trillion THR flowing within a fortnight, alongside various national transport incentives, the government’s fiscal policy this year demonstrates one clear matter: the APBN operates not merely at the national level but also functions directly to activate regional economies through distributed spending mechanisms.