"In terms of revenue, economic transformation must be applied in our design in order to transfer and encourage regions to utilize their budgets efficiently (and) in accordance with national priorities," the minister stressed here on Tuesday.
The minister outlined some policies for harmonizing the two aspects, with the first being a profit-sharing funds policy. Such a policy would take into account the manufacturing region, adjacent regions, regions that process materials, as well as other regions in a province, she informed.
The government will also need to improve synergy in the use of earmarked funds, such as funds from tobacco products excise, reforestation funds, and palm oil funds, Indrawati said.
The second is the general allocation fund policy, which the government is consistently seeking to improve, she informed. The use of the fund has been outlined in the national priority program, the minister noted.
She informed that the government has tweaked the general allocation fund's calculation schemes and disbursed the fund in accordance with work performance.
"The general allocation fund policy synergy will be consistently improved, so it will not become block grant whose use ended up very different or (even) deviated (from) the national priority. The calculation of the general allocation fund will be tweaked, and the general allocation fund disbursement will also have to be in accordance with work performance, so the effectiveness of (the) fund in the regional budget will improve," she elaborated.
The third is the special allocation fund policy, she said. According to the minister, the government will focus on some programs outlined in the national priorities, such as stunting reduction, extreme poverty eradication, inflation control, as well as investment.
The government will also pursue basic infrastructure and connectivity development, as well as low carbon development in a bid to achieve the energy transition, she added.
The fourth is the village funding policy, under which the government has decided to disburse village funding in accordance with a village's performance, Minister Indrawati informed.
The government has also decided to fix the village funding scheme and monitor the progress of the national fiscal policy’s implementation, she added.
The fifth is the policy on fiscal incentives, which are allocated based on performance in the previous budget year, she said. The government will also focus on improving the frequency of budget year performance based on the government strategic policies' implementation performance, she added.
"This is one reward which will be actively used so the regional government can design regional budget, whether it is on executive or legislative scope, in accordance with the national development priority," the minister said.
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Translator: Bayu Saputra, Mecca Yumna
Editor: Azis Kurmala
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