Smart Local Governments That Control Spending and Inflation Can Receive a Bonus of Rp 1.83 Trillion

The Ministry of Finance (Kemenkeu) provides fiscal incentives to well-performing regional governments (pemda), ranging from accelerating regional spending to controlling inflation.

A total of Rp1.83 trillion was disbursed to regional governments. Specifically, Rp750 billion was given to 7 provinces, 21 cities, and 97 regencies that successfully accelerated regional spending.

Furthermore, Rp750 billion was allocated to 7 provinces, 21 cities, and 97 regencies that optimized the use of domestic products (PDN).

An additional Rp330 billion in incentives was given to 24 regencies, 6 cities, and 3 provinces that successfully controlled inflation in the second period.

Sri Mulyani, Minister of Finance, stated that the incentives given to regional governments are intended to motivate them to "do the right thing." Incentives are provided separately according to their respective programs, such as optimizing regional budget spending (APBD), purchasing domestic products, handling inflation, addressing stunting, and tackling extreme poverty.

"Previously, awards were combined, but now they are fragmented. If a composite assessment is used, regional governments may be less responsive; some aspects might be good, while others are not. Therefore, it's better to separate them," said Ani, her nickname, at the *International Seminar on Indonesia's Fiscal Decentralization Policy For The Next Decades* at the Ministry of Finance, Central Jakarta, on Tuesday (3/10/2023).

The total allocation of Regional Incentive Funds (DID) in the 2023 State Budget (APBN) reached Rp4 trillion, comprising Rp1 trillion for inflation control incentives and Rp3 trillion for incentives to improve public welfare.

According to *Investor.id*, fiscal incentives for inflation control were disbursed in three periods. The first period was disbursed on July 31, 2023. The second period, amounting to Rp330 billion, was disbursed on October 3, 2023, to 33 regions deemed to have performed well in inflation control at the provincial, regency, and city levels.

The third period of fiscal incentive disbursement will be made at the end of October 2023.

For the category of improving public welfare, Rp3 trillion was allocated to the 7 best-performing provinces, 21 best-performing cities, and 97 best-performing regencies.

"On average, each region received an allocation of Rp9 billion, with the highest amount being Rp25.4 billion and the lowest Rp5.32 billion," said Luky Alfirman, Director General of Fiscal Balance at the Ministry of Finance, at the same event.

In addition to the DID, the government also disbursed additional village funds totaling Rp2 trillion to 15,097 high-achieving villages spread across 37 provinces.