Deferral of Provincial Revenue Allocation Exceeding Rp 200 Billion

The Ministry of Finance issued Minister of Finance Regulation No. 125/PMK.07/2016 concerning the postponement of the disbursement of General Allocation Funds (DAU) for the 2016 fiscal year. This regulation was issued because the Government intends to adjust state expenditure due to insufficient state revenue realization. The nationally postponed DAU value reached Rp 19.4 trillion, while the postponement value for provinces reached Rp 4.7 trillion.

DAU was chosen because this instrument is one of the state's tools for equalizing financial capacity among regions. As written in the PMK, this DAU postponement has considered fiscal capacity, expenditure needs, and the cash balance position in regions at the end of 2016, categorized as very high, high, fairly high, and medium. With this postponement, the disbursement of funds will be calculated as an underpayment to be budgeted for the following year in accordance with state finances.

The regulation includes 26 provinces where the disbursement of DAU funds is planned to be postponed for the period of September to December. Ten provinces have a postponement value exceeding Rp 200 billion. Three of these provinces are Central Java, East Java, and North Sumatra.