Indonesia's Ministry of Finance Targets Rp800 Trillion in Regional Fund Transfers in 2023

The Indonesian government has allocated Rp811.7 trillion (approximately US$54 billion) for regional transfers (TKD) in the 2023 State Budget (RAPBN), as detailed in the draft budget. This represents a Rp12.6 trillion increase compared to the 2022 outlook of Rp799 trillion.

"This is the first time since the COVID-19 pandemic that TKD will surpass Rp800 trillion, reaching Rp811.7 trillion," stated Finance Minister Sri Mulyani Indrawati during a press conference on the 2023 State Budget Draft in Jakarta on Tuesday, August 16th.

In 2023, TKD will constitute 26.69% of total government spending. These funds are earmarked for improving the quality of public services in regions, particularly in decentralized services like healthcare and education.

The government attributes this TKD allocation to several factors: the establishment of new provinces in Papua and an increase in revenue-sharing funds (DBH) due to rising commodity prices. "We have several new provinces in Papua, and we expect to pay higher revenue-sharing funds (DBH) due to the high commodity prices next year," explained Sri Mulyani.

The general policies for TKD in 2023 are as follows:

1. Enhancing synergy between central and regional fiscal policies, and harmonizing central and regional spending.
2. Strengthening the quality of TKD management to ensure it is targeted, measurable, accountable, and transparent.
3. Improving regional tax capacity while maintaining a conducive investment climate, ease of doing business, and public welfare.
4. Promoting the use of financing instruments to address fiscal capacity constraints and accelerate development.

The following details the breakdown of TKD and Village Funds in the 2023 RAPBN:

* Revenue Sharing Funds (Dana Bagi Hasil): Rp136.3 trillion
* General Allocation Funds (Dana Alokasi Umum): Rp396.0 trillion
* Special Allocation Funds (Dana Alokasi Khusus): Rp182.9 trillion
* Special Autonomy Funds (Dana Otonomi Khusus): Rp17.2 trillion
* Yogyakarta Special Region Funds (Dana Keistimewaan D.I. Yogyakarta): Rp1.3 trillion
* Village Funds (Dana Desa): Rp70.0 trillion
* Fiscal Incentives (Insentif Fiskal): Rp8.0 trillion
* Total: Rp811.7 trillion