Regulations
All eyes are on President Prabowo Subianto, who is set to unveil next year's state budget in two weeks, which will reveal whether transfers to regional governments will face another round of cuts.
Regional leaders are seen on Feb. 25, 2025, during a week-long mountain glamping retreat at a military academy in Magelang, Central Java. (AFP/Aditya Aji)
Regional leaders are calling for an overhaul of the fiscal transfer system, warning that shrinking transfers to the regions and delays in disbursing revenue-sharing funds (DBH) have left many administrations "anxious", as they struggle to pay civil servant allowances and finance infrastructure projects.Experts say the austerity drive pursued over the past 18 months has pushed many regional governments close to their limits, leaving little room for further budget cuts.
The squeeze has sharpened the gap with the central government's continued lavish spending on flagship initiatives, which could widen further if President Prabowo Subianto opts to reduce transfers to regional governments again in next year's state budget, which is set to be unveiled within the next two weeks.
