JakartaGlobe-Aug 26
The Indonesian government is planning a sharp cut in transfers to provinces in its 2026 state budget, even as central government spending is set to rise by double digits. The move has sparked protests from regional governments and budget transparency advocates, who warn of potential setbacks in public services. According to the draft 2026 budget, central government expenditure will rise 17 percent to Rp 3,136 trillion ($192 billion) to fund flagship programs of President Prabowo Subianto’s administration. At the same time, transfers to the country’s 38 provinces will be reduced by 25 percent to Rp 650 trillion ($39.9 billion). The government has framed the shift as a measure to rebalance fiscal responsibilities, but the debate highlights long-standing tensions between Jakarta’s central control and the autonomy of Indonesia’s regions. The decision is likely to remain a flashpoint as parliament debates the final budget ahead of implementation in 2026.
Lawmakers backing the plan argue that the cuts are intended to better align local fiscal policy with national priorities. Edy Wuryanto, a member of parliament’s Commission IX, said many regions lack the capacity to execute programs effectively, creating inefficiencies.
“The funds will now be directed toward improving human capital and supporting flagship national programs such as free health checks, free nutritious meals, and better services for people with disabilities,” Edy said at a policy forum in Jakarta on Tuesday. He added that special allocations will be limited to regions with low fiscal capacity, including support for building health clinics. Critics argue the cuts could jeopardize essential services. Siska Barimbing, a researcher at the Indonesian Forum for Budget Transparency (FITRA), said the reduction would hit hardest in poorer provinces. “Basic services such as health, sanitation, and clean water are at risk,” Siska said, noting that 330 districts and municipalities still rely on central government funds for around 66 percent of their budgets. Read more at:
https://jakartaglobe.id/business/centralregional-divide-widens-in-indonesias-2026-spending-plan
