Anticipating 2023 spending swell-up: Burden sharing with regional govts expanded
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Antisipasi pembengkakan belanja 2023: Burden sharing daerah diperluas
15 November 2022
By: Tegar Arif
The government is expanding the burden sharing scheme with regional governments to make expenditure amid the limited fiscal space next year.
Initially, burden sharing between the central government and regional governments in the 2023 state budget (APBN) is implemented on the governance of proceeds.
However, Law No. 28/2022 on State Budget for Fiscal Year 2023 mandates burden sharing with village funds.
This means that some of the village funds transferred to regional governments will be allocated for expenditure or funding in accordance with the direction from the central government.
Article 14 paragraph (1) subparagraph b of the law states that Rp2 trillion is used to increase the village funds allocated in the current fiscal year and/or to carry out government policies.
“The government’s policy is the funding burden sharing,” an explanation regarding the substance in Law on APBN in 2023 wrote.
The burden sharing scheme is expanded to anticipate the increase in expenditures for energy subsidies and compensation if the price of oil surges next year.
Moreover, the state’s fiscal space is limited as there is a consolidation mission that mandates budget deficit to not surpass 3% of the gross domestic product (GDP).
Meanwhile, despite that it will be implemented next year, the government has adopted the burden sharing scheme this year.
This is reflected in the adjustment of the proceed allocation from non-tax state revenue and natural resources. The law on APBN 2023 also recorded that proceed from natural resources reaches Rp2.28 trillion from a total of Rp97.74 trillion.
However, the lack of proceed does not include the additional proceed in fiscal year 2022 that is not allocated per region worth Rp12 trillion that is considered burden sharing over state revenue realisation from mineral and coal this year.
When he was contacted by Bisnis, several officials from the Finance Ministry does not want to provide an explanation regarding the direction of the energy subsidiary policy in the future and its correlation with the burden sharing expansion.
However, some time ago, APBN Preparation Director of the Budget Directorate General of the Finance Ministry Rofyanto Kurniawan said that the fiscal collaboration was prepared by considering the seriousness of the economic challenges next year that are still looming over the global economy, including Indonesia.
The challenges include global supply chain disruption, geopolitical tension in eastern Europe, as well as low prices of commodities especially oil and gas that is the cause of energy crisis.
