Budget 2025: Govt Considers Burden-Sharing Scheme

The government is considering a burden-sharing scheme for the 2025 state budget, potentially putting strain on regional budgets that remain dependent on transfers from the central government.

Editorial Team

13 Mar 2024 - 20.50
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Budget 2025: Govt Considers Burden-Sharing Scheme

Finance Minister of the Republic of Indonesia Sri Mulyani Indrawati./Bisnis

Bisnis, JAKARTA — The government designs the 2025 state budget similarly to the 2023 state budget by implementing a burden-sharing scheme between central and local governments to meet the increased national expenditure needs, especially in social assistance spending.

The Finance Ministry plans to involve regional budgets to fulfill functional programs in the 2025 state budget, reflecting the central government’s aim to synergize programs between the central and regional levels in projects related to strategic development or programs to increase people’s purchasing power.

On the other hand, this burden-sharing scheme indicates the country's limited fiscal space next year to meet various spending needs. This is also reflected in the government's plan to raise the VAT rate from 11 to 12 percent in 2025 to increase state revenue.

Meanwhile, the burden-sharing scheme between central and local governments poses a risk of eroding the fiscal independence of regions as they are required to contribute to central government budget expenditures. Most local governments still rely on central government transfers due to limited optimization of local revenue.

Cek Berita dan Artikel yang lain di Google News dan WA Channel
Editor: Yusuf Waluyo Jati
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Budget 2025: Govt Considers Burden-Sharing Scheme

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