The Impact of Decentralization on Subnational Government Fiscal Slack in Indonesia
Since Indonesia began implementing its decentralization program in 2001, subnational unspent balances have grown rapidly and have reached levels that many officials find unreasonably high. But the extent to which subnational government reserves are excessive, in general, is not obvious. A not implausible decrease in the price of oil would reduce transfers to subnationals significantly and, if sustained, could possibly eliminate reserves in a relatively short time. Central government should not take any immediate action to reduce subnational slack resources directly but should instead focus on removing the underlying causes of such.
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| Main Authors: | , |
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| Format: | Journal Article biblioteca |
| Language: | EN |
| Published: |
2009-07
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| Subjects: | State and Local Taxation, Subsidies, and Revenue H710, State and Local Budget and Expenditures H720, Intergovernmental Relations, Federalism, Secession H770, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements O170, Economic Development: Regional, Urban, and Rural Analyses, Transportation O180, |
| Online Access: | http://hdl.handle.net/10986/4687 |
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| Summary: | Since Indonesia began implementing its decentralization program in 2001, subnational unspent balances have grown rapidly and have reached levels that many officials find unreasonably high. But the extent to which subnational government reserves are excessive, in general, is not obvious. A not implausible decrease in the price of oil would reduce transfers to subnationals significantly and, if sustained, could possibly eliminate reserves in a relatively short time. Central government should not take any immediate action to reduce subnational slack resources directly but should instead focus on removing the underlying causes of such. |
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