Ministry: Central and Regional Fiscal Policy Key to Indonesia's Economic Growth

RRI.CO.ID, Jakarta - Indonesia's Vice Minister of Finance, Juda Agung, emphasized that synergy between central and regional fiscal policies is a crucial factor in driving inclusive and sustainable national economic growth. He made the statement at the National Conference on Regional Economic Development organized by the Financial Services Authority at Balai Kartini, Jakarta, on Monday, May 25, 2026.

According to him, national economic growth is fundamentally based on economic activity in the regions, from traditional markets, MSME centers, industrial areas, to the agricultural and household sectors. Therefore, strengthening the regional economy needs to be done through cross-sector synergy and integrated policies. "Growth doesn't start with tables and figures; growth begins when central and regional policies work together and the benefits are felt down to households," the Vice Minister said.

"Accelerating regional economic growth through cross-sector policy synergy is an important theme because national economic growth does not occur in a vacuum. National economic growth occurs because of regional growth," he said.

In the context of regional economic development, the Vice Minister of Finance highlighted three main challenges still facing regional governments: the need for regional economic diversification, improving the quality of regional spending, and limited regional fiscal capacity. Many regions still rely on the primary commodity sector and transfers from the central government, while regional spending is considered less than fully productive, dominated by personnel and goods expenditures.

To address these challenges, the government, through the Ministry of Finance, continues to strengthen support for regions through regional transfers (TKD), creative financing, and strengthening regional original revenue (PAD). As of April 2026, TKD realization had reached IDR 256 trillion, or approximately 37 percent of the budget.

Concluding his remarks, he affirmed the importance of policy orchestration between the central government, regional governments, the financial sector, and the business world in strengthening the national economy.

"Strong regions will strengthen the national economy, but strong regions are not just regions with large budgets; strong regions are regions capable of converting budgets into services, services into productivity, and productivity into prosperity," the Vice Minister said.