Gov’t to Postpone DAU/DBH Distribution for Regions Failing to Meet Budget Reports on COVID-19

Illustration of General Allocation Fund (DAU), Special Allocation Fund (DAK), and Revenue Sharing Fund (DBH). (Source: Directorate General of Fiscal Balance(DJPK) of Ministry of Finance)

The Government has announced it will delay distribution of partial General Allocation Funds (DAU) and/or Revenue Sharing Funds (DBH) for regional governments that do not meet the provisions of the fiscal year 2020 regional budget report.

The Government said the moves aims to ensure that the commitment of the regional governments in the mitigation/handling of COVID-19 is in accordance with the provisions of Minister of Finance Regulation (PMK) Number 35/PMK.07/2020 on Management of Transfer to Local Government and Village Fund for Fiscal Year 2020 on the Handling of COVID-19 Pandemic and/or to Dealing with Serious Threats on National Economy.

The DAU postponement is also in place for regional governments that have submitted the regional budget report but it is not in accordance with the provisions of the Joint Decree (SKB) of Minister of Home Affairs and Minister of Finance Number 119/2813/SJ and 117/KMK.07/2020 on Acceleration of the 2020 Regional Budget Adjustment on the COVID-19 Handling, as well as Safeguarding Public Purchasing Power and the National Economy and PMK Number 35/PMK.07/2020.

For the record, evaluation criteria for regional governments that have submitted reports but have not yet complied with the provisions of the SKB and PMK Number 35/PMK.07/2020 are as follows:

1. Rationalization of goods/services expenditure and capital expenditure of at least 50% each, as well as the rationalization of personnel expenditure and other expenditure by taking into account the estimated decline in regional income;
2. Regional governments’ efforts to rationalize regional expenditure by taking into account:
3. regional financial capacity by providing a total tolerance of rationalization of goods/services expenditure and capital expenditure of at least 35%;
4. extreme reduction of Local Revenue (PAD) as a result of the decline in community and economic activities; and/or
5. the development of a COVID-19 pandemic level in each region that needs to be immediately addressed with an adequate budget;
6. Rationalization results of regional expenditures to be allocated for the mitigation/handling of COVID-19, social safety nets, and to move/restore the regional economy.

The provision of the DAU postponement is set forth in the Decree of Minister of Finance Number 10/KM.7/2020.

If regional governments immediately submit the regional budget adjustment report according to the provisions, some of the deferred DAU will be distributed again in May 2020. (Ministry of Finance/EN)

Translated by: Fairuzzamani Inayatillah
Reviewed by: M. Ersan Pamungkas