Local Governments Earn Fiscal Incentives for Controlling Inflation

Jakarta, VIVA – The Government continues to provide fiscal incentives to local governments (Pemda) for successfully maintaining price stability in their regions, thus controlling National inflation.

The symbolic handover was carried out by Minister of Home Affairs Tito Karnavian together with Deputy Minister of Finance Suahasil Nazara in Jakarta on Monday (August 5).

"For regions that manage to control their inflation to relatively low levels, fiscal incentives will be disbursed in the current fiscal year," Nazara said in a statement.

Since 2023, the Government has regulated regional incentive funds, with one of the factors being the inflation rate in each district, city, and province.

Nazara emphasized that synergy and collaboration between the central government and local governments are crucial in ensuring controlled inflation.

"The central government has launched various programs to maintain overall price stability, including providing subsidies and compensation," Nazara remarked.

On the other hand, local governments also play a vital role in directly monitoring on-ground conditions and the availability of goods in the market.

He then asked regional heads to closely examine their respective regional economic growth rates to help push Indonesia's overall economic growth above five percent.

Central government programs are also expected to help increase people's purchasing power.

"Governors, Regents, and Mayors should review their regional budgets to ensure that the national budget is implemented, spending is carried out, and that spending is productive in boosting economic growth in their respective regions," he stressed.

He added, "Good economic growth will benefit the increase in purchasing power and income of our people."

In addition, Nazara also hopes that regional heads will closely monitor business activities in their regions, especially those involved in production and creating goods and services, which can absorb labor.

"All of this forms the foundation for our good economic growth, so we can continuously drive economic growth in each region. You use the regional budget (APBD), while from the central government, we use the national budget (APBN) to synergize in supporting the economy, helping households and businesses," he explained.

The number of regions receiving fiscal incentives for controlling inflation in 2024 is higher compared to the previous year.

In 2023, the number of regions receiving fiscal incentives for inflation control was 33 per period.

Meanwhile in 2024, this number has increased to 50 regions per period, providing a greater opportunity for regions to receive fiscal incentive allocations.

Of the 50 regions receiving these incentives, 36 are new regions that had not previously received awards in the inflation control category in the 2023 fiscal year.