Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia
The COVID-19 pandemic has put immense pressure on the fiscal situation. Central revenues have decelerated while expenditures had to be increased to facilitate economic recovery. Local governments faced even harder challenges as intergovernmental transfers were reduced and room for mobilizing alterna...
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-05-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/10/5/108 |
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| author | Nauli Aisyiyah Desdiani Syahda Sabrina Meila Husna Amalia Cesarina Budiman Fachry Abdul Razak Afifi Alin Halimatussadiah |
| author_facet | Nauli Aisyiyah Desdiani Syahda Sabrina Meila Husna Amalia Cesarina Budiman Fachry Abdul Razak Afifi Alin Halimatussadiah |
| author_sort | Nauli Aisyiyah Desdiani |
| collection | DOAJ |
| description | The COVID-19 pandemic has put immense pressure on the fiscal situation. Central revenues have decelerated while expenditures had to be increased to facilitate economic recovery. Local governments faced even harder challenges as intergovernmental transfers were reduced and room for mobilizing alternative finances was limited. This paper employs qualitative and secondary data analysis on local budget and fiscal capacities at the subnational level in Indonesia to find insights into the implications and responses of the provincial government in a decentralized economy during the pandemic. Provinces with a high dependence on intergovernmental transfer are struggling to adopt a countercyclical mitigative fiscal policy. However, provinces with high local own-source revenue have suffered the most during the crisis as low economic activity reduced tax revenues and indirectly lead to lower fiscal space. As fiscal policy is critical to containing the pandemic and facilitating recovery, this paper proposes several strategies toward a more sustainable fiscal policy for rebuilding local government capacity in the medium-to-long term in the aftermath of the crisis. |
| first_indexed | 2024-03-10T03:00:36Z |
| format | Article |
| id | doaj.art-12c02d020a504961913660d53465cbc1 |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-10T03:00:36Z |
| publishDate | 2022-05-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-12c02d020a504961913660d53465cbc12023-11-23T10:44:40ZengMDPI AGEconomies2227-70992022-05-0110510810.3390/economies10050108Local Budget Resilience in Times of COVID-19 Crisis: Evidence from IndonesiaNauli Aisyiyah Desdiani0Syahda Sabrina1Meila Husna2Amalia Cesarina Budiman3Fachry Abdul Razak Afifi4Alin Halimatussadiah5Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaInstitute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaInstitute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaInstitute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaInstitute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaInstitute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia, Campus UI Salemba, Jakarta 10430, IndonesiaThe COVID-19 pandemic has put immense pressure on the fiscal situation. Central revenues have decelerated while expenditures had to be increased to facilitate economic recovery. Local governments faced even harder challenges as intergovernmental transfers were reduced and room for mobilizing alternative finances was limited. This paper employs qualitative and secondary data analysis on local budget and fiscal capacities at the subnational level in Indonesia to find insights into the implications and responses of the provincial government in a decentralized economy during the pandemic. Provinces with a high dependence on intergovernmental transfer are struggling to adopt a countercyclical mitigative fiscal policy. However, provinces with high local own-source revenue have suffered the most during the crisis as low economic activity reduced tax revenues and indirectly lead to lower fiscal space. As fiscal policy is critical to containing the pandemic and facilitating recovery, this paper proposes several strategies toward a more sustainable fiscal policy for rebuilding local government capacity in the medium-to-long term in the aftermath of the crisis.https://www.mdpi.com/2227-7099/10/5/108fiscal policylocal budgetCOVID-19 pandemicresilience budgeteconomic recovery |
| spellingShingle | Nauli Aisyiyah Desdiani Syahda Sabrina Meila Husna Amalia Cesarina Budiman Fachry Abdul Razak Afifi Alin Halimatussadiah Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia Economies fiscal policy local budget COVID-19 pandemic resilience budget economic recovery |
| title | Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia |
| title_full | Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia |
| title_fullStr | Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia |
| title_full_unstemmed | Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia |
| title_short | Local Budget Resilience in Times of COVID-19 Crisis: Evidence from Indonesia |
| title_sort | local budget resilience in times of covid 19 crisis evidence from indonesia |
| topic | fiscal policy local budget COVID-19 pandemic resilience budget economic recovery |
| url | https://www.mdpi.com/2227-7099/10/5/108 |
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