The impact of decentralization on subnational government fiscal slack in Indonesia

Blane Lewis, A Oosterman

    Research output: Contribution to journalArticle

    Abstract

    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.
    Original languageEnglish
    Pages (from-to)27-47
    JournalPublic Budgeting and Finance
    Volume29
    Issue number2
    DOIs
    Publication statusPublished - 2009

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