Budget Spending Alone Cannot Deliver SDGs Progress Without Accountability, Indonesian Study Finds
A new 2026 study by Riza Afrianda, Heru Fahlevi, and Darwanis from the Syiah Kuala University reveals a striking paradox in Indonesia’s regional budgeting system: increasing mandatory spending on health and education does not automatically improve key development indicators linked to the United Nations Sustainable Development Goals (SDGs). Instead, the research shows that financial accountability is the decisive factor that turns public spending into real progress.
Published in 2026 in the International Journal of Applied Economics, Accounting and Management (IJAEAM), the study analyzed how mandatory regional government spending affects life expectancy and school participation across Indonesia. Its findings matter because Indonesia allocates legally mandated portions of local budgets to health and education as part of its strategy to achieve SDG targets by 2030.
Why Mandatory Spending Matters for Indonesia’s Development
Indonesia’s fiscal decentralization system assigns local governments major responsibility for improving public services tied to SDG Goal 3 (health) and Goal 4 (education). National policy requires regional governments to allocate at least:
- 10% of their budgets to health
- 20% of their budgets to education
These rules aim to guarantee funding stability for sectors critical to human development. The assumption has long been simple: more spending should produce better outcomes such as longer life expectancy and higher school participation.
However, national statistics show a mismatch between rising budgets and slower progress in development indicators. The new study investigates why this gap persists and what can fix it.
How the Study Was Conducted
The research examined panel data from 85 regencies and cities across Indonesia between 2019 and 2023, producing 425 observations.
Researchers used:
- Regional government financial reports
- official data from Indonesia’s Statistics Indonesia
- audit opinion records from the Audit Board of Indonesia
They applied Moderated Regression Analysis to test whether financial accountability strengthens or weakens the relationship between budget allocations and SDG-related outcomes.
Two key indicators were evaluated:
- Life expectancy as a measure of health progress
- Net secondary school enrollment rates as a measure of education access
Key Findings: A Budget Paradox in Health and Education Spending
The study uncovered several unexpected results that challenge conventional assumptions about public spending effectiveness.
Health Spending Showed Negative Impact on Life Expectancy
Despite exceeding the mandatory allocation threshold, higher health spending was associated with lower life expectancy growth in many regions.
Researchers identified several reasons:
- excessive focus on infrastructure projects rather than preventive care
- procurement inefficiencies and mark-up risks
- weak alignment between spending priorities and community needs
This suggests that larger health budgets alone cannot improve outcomes without stronger governance.
Education Spending Did Not Increase Enrollment Significantly
The study also found that mandatory education spending had no statistically significant impact on net enrollment rates.
One major explanation is structural rigidity:
- most education budgets are absorbed by teacher salaries and routine administrative costs
- limited funding remains for programs that directly help students, such as scholarships or facility upgrades
As a result, compliance with spending targets does not necessarily translate into better educational access.
Financial Accountability Changed Everything
The most important discovery was the role of financial accountability in improving budget effectiveness.
Audit opinions from the Audit Board of Indonesia served as the study’s proxy for accountability quality. Regions with stronger audit outcomes demonstrated significantly better spending performance.
The findings showed:
- accountability reversed negative effects in the health sector
- accountability enabled education spending to increase school participation
- governance quality determined whether budgets produced real social benefits
As the authors explain, “financial accountability acts as a corrective mechanism that transforms inefficient spending into effective public investment.” This insight reflects the analysis conducted by researchers from Syiah Kuala University, highlighting governance as the missing link between funding and development results.
Why Accountability Matters More Than Budget Size
The study challenges a long-standing policy assumption that increasing spending alone can accelerate SDG achievement.
Instead, it shows:
- budget compliance does not equal development success
- governance quality determines spending effectiveness
- audit transparency reduces inefficiency risks
- accountability strengthens public trust and service delivery
In practical terms, regions with strong internal controls and clean audit opinions were more successful at turning spending into measurable improvements.
Policy Implications for Indonesia’s Government
The findings suggest several priorities for policymakers.
Shift Incentives Toward Spending Quality
National fiscal incentives should reward regions that demonstrate measurable improvements in life expectancy and school enrollment, not just compliance with allocation percentages.
Reform Education Budget Structure
Reducing the dominance of salary spending within the education budget could create more room for student-centered programs and infrastructure improvements.
Strengthen Oversight Systems
Improving the role of internal government auditors can help prevent inefficiencies before budgets are executed.
Focus Health Spending on Preventive Services
Redirecting funds toward nutrition, sanitation, and immunization programs could generate stronger long-term health outcomes.
Real-World Impact for SDG Progress
The study highlights a critical lesson for countries pursuing SDG targets: development outcomes depend not only on how much governments spend, but how effectively they manage those resources.
For Indonesia, this means strengthening financial accountability systems may be the fastest way to accelerate progress in education and health indicators nationwide.
The research also provides evidence that governance reforms can improve public service delivery without requiring major increases in total spending.
Author Profiles
Source
URL :https://mrymultitechpublisher.my.id/index.php/ijaeam/index
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