Budget Effectiveness of Regional Development Functions in Indonesia: Disparities in Health and Education Sectors Throughout 2024

Natalia Sihombing S.Pd Jumat, Oktober 02, 2026
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FORMOSA NEWS

Regional budget management in Indonesia continues to face serious challenges, where large financial allocations do not always guarantee successful execution of development programs at the provincial level. These findings were revealed by Dirmansyah Darwin and Mahrani from Universitas Negeri Makassar through a comprehensive study analyzing budget performance across 34 provinces throughout 2024. The research highlights that the effectiveness of public spending heavily relies on the quality of bureaucratic governance and institutional capacity in the regions, rather than solely on the availability of financial resources.

Challenges of Decentralization and Government Spending

Within the fiscal decentralization framework, local governments are granted full authority to determine development priorities based on their regional characteristics. However, increased fiscal transfers and regional revenues frequently lead to suboptimal spending if not supported by sound governance. This study stems from a classic problem in development economics, namely the gap between planned budgets and the actual realization of programs in the field. Evaluating development based solely on budget allocation amounts is deemed insufficient to reflect a local government's capability to translate fiscal policies into tangible results for the community.

Research Methodology Based on Regional Comparison

The study employs a descriptive quantitative approach with a cross-regional comparative analysis method. The objects of analysis include regional budget and expenditure realization data (APBD) for 2024 from 34 provinces in Indonesia. The analysis focuses on nine primary development functions: general public services, public order and safety, economic affairs, environmental protection, housing and public facilities, health, tourism, education, and social protection. The researchers evaluated budget structures, measured absorption rates, and calculated program realization effectiveness levels across regions.

Key Findings: Contrast Between Education and Health Sectors

Based on aggregated data from 34 provinces with a total development function budget reaching IDR 380.08 trillion, the largest allocations were dominated by public services (IDR 139.60 trillion), education (IDR 106.63 trillion), and economic affairs (IDR 59.56 trillion). Nevertheless, inter-sectoral absorption effectiveness showed sharp disparities:

  • Education Sector Emerges as Most Effective: The education function recorded the highest implementation rate with an effectiveness ratio reaching 100.11%, demonstrating strong consistency in human resource investment.
  • Health Sector Experiences the Largest Gap: A health budget allocation of IDR 41.41 trillion only achieved IDR 12.53 trillion in realization, leaving a shortfall or budget gap of IDR 28.88 trillion (an effectiveness rate of only 30.27%).
  • Inter-Provincial Variations: Bangka Belitung Islands, West Sulawesi, and Riau Islands recorded the highest total effectiveness levels, whereas several other regions continued to face administrative obstacles and program execution delays.
  • Regional Performance: Regionally on average, Bali and Nusa Tenggara led with an effectiveness rate of 101.27%, followed by Sulawesi and Kalimantan, while Sumatra and Maluku-Papua ranged between 93% and 94%.

Policy Implications and Enhancing Public Service Quality

Dirmansyah Darwin and Mahrani emphasize that successful fiscal decentralization demands fundamental improvements in the organizational capacity of regional apparatuses. Local governments are encouraged to implement performance-based budgeting so that spending orientation is not merely focused on budget absorption rates, but rather on generating real impacts on community welfare. Policy evaluations also need to focus specifically on sectors with high implementation gaps such as health, social protection, and environmental protection through approaches tailored to each region's specific characteristics.

Author Profile

  • Full Name: Dirmansyah Darwin, Mahrani
  • University Affiliation: Universitas Negeri Makassar, Indonesia
  • Field of Expertise: Public Financial Management, Fiscal Decentralization, and Local Government

Research Source

Natalia Sihombing S.Pd

Diposting oleh Natalia Sihombing S.Pd

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