The policy has changed, now the government plans to increase the allocation of transfer funds to the regions (TKD) in 2026. This is done as an effort to strengthen the regional economy, as well as to reduce the socio-political turmoil in Indonesia some time ago.
Responding to this new regional transfer policy, researchers from the Institute for Development of Economic and Finance (Indef) hope that TKD funds will be used to improve access to public services and encourage sustainable regional development.
"Local governments are expected to be able to utilize this TKD fund according to the portion and be used for its real purpose. Namely, increasing access to public services and encouraging sustainable regional development," Indef Executive Director Esther Sri Astuti told SUAR in Jakarta, (15/9).
Previously, the government allocated a budget for transfers to regions (TKD) worth IDR 650 trillion. This figure dropped significantly by IDR 214.1 trillion or 24.8% compared to the 2025 State Budget outlook which reached IDR 864.1 trillion.
The government's decision to cut the allocation of transfer funds to regions (TKD) in the draft budget for next year has reaped various reactions from various regional heads of government. They said that this has the potential to burden regional finances and hinder regional development.
However, the cut in TKD funds is an exercise in regional fiscal independence. Various regions are required to have a variety of innovations to increase local revenue so that they do not depend on transfer funds from the central government.
But change the minister, change the policy. The new Minister of Finance, Purbaya Yudhi Sadewa, emphasized that the government has no plans to cut transfers to the regions again. Instead, there are currently indications to increase the allocation of transfers to the regions.
The government, said Purbaya, must discuss with the DPR regarding the additional TKD funds. In principle, the government directs the TKD funds to encourage regional economic growth.
"We don't know how much yet but we will continue to monitor and calculate," he said.
TKD 2026 is divided into budget items such as revenue sharing funds of Rp 45.1 trillion, general allocation funds (DAU) of Rp 373.8 trillion, and special allocation funds (DAK) of Rp 155.1 trillion.
The special autonomy fund amounted to IDR 13.1 trillion, the special region of Yogyakarta fund IDR 500 billion, village funds IDR 60.6 trillion, and fiscal incentives IDR 1.8 trillion.
Reduce inequality
Esther said the main purpose of TKD is to support regional autonomy that allows local governments to fund and organize government affairs under their authority.
Then, TKD funds can also reduce inequality, becoming a tool for equitable development and public services between the central and regional regions (vertical) and between regions (horizontal).
"The discourse for additional TKD funds is very good, so that local governments can work with their programs," he said.
Esther suggested that TKD funds be used to strengthen important sectors, such as education and health. "Local governments must really focus on the absorption of TKD funds, so that there is no budget deficit." she said.
Responding to the new policy, Executive Director of the Association of Indonesian Regency Governments (Apkasi) Sarman Simanjorang welcomed it if President Prabowo Subianto's administration was willing to review the 2026 TKD cut policy.
"The review and discourse on the addition of the TKD budget is positive news for regional heads. Of course, the regional heads hope that this can actually be realized. This means that the 2026 TKD will not be cut and return to normal," he said.
