Factors of Budget Delay: Local Government Capacity, Bargaining and Political Interaction in Indonesia

Abstract

Rapid decentralisation in Indonesia has shifted responsibility for managing substantial public funding from national to district governments and increased the importance of local government at the district level in delivering public services. Local government budget delays have become a huge problem as they not only delay the local government’s delivery of services but also reduce its functional capacity. Our research assesses problems of budget delay in Indonesian districts. Three districts were chosen as case studies for interviews and group discussions. The research finds that human capacity and administrative problems have slowed the development and enactment of budgets. Moreover, efforts to keep election promises, especially to develop infrastructure, have not only brought a lengthy process of bargaining for economic and financial resources but also undermined the participatory budget process. This has been intensified by poor political interaction, as shown in the three case studies.