Abstract
Indonesia has now entered a new phase of decentralisation. Two basic elements in the new policy are wider regional autonomy and fiscal decentralisation. The latter is essentially expenditure-based in character, rather than revenue-based, within which a different approach to intergovernmental transfers between local and central government is emerging. The new general allocation fund and revenue-sharing system may have reduced vertical fiscal disparities, but it has tended to increase intercity and interregional disparities.
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