REPUBLIKA.CO.ID, JAKARTA -- The government planned to increase general allocation fund in the next year to reduce economic inequality between regions in Indonesia. In the 2016 state budget draft, general allocation fund is allocated Rp 495.5 trillion or increase to Rp 32.6 trillion from the 2015 state budget changes.

Minister of Finance, Bambang Brodjonegoro, said increase of general allocation fund is necessary to increase financial capacity of local governments in economic development, especially for those who have low fiscal capacity or those who do not have natural resources.

"Region who have low fiscal capacity and do not have natural resources, must be balanced with regions who have high fiscal capability and have already been benefited from natural resources. Thus, the gap between the regions won't be large," he said, in a meeting with the Commission XI of the House of Representatives, Tuesday (8/9).

Bambang explained, the amount of general allocation fund to each region is different. There are several criteria that must be considered, for example, the number of population, area, geographical barriers, quality of human resources, and number of regional gross domestic income.

Bambang hoped that local governments can maximize their general allocation fund. It was because, it can also be used to build major infrastructure in each region.

The government carried the spirit of fiscal decentralization in the next year. This is done for flourishing the local economy to become foundation of the national economy.

One proof of the spirit of fiscal decentralization is higher transfer of funds to the regions compared with spending funds of the ministries/agencies.

Based on 2016 state budget draft, transfer of funds to the regions are allocated to Rp 782.2 trillion or increase to Rp 91.4 trillion from the 2015 state budget. While the revised budget spending of ministries/agencies fell to Rp 15.1 trillion to become Rp 780.4 trillion.

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