Blane Lewis is Senior Economist at the World Bank in Jakarta, Indonesia. Blane Lewis from the Jakarta Stock Exchange Building, JI, Jenderal Sudirman, Kav. 52-53, Jakarta, Indonesia 12190. He can be reached at firstname.lastname@example.org
Local Government Capital Spending in Indonesia: Impact of Intergovernmental Fiscal Transfers
Article first published online: 17 MAR 2013
© 2013 Public Financial Publications, Inc.
Public Budgeting & Finance
Volume 33, Issue 1, pages 76–94, Spring 2013
How to Cite
LEWIS, B. (2013), Local Government Capital Spending in Indonesia: Impact of Intergovernmental Fiscal Transfers. Public Budgeting & Finance, 33: 76–94. doi: 10.1111/j.1540-5850.2013.12002.x
- Issue published online: 17 MAR 2013
- Article first published online: 17 MAR 2013
Indonesian policymakers intend to increase capital spending, especially on traditional infrastructure, at all levels of government in order to stimulate economic growth. Intergovernmental capital grants can have very significant impact on encouraging such spending at the subnational level. The main problems with capital transfers in the Indonesian context are that grant funding has stagnated at low levels and the proportion of funding allocated to infrastructure has declined considerably. Given current institutional constraints, the likelihood of increasing grant funding for subnational infrastructure is dubious, which suggests that economic growth in Indonesia may remain suboptimal for the near future.