Prabowo Highlights Regional Governments Hoarding Funds in Banks, Expert Explains the Causes

According to Bhima, this situation also makes regional heads more cautious in implementing locally prioritized programs because they have to align them with central government policies.

The second factor is regional officials' apprehension about legal risks when executing development projects.

“Secondly, contract officials fear getting involved in legal cases. This slows down bureaucracy and budget absorption,” he explained.

Rp 1 Billion Village Funds

Prabowo also pointed out the slow pace of village infrastructure development despite the central government channeling Village Funds.

He stated that the government has disbursed about Rp 1 billion per village annually over the last ten years.

“How long has decentralization been running? 25 years, right? We have transferred funds to each village. Rp 1 billion, for the past ten years. Transfers to regions have been made. So why aren’t bridges in villages being built? A bridge only costs around Rp 400 million,” Prabowo emphasized.

He questioned why the budget that has been allocated has not fully translated into visible village infrastructure development.

Previously, Prabowo also mentioned other issues hindering regional budget use, including conflicts between regional heads and regional parliaments.

The large amount of funds idling in banks ultimately raises questions about the causes of low regional budget absorption and how much of these funds can actually be deployed for development.

Therefore, the problem of Pemda funds idling is not only related to the considerable budget transferred by the central government but also involves the regions' capacity to execute programs, bureaucratic processes, and the division of authority between central and regional governments.