TKD Cuts, Economist Warns Budget Centralization Could Trigger Corruption

JAKARTA, KOMPAS.com - The issue of budget centralization allegedly carried out by the central government has recently attracted significant public attention.

Suspicions of budget centralization arose after President Prabowo Subianto slashed the Regional Transfer Budget (TKD) for this year.

The initial TKD ceiling for 2025 was set at Rp 919.9 trillion, established by Joko Widodo at the end of his term.

MAGNIFIC/MAGNIFIC Budget illustration, national budget.

Then, after officially taking office as president, Prabowo Subianto cut the TKD for the 2026 Regional Revenue and Expenditure Budget (APBD) to Rp 650 trillion.

Many in the public have questioned the purpose behind the TKD budget cuts.

Some worry that the reduction represents budget centralization, allowing the central government to carry out its priority programs, such as the Free Nutritious Meals (MBG) and the Red and White Village/Subdistrict Cooperatives (KDKMP).

The public fears that if this centralization is true, regional services and development will no longer be optimal due to limited funds.

Potential to foster corruption

Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), warned that centralized budgets could create loopholes for corruption.

"When the budget is centralized, massive corruption often occurs through procurement processes and even the sale of facilities at the Free Nutritious Meals (MBG) centers. This effectively disproves Prabowo's thesis," he told Kompas.com on Friday (18/9/2026) evening.

He advised that the 2027 State Budget (APBN) should not allow regional budgets to be shifted for national priority programs without approval from the People's Representative Council (DPR RI).

KOMPAS.com/ AGUSTINUS RANGGA RESPATI Economist and Executive Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira Adhinegara when met in Jakarta, Wednesday (10/6/2026).

The government is deemed obligated to comply with the Constitutional Court (MK) Decision Number 100 of 2026, which mandates that any fundamental changes to the state budget must receive DPR RI approval.

Referring to this MK regulation, Prabowo must find alternative funding sources without sacrificing regional and village budgets to support his priority programs.

If the central government continues to rely on regional or village funds to implement its priority programs, the impact could be severe.

"This could cause economic crises at the regional level, with implications including increased unemployment, especially affecting contract and government employee statuses," Bhima added.

Prabowo speaks out

Prabowo addressed the TKD cuts through his YouTube account on Thursday (17/9/2026).