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).

He explained that one reason for reducing the TKD was because many regional governments have been leaving funds idle in banks.

"Sometimes it's strange; regional governments don’t use the funds. We have proof that money is transferred but just sits in banks, sometimes due to conflicts between regents and local parliaments. So, funds are transferred but remain unused," Prabowo said, quoted from the program 'President Prabowo Answers' on his YouTube channel on Friday.

In fact, the central government claims to have routinely transferred Rp 1 billion per year to villages for the past ten years through Regional General Cash Accounts (RKUD).

Unfortunately, many regional governments are considered to have failed to utilize these transferred funds for development, especially in villages.

Of the Rp 1 billion transferred, many village infrastructures such as bridges are still damaged.

Tangkapan layar Youtube Prabowo Subianto. President Prabowo Subianto in the program 'Prabowo Answers' uploaded on Prabowo Subianto's YouTube account.

Prabowo noted that repairing a bridge only requires about Rp 400 million.

For this reason, the central government is striving to tighten the TKD to prevent continued accumulation in banks and ensure funds are used optimally.

Purbaya Yudhi Sadewa, during his time as Minister of Finance, also raised concerns over substantial idle regional funds, which reached Rp 234 trillion.

Purbaya mentioned that over the past five years, idle regional funds in banks have fluctuated significantly.

According to the Ministry of Finance’s records, in 2021 idle funds amounted to Rp 194.1 trillion, rising to Rp 223.8 trillion in 2022, declining to Rp 211.7 trillion in 2023, dropping again to Rp 208.6 trillion in 2024, then increasing to Rp 234 trillion in 2025.