Budget Political Turbulence, the Impact on Regional Revenues, Expenditures, and Poverty Rate

Abstract

This study examines the relationship between budget management and budget politics and their relation to poverty alleviation. The cycle of budget politics occurs in many countries in Asia, Africa, Europe, and Latin America. This illustrates that budget preparation, discussion, determination, and implementation cannot be separated from the influence of budget politics. The main sources of development in the regions consist of three main components: regional original income, transfer fund income, and other legitimate regional revenues. Currently, many regions have budgets dominated by central government transfer funds rather than their original regional revenues (a symptom of the flypaper effect). Nevertheless, political actors continue to use their budgetary authority to prioritize their political interests. As a result, it will be difficult for regions to carry out development to reduce poverty. The method used in this study is quantitative, with poverty as the dependent variable, regional original income, transfer funds, grant expenditures, social assistance expenditures, capital expenditures, and the budget cycle as independent variables. Data analysis using panel data regression. The results of this study indicate that five of the six independent variables, namely local revenue, transfer funds, grant spending, social assistance spending, and the political year dummy have a negative and significant effect on the dependent variable. In contrast, the only independent variable, namely capital expenditure, has no effect on poverty alleviation. However, in the partial analysis, capital expenditure has a significant effect on reducing poverty.