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The Impact of Decentralization on Subnational Government Fiscal Slack in Indonesia
Author(s) -
LEWIS BLANE D.,
OOSTERMAN ANDRÉ
Publication year - 2009
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.1540-5850.2009.00927.x
Subject(s) - decentralization , government (linguistics) , central government , economics , economic policy , action (physics) , local government , business , public economics , political science , market economy , public administration , linguistics , philosophy , physics , quantum mechanics
Since Indonesia began implementing its decentralization program in 2001, subnational unspent balances have grown rapidly and have reached levels that many officials find unreasonably high. But the extent to which subnational government reserves are excessive, in general, is not obvious. A not implausible decrease in the price of oil would reduce transfers to subnationals significantly and, if sustained, could possibly eliminate reserves in a relatively short time. Central government should not take any immediate action to reduce subnational slack resources directly but should instead focus on removing the underlying causes of such.