Indonesia: Managing Decentralization

IMF Working Papers, August 1, 2002

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Indonesia: Managing Decentralization

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Bibliographic details

• Authors: Ehtisham Ahmad, Ali M. Mansoor
• Published: August 1, 2002
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451855821.001

Summary

• The process of decentralization in Indonesia was initiated after a long period of autocratic rule.
• Despite the political imperatives, there is a need to carefully sequence the fiscal decentralization to ensure that financing follows the assignment of functions.
• The functions should be commensurate with the capacity to provide public services.
• The paper argues for the proper sequencing to avoid jeopardizing macroeconomic stability or the effective delivery of public services.

Key findings and arguments

• Fiscal decentralization must be carefully sequenced so that financing follows the assignment of functions.
• Assignments of functions should be commensurate with the capacity to provide public services.
• Improper sequencing could jeopardize macroeconomic stability.
• Improper sequencing could undermine the effective delivery of public services.

Policy recommendations and implications

• Sequence fiscal decentralization to align financing with assigned functions.
• Ensure functional assignments match local capacity to provide services.
• Prioritize sequencing measures that protect macroeconomic stability.
• Implement sequencing to safeguard effective delivery of public services.

Subjects and keywords

• Subject: Expenditure, Labor, Oil, gas and mining taxes, Public employment, Revenue administration, Taxes, Vehicle taxes
• Keywords: administration, central government, decentralization, decentralization process, District government, expenditure responsibility, gas and mining taxes, government, Habibie government, Intergovernmental Relations, Oil, Public employment, revenue, sequenced decentralization, state administration, Vehicle taxes, WP

Content in this bundle

• Indonesia: Managing Decentralization - WP/02/136
  • Indonesia: Managing Decentralization - WP/02/136 (Markdown version)
  • Indonesia: Managing Decentralization - WP/02/136 (PDF)