Budget Process of Local Government in Indonesia

Budget Process of Local Government in Indonesia

by Harryanto, Kartini and Haliah

Abstract

This study attempts to explain the local government budget in Indonesia in the three perspective: managerial, politic, and public interest. By Using the multiple regression analysis, nine hypotheses have been tested. The finding of this research shows that budget discipline, budget approval and accountability are the mediating variables to produce budget performance. The independent variables that are local fiscal capacity, budget ceiling and priority, and national priority, in the managerial perspective only have an impact on the budget performance since the existence of the budget discipline. From the political perspective, the approval process should be considered as a crucial process to mediate, intergovernmental transfer, local government prerogative and the role of local politician towards the budget performance. In the perspective of public interest, the accountability becomes a crucial factor that able to mediate financial reporting system, audit system and budget oversight towards the budget performance.

Keywords: Local Fiscal Capacity, Budget Discipline, Budget Approval, and Budget Performance

Published in: Review of Integrative Business and Economics Research, Vol 3(2), 2014.