An Analysis of Regional Financial Performance of Indragiri Hulu Regency from 2015 to 2019

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Syapsan, Taryono

Résumé

Regional autonomy marks the transfer of authority from the central government to regional governments. Decentralization requires regions to make more creative and innovative decisions and policies in utilizing regional economic potential to improve the local community welfare. Delegation of authority, followed by fiscal decentralization from local government revenue, transfers, and other legal regional income. In multiplying sources of income, apart from being creative and innovative, regions are demanded to be creative and innovative in allocating regional expenditures effectively and efficiently following regional development priorities. This study examined the Indragiri Hulu Regency’s regional income and expenditure and the regional financial management. This study aims to analyze the performance of regional income and expenditure of Indragiri Hulu Regency from 2015 to 2019 and the performance of regional financial management of Indragiri Hulu Regency from 2015 to 2019. This study used a quantitative descriptive analysis. The analysis of the performance of regional income and expenditure used indicators of income growth, regional fiscal independence, Direct Expense Ratio to Regional Expenditures, and the ratio of Realization Regional Budget. The analysis of the performance of regional financial management used the indicators of the current ratio, quick ratio, debt to asset ratio, and debt-to-equity. The results showed that the average regional income of Indragiri Hulu Regency in 2015-2019 grew by 5.71% with a fluctuation level of fiscal independence between 4.13%-9.35%. The proportion of direct expenditure in regional expenditures ranged from 40.57%-49.13%. The absorption capacity of the regional budget was around 88.36% - 92.83%, where the absorption of the direct expenditure is lower than the absorption of the indirect expenditure. The performance of regional financial management in Indragiri Hulu Regency, which is reflected in the current ratio of between 3.70-16.00 and a Quick ratio of between 3.37-15.34, and the ratio of total debt to total assets decline ranging from 1.27–0.06 followed by a decline in the debt to equity ratio from 1.29 to 0.06. Suggestions given from this study is to increase locally generated revenue by finding new sources and increasing targets from potential sources of income. There is also a need to encourage the potential of the region to increase in retribution and local taxes. For the matching of regional expenditure ratios, it is necessary to match direct and indirect expenditures making the quality of output becomes better. Hence, the function of the budget as a means of distribution, allocation, and stabilization can be good.

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