Government Policy on Refocusing Activity and Re-allocation Budget of Local Government in Pandemic and New Normal Period

Abstract

The Corona Virus Disease 19 (COVID-19) pandemic has prompted the Indonesian government to take several strategic policies to ensure the fulfillment of public services that should be provided by the government, including local governments. For this reason, the government issued a policy which is called as budget reallocation and refocusing activities during the COVID-19 pandemic as outlined in Law Number 2 of 2020. In the refocusing activities policy, the Government obliges the local government to postpones and cancels less or unnecessary activities. Meanwhile, in the budget reallocation policy, budgeting priorities are aimed to handling COVID-19. The refocusing and reallocation policy enacted by the central government has a huge influence on local government budget policy making. In this regard, this study aims to find out how local governments interpret policies on refocusing activities and reallocating local government budgets during the Pandemic and to find out the challenges faced by local governments in meeting the demands for refocusing activities and reallocating the budget. The research was conducted normatively using secondary data in the form of legislation, the regional revenue and expenditure budget documents, and literature collected through library research. The data obtained were then examined qualitatively. Based on the research, it was found that the regions cut budgets for certain activities in their revised APBD by also reducing activities, especially offline ones such as meetings and changing them into online. One of the obstacles faced by local governments is the decline in local revenue (PAD). This decline causes the government to be more selective in choosing activities to be carried out and the implementation of these activities must be adjusted to regional financial conditions. It is believed that this research is useful to provide additional knowledge about regional financial management, especially during the pandemic.