Constitutional model for financial authority restructuring between central and regional governments in Indonesia
Main Article Content
Abstract
The imbalance of fiscal authority between Indonesia’s central and regional governments remains a fundamental issue that challenges the constitutional ideal of fiscal decentralization. Although the 1945 Constitution mandates regional autonomy, the concentration of financial control at the central level has led to inefficiencies, idle funds, and procedural disparities. This study examines the constitutional framework governing fiscal authority, identifies procedural challenges in its implementation, and proposes a constitutional model to restructure intergovernmental fiscal relations. Using a normative juridical approach combined with conceptual and statutory analysis, the research explores constitutional provisions, fiscal regulations, and Constitutional Court decisions to evaluate the alignment between law and practice. The findings reveal that the existing system remains hierarchically centralized and procedurally fragmented, limiting transparency, accountability, and regional fiscal innovation. Therefore, this article proposes a procedural constitutional model emphasizing coordination, equity, and efficiency as the foundation for a balanced fiscal relationship between the central and regional governments. This study introduces a novel constitutional procedural model to harmonize Indonesia’s central–regional fiscal governance through transparency and accountability. Such a model reinforces legal certainty while promoting an accountable and participatory fiscal governance system consistent with Indonesia’s constitutional democracy.
Article Details
How to Cite
Rizal, M., & Hermawan, S. . (2026). Constitutional model for financial authority restructuring between central and regional governments in Indonesia. Journal of Law Science, 8(1), 51-61. https://doi.org/10.35335/jls.v8i1.6777
References
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Anggriawan, T., Susilo, & Prasetyia, F. (2025). Does Indonesian Fiscal Decentralization Lead to Local-Central Fiscal Dependency?? Jurnal Ilmiah Administrasi Publik ( JIAP ), 11(1), 117–125.
Arfandy, M. F., & Rinata, A. R. (2025). Economic Crisis Recovery with Legal Policies by Governments (A Comparative Study between Indonesian, French, and Argentinian Law). Jurist-Diction, 8(2), 205–226. https://doi.org/10.20473/jd.v8i2.59809
Aulia, M. Z. (2018). Hukum Progresif dari Satjipto Rahardjo. Undang: Jurnal Hukum, 1(1), 159–185. https://doi.org/10.22437/ujh.1.1.159-185
Bambang Sugeng Irianto, Salsabilah Assyifa, S. B. (2023). Regional Goverment Problematics. Equalegum: International Law Journal, 1(3), 148–154.
Black, J. (2012). Managing the Financial Crisis – The Constitutional Dimension. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1619784
Blöchliger, H., & Kantorowicz, J. (2015). Fiscal constitutions: An empirical assessment. OECD Economics Department Working Papers, 1248, 45. https://dx.doi.org/10.1787/5jrxjctrxp8r-en
Brodjonegoro, B., & Jorge, M.-V. (2002). An Analysis of Indonesia’s Transfer System: Recent Perfomance and Future Prospects. Georgia State University, 2(May), 13.
Chandra Jha, P. (2013). Theory of Fiscal Federalism?: An Analysis. Munich Personal RePEc Archive, 41769, 1–33. https://mpra.ub.uni-muenchen.de/41769/
Dzul Ikram, M., Satria Putra, M., & Latif, A. (2025). Dynamics of Administrative Law, Financial Law, and Government Accountability. Journal of Social Research, 4(4), 715–725. https://doi.org/10.55324/josr.v4i4.2509
Farhan, Y., Sucipto, Y., Khadafi, U. S., Hakim, L., Mulyanti, E., & Prayitno, H. (2015). Kupas Tuntas Hubungan Keuangan Pusat Daerah. Fitra, 86. https://seknasfitra.org/wp-content/uploads/2012/10/Keuangan-Pusat-dan-Daerah.pdf
Fatimah, M., Haryanto, H., & Dwi Retnandari, N. (2024). Central-Local Government Relations in Regional Planning and Budgeting in Indonesia: Between Autonomy and Control. Policy & Governance Review, 8(2), 131. https://doi.org/10.30589/pgr.v8i2.922
Fatoni, A. (2020). Fiscal Decentralization Dilemma in Indonesia: Between Corruption Accountability and Probability at Local Levels. Jurnal Bina Praja, 12(1), 101–110. https://doi.org/10.21787/jbp.12.2020.101-110
Gabby, M. (2015). Prinsip Evidence Based Policy Making Dalam Konteks Audit Pendahuluan Operasional Bpjs Kesehatan. Conference In Business, Accounting, And Management (CBAM), 301–308. http://jurnal.unissula.ac.id/index.php/cbam/article/view/314
Growth, E., & Insight, I. (2023). Fiscal Decentralization , Local Public Sector Finance And Intergovernmental Fiscal Relations?: A Primer. International Bank for Reconstruction and Development.
Haryanto, J. T. (2018). Fiscal Condition of Sumatra in Decentralization Era. Jurnal Bina Praja, 10(1), 57–67. https://doi.org/10.21787/jbp.10.2018.57-67
Huda, N. (2019). Pembaruan Hukum Nasional melalui Putusan Mahkamah Konstitusi. Sekretariat Jenderal Komisi Yudisial Republik Indonesia.
Irfan Sofi. (2017). Hubungan Keuangan Antara Pemerintah Pusat dan Pemerintah Daerah. Politeknik Keuangan Negara STAN.
James Manor. (1999). The Political Economy of Democratic Decentralization. The World Bank Washington, D.C.
JENERIO, R., WATI, W., JAMILAH, F. L., TUAHNU, B., & KRISTHY, M. E. (2024). Financial Relations Between Central Government and Regional Government in Regional Autonomy. Journal of Political And Legal Sovereignty, 1(4), 135–141. https://doi.org/10.38142/jpls.v1i4.141
Khoirunisa, I., & Sulaeman, A. S. (2022). Fiscal Decentralization: Is There a Simultaneous Relationship Between Regional Independence and Social Welfare? Jurnal Tata Kelola Dan Akuntabilitas Keuangan Negara, 8(2), 213–226. https://doi.org/10.28986/jtaken.v2i1.848
Maarif, I. (2022). Alternative Transition Of Potential Public Service Retribution Through The Services Of Regional Public Services Agency. Legal Brief, 11(4), 2327–2338. https://doi.org/10.35335/legal
Manotal Tampubolon, Simanjuntak, N. (2023). Hukum dan Teori Konstitusi. Global Eksekutif Teknologi.
Mendy, O. (2024). Regional Autonomy in Indonesia after the Second Constitutional Amendment: Assessing its Developmental Delivery. Constitutionale, 5(1), 39–52. https://doi.org/10.25041/constitutionale.v5i1.3279
Nurchasanah, T., Aziz, A., & Pratama, N. (2023). Hubungan Kebijakan Fiskal Pemerintah Pusat dan Daerah dalam Konteks Desentralisasi. Ulil Albab: Jurnal Ilmiah Multidisiplin, 2(2), 855–862.
Peter Mahmud Marzuki. (2009). Penelitian Hukum. In Kencana (Vol. 151, Issue 2).
Prof. Jimly Asshiddiqie, G. B., Hukum Tata Negara, L. J., New, T., & American, O. (2020). Konstitusi dan Konstitusionalisme Indonesia: Studi terkait Konstitusi Republik Indonesia Tahun 1945 dan Konstitusionalisme Indonesia. Jakarta: Pengertian Konstitusi, 2009–2015.
Rika Febby Rhamadhani, F. O. E. (2025). Citizen Participation and Digital Governance in Public Sector Accountability. Sinergi International Journal of Accounting & Taxation, 2(4), 200–210. https://www.academia.edu/download/107852094/10.pdf
Rohman, I. K., Prabowosunu, M. A., Lead, J., Glory, E., & Br, P. (2025). IFG Progress Digest When Trillions Nap in Banks?: The Limits of Indonesia ’ s Liquidity Push. 25.
Saputra, N. A. A., & Setiawan, D. (2021). Fiscal Decentralization, Accountability and Corruption Indication: Evidence from Indonesia. Jurnal Bina Praja, 13, 29–40. https://doi.org/10.21787/jbp.13.2021.29-40
Sari, B. H. (2022). Law number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments. Pemerintah Indonesia, 6(2), 34–42.
Schwarcz, S. (2017). A Model-Law Approach to Restructuring Unsustainable Sovereign Debt. CIGI Policy Brief, 64.
Series, T. G. U. E. D. (2012). Fiscal Decentralization In Japan. United Nations Human Settlements Programme.
Simandjuntak, R. (2015). Sistem Desentralisasi Dalam Negara Kesatuan Republik Indonesia Prespektif Yuridis Konstitusional. De Jure, Syariah Dan Hukum, 07(01), 57–67.
Soerjono Soekanto. (2006). Penelitian hukum normatif. In Rajawali (Vol. 151, Issue 2). Rajawali.
Suhendra, D., Faisal, Suhaimi, & Syarifuddin. (2023). Regional Autonomy Inconsistency in Indonesia Post Amendment to the 1945 Constitution. Journal of Law and Sustainable Development, 11(11), e1693. https://doi.org/10.55908/sdgs.v11i11.1693
Sukhoya, W. (2023). Keuangan Pusat dan Daerah: Aspek Hukum Hubungan Dalam Peraturan Perundangan. PROGRESIF: Jurnal Hukum, 17(2), 144–160. https://doi.org/10.33019/progresif.v17i2.4383
Sumbu, T. (2010). Hubungan Pemerintah Pusat Dengan Pemerintah Daerah Dalam Kerangka Pengelolaan Keuangan Negara Dan Daerah. Jurnal Hukum Ius Quia Iustum, 17(4), 567–588. https://doi.org/10.20885/iustum.vol17.iss4.art4
Suparto. (2020). Konstitusi (Teori, Hukum dan Perkembangannya). Bina Karya.
Tanzi, V. (2006). Fiscal Policy: When Theory Collides With Reality. IDB Publications (Working Papers) 2312, 246, 15. https://www.ceps.eu/ceps-publications/fiscal-policy-when-theory-collides-reality/
Thoriq, Y. A., Shinta, D. A. E., & Sati, L. (2019). Hukum dan Teori Konstitusi (Perubahan Konstitusi Yang Partisipatif dan Populis. Jurnal Hukum Magnum Opus, 2(2), 217. https://doi.org/10.30996/jhmo.v2i2.2601
Usman, S. (2002). Regional Autonomy in Indonesia?: Field Experiences and Emerging Challenges The conference jointly organized by?: Indonesian. SMERU Working Paper, July 2002, 20–21.
Verico, K. (2018). Economics and Finance in Indonesia Modification of the Regulatory Impact Assessment on Indonesia ’ s Economic Policies Modification of the Regulatory Impact Assessment on Indonesia ’ s Economic Policies. 64(1). https://doi.org/10.47291/efi.v64i1.579
Widiyanto, A., Nurrochmat, D. R., Trison, S., & Subarudi. (2025). Assessing the Option of Devolution without Decentralization in Social Forestry Management: The Case Study of Java, Indonesia. Environment and Ecology Research, 13(4), 509–520. https://doi.org/10.13189/eer.2025.130405
World Bank. (2022). Decentralization, Multilevel Governance and Intergovernmental Relations: A Primer. 1–36. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099225502022314300/p1754490a5d87e07d0915e0e165e739dbf5
Wulan, D. N., Rusydi, Ahmad Munir, & Ahmad Taufiq Rifaldi. (2024). Limitation Of Authority Between Central And Local Governments In The Oil And Gas Business. Widya Pranata Hukum?: Jurnal Kajian Dan Penelitian Hukum, 6(1), 1–15. https://doi.org/10.37631/widyapranata.v6i1.1315
Yuliani, E. L. (2004). Decentralization , deconcentration and devolution?: what do they mean?? Interlaken Workshop on Decentralization, April, 27–30. http://www.cifor.org/publications/pdf_files/interlaken/Compilation.pdf
Agustina, F., Pramono, A. J., Akbar, B., & Alma’arif, A. (2022). Factors Determining Low Regional Financial Independence: Financial Autonomy and Degree of Decentralization. Jurnal Tata Kelola Dan Akuntabilitas Keuangan Negara, 8(1), 117–130. https://doi.org/10.28986/jtaken.v8i1.701
Akbar, M. F., Mareto, I., Adhiem, A. F. A., Firdaus, A. D., & Farid, A. M. B. M. (2023). The Financial Balance Policy Between Central and Local Government: Toward More Just Financial Allocation. Yuridika, 38(2), 415–430. https://doi.org/10.20473/ydk.v38i2.42904
Anggriawan, T., Susilo, & Prasetyia, F. (2025). Does Indonesian Fiscal Decentralization Lead to Local-Central Fiscal Dependency?? Jurnal Ilmiah Administrasi Publik ( JIAP ), 11(1), 117–125.
Arfandy, M. F., & Rinata, A. R. (2025). Economic Crisis Recovery with Legal Policies by Governments (A Comparative Study between Indonesian, French, and Argentinian Law). Jurist-Diction, 8(2), 205–226. https://doi.org/10.20473/jd.v8i2.59809
Aulia, M. Z. (2018). Hukum Progresif dari Satjipto Rahardjo. Undang: Jurnal Hukum, 1(1), 159–185. https://doi.org/10.22437/ujh.1.1.159-185
Bambang Sugeng Irianto, Salsabilah Assyifa, S. B. (2023). Regional Goverment Problematics. Equalegum: International Law Journal, 1(3), 148–154.
Black, J. (2012). Managing the Financial Crisis – The Constitutional Dimension. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1619784
Blöchliger, H., & Kantorowicz, J. (2015). Fiscal constitutions: An empirical assessment. OECD Economics Department Working Papers, 1248, 45. https://dx.doi.org/10.1787/5jrxjctrxp8r-en
Brodjonegoro, B., & Jorge, M.-V. (2002). An Analysis of Indonesia’s Transfer System: Recent Perfomance and Future Prospects. Georgia State University, 2(May), 13.
Chandra Jha, P. (2013). Theory of Fiscal Federalism?: An Analysis. Munich Personal RePEc Archive, 41769, 1–33. https://mpra.ub.uni-muenchen.de/41769/
Dzul Ikram, M., Satria Putra, M., & Latif, A. (2025). Dynamics of Administrative Law, Financial Law, and Government Accountability. Journal of Social Research, 4(4), 715–725. https://doi.org/10.55324/josr.v4i4.2509
Farhan, Y., Sucipto, Y., Khadafi, U. S., Hakim, L., Mulyanti, E., & Prayitno, H. (2015). Kupas Tuntas Hubungan Keuangan Pusat Daerah. Fitra, 86. https://seknasfitra.org/wp-content/uploads/2012/10/Keuangan-Pusat-dan-Daerah.pdf
Fatimah, M., Haryanto, H., & Dwi Retnandari, N. (2024). Central-Local Government Relations in Regional Planning and Budgeting in Indonesia: Between Autonomy and Control. Policy & Governance Review, 8(2), 131. https://doi.org/10.30589/pgr.v8i2.922
Fatoni, A. (2020). Fiscal Decentralization Dilemma in Indonesia: Between Corruption Accountability and Probability at Local Levels. Jurnal Bina Praja, 12(1), 101–110. https://doi.org/10.21787/jbp.12.2020.101-110
Gabby, M. (2015). Prinsip Evidence Based Policy Making Dalam Konteks Audit Pendahuluan Operasional Bpjs Kesehatan. Conference In Business, Accounting, And Management (CBAM), 301–308. http://jurnal.unissula.ac.id/index.php/cbam/article/view/314
Growth, E., & Insight, I. (2023). Fiscal Decentralization , Local Public Sector Finance And Intergovernmental Fiscal Relations?: A Primer. International Bank for Reconstruction and Development.
Haryanto, J. T. (2018). Fiscal Condition of Sumatra in Decentralization Era. Jurnal Bina Praja, 10(1), 57–67. https://doi.org/10.21787/jbp.10.2018.57-67
Huda, N. (2019). Pembaruan Hukum Nasional melalui Putusan Mahkamah Konstitusi. Sekretariat Jenderal Komisi Yudisial Republik Indonesia.
Irfan Sofi. (2017). Hubungan Keuangan Antara Pemerintah Pusat dan Pemerintah Daerah. Politeknik Keuangan Negara STAN.
James Manor. (1999). The Political Economy of Democratic Decentralization. The World Bank Washington, D.C.
JENERIO, R., WATI, W., JAMILAH, F. L., TUAHNU, B., & KRISTHY, M. E. (2024). Financial Relations Between Central Government and Regional Government in Regional Autonomy. Journal of Political And Legal Sovereignty, 1(4), 135–141. https://doi.org/10.38142/jpls.v1i4.141
Khoirunisa, I., & Sulaeman, A. S. (2022). Fiscal Decentralization: Is There a Simultaneous Relationship Between Regional Independence and Social Welfare? Jurnal Tata Kelola Dan Akuntabilitas Keuangan Negara, 8(2), 213–226. https://doi.org/10.28986/jtaken.v2i1.848
Maarif, I. (2022). Alternative Transition Of Potential Public Service Retribution Through The Services Of Regional Public Services Agency. Legal Brief, 11(4), 2327–2338. https://doi.org/10.35335/legal
Manotal Tampubolon, Simanjuntak, N. (2023). Hukum dan Teori Konstitusi. Global Eksekutif Teknologi.
Mendy, O. (2024). Regional Autonomy in Indonesia after the Second Constitutional Amendment: Assessing its Developmental Delivery. Constitutionale, 5(1), 39–52. https://doi.org/10.25041/constitutionale.v5i1.3279
Nurchasanah, T., Aziz, A., & Pratama, N. (2023). Hubungan Kebijakan Fiskal Pemerintah Pusat dan Daerah dalam Konteks Desentralisasi. Ulil Albab: Jurnal Ilmiah Multidisiplin, 2(2), 855–862.
Peter Mahmud Marzuki. (2009). Penelitian Hukum. In Kencana (Vol. 151, Issue 2).
Prof. Jimly Asshiddiqie, G. B., Hukum Tata Negara, L. J., New, T., & American, O. (2020). Konstitusi dan Konstitusionalisme Indonesia: Studi terkait Konstitusi Republik Indonesia Tahun 1945 dan Konstitusionalisme Indonesia. Jakarta: Pengertian Konstitusi, 2009–2015.
Rika Febby Rhamadhani, F. O. E. (2025). Citizen Participation and Digital Governance in Public Sector Accountability. Sinergi International Journal of Accounting & Taxation, 2(4), 200–210. https://www.academia.edu/download/107852094/10.pdf
Rohman, I. K., Prabowosunu, M. A., Lead, J., Glory, E., & Br, P. (2025). IFG Progress Digest When Trillions Nap in Banks?: The Limits of Indonesia ’ s Liquidity Push. 25.
Saputra, N. A. A., & Setiawan, D. (2021). Fiscal Decentralization, Accountability and Corruption Indication: Evidence from Indonesia. Jurnal Bina Praja, 13, 29–40. https://doi.org/10.21787/jbp.13.2021.29-40
Sari, B. H. (2022). Law number 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments. Pemerintah Indonesia, 6(2), 34–42.
Schwarcz, S. (2017). A Model-Law Approach to Restructuring Unsustainable Sovereign Debt. CIGI Policy Brief, 64.
Series, T. G. U. E. D. (2012). Fiscal Decentralization In Japan. United Nations Human Settlements Programme.
Simandjuntak, R. (2015). Sistem Desentralisasi Dalam Negara Kesatuan Republik Indonesia Prespektif Yuridis Konstitusional. De Jure, Syariah Dan Hukum, 07(01), 57–67.
Soerjono Soekanto. (2006). Penelitian hukum normatif. In Rajawali (Vol. 151, Issue 2). Rajawali.
Suhendra, D., Faisal, Suhaimi, & Syarifuddin. (2023). Regional Autonomy Inconsistency in Indonesia Post Amendment to the 1945 Constitution. Journal of Law and Sustainable Development, 11(11), e1693. https://doi.org/10.55908/sdgs.v11i11.1693
Sukhoya, W. (2023). Keuangan Pusat dan Daerah: Aspek Hukum Hubungan Dalam Peraturan Perundangan. PROGRESIF: Jurnal Hukum, 17(2), 144–160. https://doi.org/10.33019/progresif.v17i2.4383
Sumbu, T. (2010). Hubungan Pemerintah Pusat Dengan Pemerintah Daerah Dalam Kerangka Pengelolaan Keuangan Negara Dan Daerah. Jurnal Hukum Ius Quia Iustum, 17(4), 567–588. https://doi.org/10.20885/iustum.vol17.iss4.art4
Suparto. (2020). Konstitusi (Teori, Hukum dan Perkembangannya). Bina Karya.
Tanzi, V. (2006). Fiscal Policy: When Theory Collides With Reality. IDB Publications (Working Papers) 2312, 246, 15. https://www.ceps.eu/ceps-publications/fiscal-policy-when-theory-collides-reality/
Thoriq, Y. A., Shinta, D. A. E., & Sati, L. (2019). Hukum dan Teori Konstitusi (Perubahan Konstitusi Yang Partisipatif dan Populis. Jurnal Hukum Magnum Opus, 2(2), 217. https://doi.org/10.30996/jhmo.v2i2.2601
Usman, S. (2002). Regional Autonomy in Indonesia?: Field Experiences and Emerging Challenges The conference jointly organized by?: Indonesian. SMERU Working Paper, July 2002, 20–21.
Verico, K. (2018). Economics and Finance in Indonesia Modification of the Regulatory Impact Assessment on Indonesia ’ s Economic Policies Modification of the Regulatory Impact Assessment on Indonesia ’ s Economic Policies. 64(1). https://doi.org/10.47291/efi.v64i1.579
Widiyanto, A., Nurrochmat, D. R., Trison, S., & Subarudi. (2025). Assessing the Option of Devolution without Decentralization in Social Forestry Management: The Case Study of Java, Indonesia. Environment and Ecology Research, 13(4), 509–520. https://doi.org/10.13189/eer.2025.130405
World Bank. (2022). Decentralization, Multilevel Governance and Intergovernmental Relations: A Primer. 1–36. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099225502022314300/p1754490a5d87e07d0915e0e165e739dbf5
Wulan, D. N., Rusydi, Ahmad Munir, & Ahmad Taufiq Rifaldi. (2024). Limitation Of Authority Between Central And Local Governments In The Oil And Gas Business. Widya Pranata Hukum?: Jurnal Kajian Dan Penelitian Hukum, 6(1), 1–15. https://doi.org/10.37631/widyapranata.v6i1.1315
Yuliani, E. L. (2004). Decentralization , deconcentration and devolution?: what do they mean?? Interlaken Workshop on Decentralization, April, 27–30. http://www.cifor.org/publications/pdf_files/interlaken/Compilation.pdf
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