The Efficiency of Village Funds in Indonesia: A Case Study of the Mandatory Spending Programme

Abstract

The Law No. 6 of 2014 concerning the Village brought fundamental changes in the management, arrangement, and implementation of village governance. However, there are still a number of issues with how it's implemented. Government Regulation concerning Villages states that Village Funds are prioritized for handling food security, stunting, and Direct Cash Assistance from Village Funds (BLT-DD). Mandatory spending is distributed evenly to all villages that receive village funds, whereas each village is different, so an in-depth study is needed on whether the mandatory program is considered ineffective according to the real needs of the village. This study aims to identify the effectiveness of the mandatory program in terms of the priority of using Village Funds. The analysis was conducted using a qualitative approach by mapping Village Fund Problems (current situation - effects-causes) by looking at the Priority Use of Villages Funds and Implementation of Village Funds. The results showed that: 1) The percentage for Village Funds is more flexible to adjust to village needs 2) it is necessary to evaluate the weighting of indicators and determine the criteria for measuring the needs of each village in determining the amount of Village Funds and 3) important to increase capacity for structures under the Ministry of Villages, Development of Disadvantaged Regions, and Transmigration (Ministry of Villages PDTT). These efforts need to be carried out immediately so that the priority of using village funds can be more effective and meet the real needs of the village.