IMPLEMENTING PRO POOR BUDGETING IN REDUCTION POVERTY: A CASE OF

LOCAL GOVERNMENT IN BONE DISTRICT, SOUTH SULAWESI PROVINCE,

INDONESIA

Nursini Nursini
Department of Economics, Faculty of Economics and Business, Hasanuddin University,
Email: [email protected]
Agussalim Agussalim
Department of Economics, Faculty of Economics and Business, Hasanuddin University,
email:[email protected]
Sultan Suhab
Department of Economics, Faculty of Economics and Business, Hasanuddin University,
email:[email protected]
Tawakkal Tawakkal
Department of Accounting, State Polytechnic of Ujung Pandang,
Email:[email protected]

Abstract

The number of transfer funds managed by local governments has increased significantly but the
decline of the poor is quite slow. The implementation of pro poor budgeting depends on the extent to
which local governments formulate program planning and budgeting related to poverty alleviation.
This study uses descriptive analysis approach and contents analysis on planning documents and local
budgets to know the number of programs and the amount of government spending related to poverty
reduction in Bone District. The study finds that the number of programs implemented by Bone
District governments in 2015 amounted to 45 programs with budget realization of IDR 126.2 billion.
This figure is relatively small only 6.86 percent of IDR 1841.8 billion total local government
spending in Bone District. This study suggests the need for an increasing the number of programs and
the proportion of spending associated with poverty alleviation.

Key words: Pro-poor budgeting, poverty, fiscal decentralization

JEL Classification: H7, O1, O2

1
1. Introduction

Until now, the issue of poverty remains an interesting topic of discussion by policy makers in
Indonesia. This is indicated by the number of poor people is still quite high until 2015. The number of
poor people increases from 27.72 million people in 2014 to 28.51 million people in 2015, or from
10.96 percent to 11.13 percent at the same period. The figure is distributed in all provinces in
Indonesia. For South Sulawesi Province, the number of poor people is 864,51 thousand in 2015 and
the amount varies between districts/cities. Most of the poor are in rural areas. This condition further
reinforces the fact that to overcome the poverty problem requires a multidimensional and
comprehensive policy (Mawardi and Sumarto, 2003).
One policy that plays a major role in reducing poverty is the fiscal decentralization policy. In
the era of fiscal decentralization, local governments are given the widest possible authority to regulate
the use of transfer funds to improve the welfare of the people through the provision of public services.
In relation to this, pro poor budgeting policies plays an important role. Boex, Jameson, et al, (2006) in
their study state that fiscal decentralization can reduce poverty through each of the pillars of
decentralization, namely expenditure authority, acceptance authority, central and local financial
relations, and loans.
In 2010, balance funds in South Sulawesi (Provinces and Districts/Municipalities) have
reached IDR 10.73 trillion (World Bank, 2012) and are confirmed to have increased over the past six
years. However, the number of poor people in South Sulawesi Province is still relatively high and
even increased in 2015. This indicates that the amount of transfer funds has not been effective to
accelerate the decline in the number and percentage of poor people. Although it is acknowledged that
transfer funds to the regions are absorbed more into personnel expenditure, but local governments are
still responsible for providing space and increasing the proportionate budget allocation portion to the
poor.
The pro-poor budgeting policy has given the local government more space in the era of fiscal
decentralization. There are two pillars of fiscal decentralization that contribute to reducing poverty in
the regions, namely expenditure and intergovernmental fiscal relations. Previous studies that
estimated between fiscal decentralization and poverty reduction were relatively large and the results
varied (Steiner, Susan, 2005; Susan, Steiner, 2005; Liv, 2009; Sepulveda, Cristian F; Martinez-
Vazquez, Jorge, 2010; Banwo, 2012; Valaris, Nicholas, 2012; Moche, Tebogo J; Monkam, Nara; Aye,
Goodness C., 2014; Azila and Tibu, 2014; Maharajabdinul, et al, 2015; Abdillah and Mursinto, 2016;
and recently by Agegnehu and Dibu, 2017). Soejoto, et al., (2015) and Maharajabdinul, et al, (2015)
find the increasing decentralization funds is not followed by a decrease in total poor population
significantly in Indonesia. The study of transfer funds as a measure of fiscal decentralization and
poverty reduction generally uses quantitative analysis and focuses on a national level, a qualitative
approach and a focus on local government level is relatively limited. Empirical studies at the local
government level are important because local governments are more aware of the actual needs of
communities and can collaborate with communities in formulating program planning and budgeting
related to poverty alleviation (Bräutigam, Deborah, 2004; Manaf, Asnawi, et al, 2016).
The impact of fiscal decentralization on poverty reduction depends on the extent to which
local governments are committed to allocating budgets to programs and activities that directly touch
the needs of the poor. The more pro-poor programs and activities the greater the proportionate budget
portion to the poor who can then create income for the poor (Bossuyt, 2000). Bräutigam, Deborah,
(2004) asserts that the allocation of spending more to the poor if the poor are directly involved in
determining budget decisions. Manaf, Asnawi, et al (2016) find that Kota Pekalongan has succeeded
in encouraging increased community participation in planning and development and has also
successfully implemented a poverty reduction program
Mawardi and Sumarto (2003) find that local governments have a high degree of flexibility in
using DAU funds for the benefit of the poor, and transfer funds are complementary to local
government funding to address poverty (Bossuyt, 2000). This is in line with Rao (1998) which states
that the success of anti-poverty strategies in the decentralization era consists of three groups of
measures: (i) providing opportunities to the poor, (ii) empowering the poor, and (iii) providing
protection to the poor. These three measures are inseparable from the extent to which local
governments formulate pro-poor planning and budgeting.

2
 This study analyzes the implementation of pro poor budgeting policy in the era of fiscal
decentralization at the local government level in Bone District by focusing on three key questions: (i)
What programs, and activities were developed by local governments that are pro-poor? (ii) How much
of the budget was allocated to pro-poor? (iii) What forms of local government innovation are related
to poverty reduction in Bone district?
The study is organized as follows: (i) Session 2 contains Survey Literature of pro poor
budgeting, (ii) Session 3 contains research method, (iii) session 4 Containing Results and Discussion,
and (iv) Session 5 contains Conclusions and Recommendations.

2. Survey Literature of Pro Poor Budgeting

Pro-poor budget policy is a pro-poor budgetary reform. This policy arises from the weakness
of the implementation of previous budget policies that are not pro-poor. This is indicated by the
number of poor people who do not benefit from the results of development. According to Kakembo,
Sophie Nampewo (2016) that pro-poor budget has important implications for redistributing funds to
reduce poverty. To achieve this, poor people should be involved in the planning and budgeting
process to ensure that government aid and spending programs for social services such as education
and health are fully defined and enjoyed by them.
In the era of decentralization, the World Bank (2008) asserts that democratization in the
budget sector includes participation (from the people), accountability and transparency (by the people)
and responsiveness (for the people). Democratization is what has led to new concepts in the budget
sector: participatory budgeting, gender budgeting, people budgeting and pro poor budgeting (Santos,
1998; Sintomer, Y et al., 2008).
Rono and Getachew (2016) define pro poor budget in two aspects: First, expenditure aspect is
budget allocation to social and economic sectors directly accepted by the poor, and budget allocation
to social and economic sectors indirectly accepted by the poor but have significant access
opportunities to the poor. Second, aspects of taxation, the setting of progressive taxes according to the
income received by the poor. Further World Bank (2008) notes the characteristics of the pro-poor
budget are: First, income side of the Region such as; not collect taxes, levies from the poor, not
impose taxes and levies on the fulfillment of the basic needs of the poor as the main source of local
income, not burden the poor with various services types of taxes and levies. Second, regional
expenditure such as; budget allocation for subsidy of fulfillment basic needs of the poor, budget
allocation for the provision of public facilities and public infrastructure in favor of the poor, includes
of community health service center (Puskesmas), auxiliary public health service center (Pustu),
village roads, and clean water; Third, the existence of budget allocation for the data collection of the
poor and the needs assessment of the poor, Fourth, the existence of budget allocations to provide
space for participation and self-actualization of the poor, and Fifth, the existence of budget allocations
for planning and assessing the impact of programs / activities on the poor. There are two different
approaches related to expenditure for the poor people: expenditures that directly improve the income
of the poor and expenditures aimed at improving the quality of life of the poor through improved
access to basic services (Kakembo, S.Nampewo, 2016).
Thus, a State is categorized as a pro-poor country which is measured from the extent to which
it promotes poverty reduction strategies, plans, and commitments. Some empirical studies of pro poor
budget such as Kakembo, S.Nampewo (2016) for the case of Uganda Country, Rono and Getachew,
(2016) for the State of Kenya. Both of these studies conclude that the amount of budget allocated to
pro poor is still low. In the case of South Sumatra, Indonesia, the ratio of expenditure allocations to
the poor ranging from 0.2 in 2009-2010 is highly categorized, while in 2012-2013 is 0.18 categorized
as siding (Padriyansyah, 2015).

3. Research Method
The research is conducted at Bone District in South Sulawesi. The target groups are six key
SKPD-Regional Units: Regional Development Planning Agency-Bappeda Bappeda, Health Office,
Education Office, Department of Women Empowerment and Child Protection, and Social Service
Office, and Community Empowerment Board. The data used is primary and secondary data which is
analyzed through statistic-descriptive and content analysis. Primary data includes the forms of
innovative of local government related to poverty reduction and the constraints and obstacles in

3
allocating budgets for poverty reduction. Secondary data includes planning documents such as
Strategic Planning-RENSTRA, Annual Planning-RENJA, and Budget Documents-APBD. Contents
analysis includes identification of programs and activities contained in planning and budgeting
documents related to poverty alleviation, while descriptive analysis includes analyzing budget
allocation realization for poverty alleviation programs and activities in Bone District.

4. Result and Discussion

4.1. Local Budget Analysis in Bone District

During the period of 2010-2015, the realization of revenue in Bone increased from IDR 850.7
billion to IDR 1,870.1 billion or grew by an average of 17.29 percent per year. Acquisition of regional
revenues during the period comes from three sources: revenues derived from local original revenues-
PAD, revenues from balance funds, and other legitimate local revenue. PAD consists of tax revenues,
user charge, Regional Owned Enterprise Revenue and other legitimate PAD. PAD has increased until
2015 except in 2012. The increase share in PAD began to occur in 2014-2015. This shows that the
role of PAD as a source of income has improved, especially in the last two years.
From the PAD structure, it seems that local taxes and user charges are relatively the same, but
since 2014 and 2015, the role of local taxes is considerable. Over the past three years, the largest
revenue of PAD has come from other legitimate PADs. This means that revenues originating from
Other Legitimate PAD plays an important role in the performance of PAD, especially in the last two
years. The magnitude of the contribution of other legitimate PAD since 2014 affects the performance
of PAD as a whole so that PAD can grow on average 41.58 percent per year during the last five years.
The high average PAD growth in the last five years indicates that PAD performance has shown
positive signs as a source of local revenue. Along with the economic progress in Bone District, the
opportunity to increase the sources of PAD, especially from local taxes is still quite large.

Table 1. Trend of Regional Income in Bone District (Billion Rupiah), 2010-2015

Descriptions 2010 2011 2012 2013 2014 2015 Average of
Growth
Regional Revenue 850.7 1097.0 1198.0 1392.7 1534.6 1870.1 17.29
Own Revenue 34.8 60.4 52.3 85.9 155.4 159.8 41.58
Local Taxes 8.8 10.4 14.6 14.6 36.3 35.1 40.94
User Charges 19.7 10.8 11.7 14.1 15.4 15.2 -1.62
Regional Owned Enterprise 1.5 2.0 1.8 2.0 2.3 3.0 14.62
Revenue and Segmented
Wealth Management
Others legitimate PAD 4.8 37.3 24.2 55.3 101.4 106.5 170.65
Balance Fund 663.0 761.7 913.6 1022.6 1083.6 1242.6 13.48
Tax sharing 50.1 51.2 68.1 63.8 42.2 29.5 -6.99
Non-Tax Revenue Sharing / 1.6 2.1 2.7 4.7 5.4
Natural Resources
General allocation funds 541.7 622.1 754.0 867.8 950.4 977.8 12.71
Special allocation funds 69.7 88.4 89.4 88.2 86.3 229.9 38.18
Other legitimate revenue 152.9 274.9 232.0 284.3 295.6 467.8 29.79
Grant Revenue 1.2
Emergency fund
Tax sharing from Province 23.0 34.0 31.8 35.5 50.8 53.9 20.46
and other local government
Adjustment fund and regional 104.5 214.9 175.4 209.3 217.8 385.5 37.54
autonomy
Financial Assistance from 24.3 26.0
Provinces or Other Local
Governments
Others 24.8 39.4 27.1 28.4
Source: BPS, Bone in Figures, processed various editions

4
 Balance funds as a source of revenue Bone District shows an increasing every year. During
that period, the average growth of the balance fund was 13.48 percent per year. The balance fund
component consists of three, namely Tax sharing/Non-Tax sharing, General Allocation Fund-DAU,
and Special Allocation Fund-DAK. Tax/Non-Tax Sharing tends to fluctuate from year to year so that
the growth for five years is negative. While DAU increases every year with an average growth of
12.71 percent per year. DAK, although relatively high, is relatively fluctuating and has a dramatic
jump in 2015. Looking at the three components of the Balance Fund, it appears that the main
contributor of the Balance Fund is the General Allocation Fund on average 84.3 percent of the total
balance fund. The remainder is distributed to Tax and Non-Tax sharing and Special Allocation Funds.
Local revenue derived from Other Regional Revenue also increased except in 2012. In 2015 it
doubled compared with 2014 to reach IDR 467.8 billion. Other Legal Revenue is dominated by
Adjustment Funds and regional autonomy funds. Based on the revenue structure of Bone District, it
appears that revenues derived from balance funds still dominated the total regional income. This
means that the level of dependence of the Bone District government on the central government is
quite large. During that period, the contribution of balance funds to total regional revenues was on
average 72.35 percent, PAD of 6.47 percent, and Others Legal revenue by an average of 21.18 percent
(Table 2). This means that the source of funding for the implementation of the region's medium-term
development program in the previous period came mostly from the central government. Although the
balance fund is a big contributor, but its contribution tends to decline in the last three years.
Along with the increase in Bone regional revenue, the regional expenditure also increased in
the period 2010-2015. When compared to the average growth between regional expenditure and
regional revenues, it appears that regional expenditures are growing faster than regional revenues.

Table 2. Contribution of Type of Revenue to Total Regional Income Bone District (%), 2010-
2015
Description 2010 2011 2012 2013 2014 2015 averag
e

Own Original Revenue

4.10 5.51 4.37 6.17 10.13 8.54 6.47
(PAD)
Local Tax 1.03 0.95 1.22 1.05 2.36 1.88 1.41
User Charge 2.31 0.98 0.98 1.01 1.00 0.81 1.18
Results of Regional-Owned
Companies and Management 0.18 0.18 0.15 0.14 0.15 0.16 0.16
of Separated Regional Wealth
Other Legitimate PAD 0.57 3.40 2.02 3.97 6.61 5.69 3.71
Balance Fund 77.94 69.43 76.26 73.42 70.61 66.44 72.35
Tax sharing 5.89 4.67 5.68 4.58 2.75 1.58 4.19
Non-Tax sharing /Natural
0.19 - 0.18 0.20 0.30 0.29 0.19
Resources
General Allocation Fund 63.68 56.71 62.94 62.31 61.93 52.29 59.98
Special Allocation Fund 8.19 8.06 7.47 6.34 5.62 12.29 7.99
Other legitimate revenue 17.97 25.06 19.37 20.41 19.26 25.01 21.18
Grant Revenue 0.14 - - - - - 0.02
Emergency Fund - - - - - - -
Tax sharing from Province
2.70 3.10 2.65 2.55 3.31 2.88 2.86
and other local government
Adjustment fund and regional
12.28 19.59 14.64 15.03 14.19 20.61 16.06
autonomy
Financial Assistance from
Provinces or Other Local 2.85 2.37 - - - - 0.87
Governments
others - - 2.07 2.83 1.76 1.52 1.36
Source: BPS, Bone in Figures, processed various editions
During that period, the average growth of regional expenditure reached 20 percent per year
while regional revenue grew an average of only 17.29 percent per year. This condition indicates that

5
the local government of Bone District faces challenges in financing the administration and
development. The optimization of the excavation of local revenue sources still needs to be improved
as the community needs continue to improve over time. In 2010, the realization of local expenditure
of IDR 777.71 billion increased every year to IDR 1841.48 billion. This means that in the last six
years the increase in regional expenditure has almost doubled. This indicates that people's needs are
increasing.
From the regional expenditure structure, the largest expenditure allocation of the budget in
Bone District is indirect expenditure. Indirect expenditure has doubled from IDR 540.5 billion in 2011
to IDR 1164 billion by 2015. During that period, indirect expenditure grew by an average of 17
percent per year. The biggest contributor to indirect expenditure is personnel expenditure. Almost all
indirect expenditure is contributed by personnel expenditure. The second largest sequence of indirect
expenditure is subsidized expenditure and financial aid expenditure to provincial / district
governments. For direct expenditure realization also shows an increase every year with an average
growth of 27.2 percent. When compared between the average of indirect expenditure growth and
direct expenditure, it is seen that the growth rate of direct expenditure is faster than the indirect
expenditure (17.0 percent). This means that the attention of the local government of Bone District
towards public services is getting better.
Based on the structure of direct expenditure, the largest direct expenditure is expenditure on
goods and services and thus capital expenditure. Overall, the largest expenditure composition of total
local expenditure is personnel expenditure but tends to decline in 2015. While the proportion of
capital expenditure tends to increase in 2015. Over the period 2010-2015, the proportion of personnel
expenditure to total regional expenditure by an averages of 60 percent per year. As for the proportion
of capital expenditure by an average of 16.1 percent and the rest is absorbed into goods and services
and other expenditures. Based on the results of revenue and expenditure analysis, the local
government of Bone Regency appears to run a surplus budget over the last five years.

Table 3. Local Government Expenditure in Bone District (Billion Rupiah), 2010-2015

Expenditure 2010 2011 2012 2013 2014 2015 Average
of
growth
Indirect Expenditures 540.5 729.3 774.9 873.4 973.0 1164.2 17.0
Personnel Expenditure 518.0 653.9 711.3 776.4 863.4 917.0 12.3
Interest Rate
2.9 3.3 2.3 1.9 1.6 1.3 -14.4
Expenditure
Subsidy Expenditure .0 2.3 28.9 31.9 28.6
Grants Expenditure .0 22.1 17.9 15.6 5.5 2.2
Expenditure for Social
19.5 1.8 3.1 2.1 3.3 .4 -15.1
Aid
Revenue Sharing to
Provinces / Regencies /
.0 44.4 38.0 47.0 1.8 213.2
Municipalities and
Village Governments
Shopping Expenditures
from Provincial /
.0 1.5 .9 .9 65.5 1.3
District / City and
Village Government
Unexpected
.0 .0 1.4 .6 - .2
Expenditure
Direct Expenditure 237.0 432.8 374.4 493.0 540.0 677.5 27.2
Personnel Expenditure 21.3 26.3 15.8 15.7
Expenditure for Goods
121.0 174.2 164.4 245.8 330.4 373.2 27.0
and Services
Capital Expenditure 94.8 232.3 194.2 231.5 209.6 304.4 36.7
REGIONAL
777.5 1162.1 1149.2 1366.5 1487.0 1841.8 20.0
EXPENDITURE
Source: BPS, Bone in Figures, processed various editions

6
4.2. Poverty Analysis in Bone District

The number and percentage of poor people in Bone show a declining trend in the last six years.
A significant decrease in poverty occurred in 2014, where the number of poor people was reduced by
7,240. The declined in poverty seems to have contributed to a fairly high rate of economic growth at
the time, at 9.53 percent which is the highest figure in six years. This gives a strong message that to
reduce the poverty rate in Bone District, economic growth must be maintained to stay within the range
of 9.0 - 10.0 percent per year.
In 2016, the number of poor people in Bone District reached 75,090 people, which Bone
District is the largest number of poor people in South Sulawesi Province. About 9.30 percent of all
poor people in South Sulawesi Province live in Bone District. The percentage of poor people in Bone
District is also relatively higher than to other districts in South Sulawesi Province. Relatively, Bone
District occupies the 10th position of 24 districts/cities in South Sulawesi Province in terms of
percentage of poor people.

Figure 2. The number and percentage of poor people in Bone District, 2011-2016
100000 12.67 14
12.25 11.92
90000
10.88 12
80000 10.12 10.07

percentage of poor people

number of poor people

70000 10
60000 8
50000
92075 88800 87700
40000 80460 6
75010 75090
30000 4
20000
2
10000
0 0
2011 2012 2013 2014 2015 2016

number percentage
S
ource: BPS, Data and Information of poor people in District/City

If linked with balance funds received by the local government appears to be quite large. Of the
three components of the transfer fund, the average proportion of DAU to the total balance fund of 82.86
percent is the largest compared to DAK with an average of 11.17 percent, and DBH is only about 5.97
percent. The large proportion of DAU is a great opportunity for local governments to allocate programs
and activities that are pro poor. However, based on the analysis of types of local government
expenditure in Bone District, it is also found that the largest proportion of expenditure is personnel
expenditure, which is more than 50 percent of total local government expenditure each year. This means
less than half of it is spent on other expenditures, including expenditure allocations to address poverty.
Total personnel expenditure by an average of IDR 753 billion for each year, while the average balance
fund was IDR 947.8 billion. If all personnel expenditure is funded by DAU, then the difference can be
allocated for poverty alleviation.

Figure 3. Balance Fund and Poor People in Bone District, 2010-2014

7
 1200 16
14.08
12.67 11.92 14
1000 12.25
12
10.88

% of poor people
800
Billion Rupiah

10
600 8
1022.6 1083.6
913.6 6
400 761.7
663 4
200
2
0 0
2010 2011 2012 2013 2014

Balance Fund (billion) % of poor people

Source: BPS, Bone in Figure, processed data, 2017

Taking into consideration in Figure 3 shows that there is a negative relationship between the
amount of balance funds and the percentage of the poor. Starting from 2010 to 2014, the balance
funds in Bone District moved up each year and at the same time the percentage of the poor moved
down. This suggests that balancing funds in addition to being used to finance personnel expenditures
are also used to finance programs and activities that target poor people either directly or indirectly.

4.3. Identification of Programs and Activities to Poverty Reduction

Efforts to alleviate poverty are reflected in the formulation of policies, programs, and
activities that are planned and implemented by the government, both central and local governments.
Programs and activities related to poverty alleviation can be divided into several clusters. One of them
is the National Team of Poverty Reduction Acceleration which is called by TNP2K which is divided
into three clusters, namely: (i) family-based poverty eradication clusters, (ii) community
empowerment clusters, and (iii) micro and small-scale economic empowerment clusters. Family-
based clusters include Community Health Insurance, Hope Family Program, Rice for the Poor, Poor
Student Assistance. The community empowerment-based cluster is the National Program for example
Community Empowerment-PNPM, and program based on Medium Small Entrepreneurs
Empowerment is the People's Business Credit-KUR. The cluster is formed by the central government,
followed by the local government. Then the source of funding comes from the central government
through National Budget -APBN and can also come from the local government through local budget.
The local government of Bone District has identified poverty alleviation programs in 2015
which is divided into three groups (Bappeda, 2016):
1. Protection and Social Assistance Program groups by 28 programs,
2. Community Empowerment program groups with 33 programs,
3. Empowerment of Micro and Small Business with the number of programs by 6 programs.
The total number of programs are 67 programs in 2015. Of the three groups of poverty
alleviation programs, it is seen that community empowerment groups dominate from all programs.
However, it should be noted that the identification of these programs is not all aimed at the poor
directly, so the budget allocated to programs is not all enjoyed by the poor.
Based on the consensus of Bone District, there are 9 indicators of local-based poverty, namely
food needs approach, clothing needs, board / housing needs, health, education, jobs creations, capital,
value approach, distance and transportation. These indicators have been established along with
development stakeholders in Bone District. These indicators should be a reference for local
governments in devising programs and activities that directly address the special needs of the poor, so
that the poor can directly enjoy public services from the government. The nine indicators will be a
guide to formulate programs and activities that are further integrated into the three groups of poverty
reduction programs (social protection, community empowerment, and SME empowerment).
One measure of the implementation of pro-poor budget policy is the increased of proportion
of the budget allocation/budget realization to the poor. Thus, local governments can add activities for

8
the poor relevant to the three groups of programs. For example, community empowerment program
groups, it can be added activities that are really intended for the poor. Another alternative is to
increase poverty alleviation programs based on the nine local-based poverty approaches as well as
details of activities that contribute to the program.
It should be noted that not all poverty alleviation program plans which is mentioned before
have budget allocation from the local government. In other word that not all programs have
implemented in 2015. Based on the results of content analysis through APBD realization in 2015,
some programs were not found in the APBD accountability document by 2015. There are 22
programs are not implemented in 2015. The total program that gets the allocation of expenditure is
only 45 programs, and the most is the community empowerment program. This indicates that the poor
do not only need material benefits but need to get empowerment programs. Poor community
empowerment program is a medium-term program so that in general the activities attached to the
program are activities in the form of training, coaching, and mentoring which results can be realized
in the next few years.
Table 4. Programs and activities realization for poverty alleviation, in Bone District, 2015
Programs / Cluster Group Number of % Number of %
Programs Activities
Social Protection and Assistance 17 37.8 39 22.5
Community Empowerment 24 53.3 114 65.9
Empowerment Of SMEs 4 8.9 20 11.6
45 100.0 173 100.0
Source: Processed Data by Team, Local Regulation on Accountability and Implementation of APBD,
2016

The 45 programs are distributed to 18 Regional Device Organizations (OPD). Each program
has the number of activities and the total number of activities for those programs are 173 activities.
However, it should be emphasized that not all activities in each program are not directed directly by
the poor. Other activities are quite doubtful whether the target of the activity is really the poor or not.
This is mostly found in community empowerment programs and small enterprise empowerment
programs.

4.4. The size of budget associated with poverty reduction in Bone District
Pro poor budget is a pro-poor budget policy. Siding is defined as a useful budget for the poor,
proximity of access, participation, and control of the poor over national and regional planning and
budgeting. Poverty reduction programs can be divided into three clusters: Programs related to
household-based social protection, community empowerment programs, and micro-small enterprise
empowerment programs. In the fiscal year 2015, the total budget allocated in relation to poverty
reduction in Bone District reached IDR 281.1 billion distributed in social protection program of IDR
116.2 billion, community empowerment program of IDR 162.8 billion, and program of empowerment
of SMEs IDR 2 billion. However, the realization of the budget is only 44 percent of the total budget in
2015 of IDR 126.2 billion. Social protection program amounting to IDR 67.5 billion, community
empowerment program of IDR 57.4 billion, and program of empowerment of SMEs amounting to
IDR 1.3 billion. The following table shows the plan and budget realization of programs implemented
in Bone District in order to reduce the number and percentage of the poor. It means that social
protection programs still dominated to poverty alleviation. This is line with the case of Kenya in
2016/2017 (Rono and Getachew, 2016).
Table 5. Budget Plan and Realization for Poverty Reduction in Bone District, 2015
Program / Cluster Group Budget, 2015 Realization, 2015 (%)
Social Protection and Assistance 116,244,206,642 67,542,527,542 58.10
community empowerment 162,817,465,296 57,406,863,372 35.26
Empowerment of SMEs 1,999,679,000 1,281,389,200 64.08
Total 281,061,350,938 126,230,780,114 44.91
Source: Processed Data by Team, Local Regulation on Accountability and Implementation of APBD,

9
2016

By looking at the large number of programs and budgets that have been set up in relation to poverty
alleviation, it can be said that local governments have sided with the poor. This study is in line with
Padriyansyah (2015) for a case study of South Sumatra Province. One of the key notes highlighted in
this case study is that the local government in Bone District have paid great attention to reducing
poverty as reflected in the many formulations of program and activity planning. Just because of
budget constraints alone causes programs and activities that did not implement in the budget year. To
overcome poverty reduction in Bone District, it is necessary to increase government spending growth.
Increased government spending is influenced by several factors, including economic and non-
economic factors (Jaén- García, Manuel, 2017).
There are two notes that need to be taken into account of the size of expenditure related to
poverty alleviation in Bone District:1. Expenditure components for each poverty alleviation program
covers personnel expenditures, goods and services expenditures, and capital expenditures. 2. The
activities in each program are those directly or indirectly enjoyed by the poor. This is in line with the
operational definition of the pro poor budget, which is the budget not only for the poor but the target
budget also for institutional strengthening whose ultimate objective is to improve the welfare of
society entirely. However, if the pro poor budget is narrowly defined as a budget that is actually
received directly by the poor, it appears that the number of activities is very limited which has
implications for the low allocation of expenditure. In other word, the allocation of expenditures
received directly by the poor is very small. The analysis shows that from IDR 126.2 billion
expenditure on poverty alleviation program, IDR 13.5 billion is really accepted by the poor.

Table 5 Budget Realization for Poverty Alleviation Programs and Activities in Bone District, 2015
Program / Cluster Group Number of Realization of budget Number of Budget Realization of
programs (rupiah) activities activities* (rupiah)
Social Protection and 17 67,542,527,542 39 13,345,152,000
Assistance
community empowerment 24 57,406,863,372 114 115,407,500

Empowerment of SMEs 4 1,281,389,200 20 1,281,389,200

Total 45 126,230,780,114 173 14,741,948,700
Source: Processed Data by Team, Local Regulation on Accountability and Implementation of APBD,
2016
“*” activities whose nomenclature refers to "the poor" (or calling its target the poor ") with in line to
Regulation of the Minister of Home Affairs No. 13/2016.

Although the portion of the budget for poverty alleviation is still relatively small but if targeting is
done correctly then it is predicted to contribute to poverty reduction in Bone District. Previous
empirical studies have proven that total government expenditure, expenditure per sector, expenditure
on pro social protection for the poor can reduce poverty (Simson, Rebecca., 2012; Alexander, 2015;
Becky, C, 2015; Lustianah, Mery, 2016). Alexander (2015) finds that a 1 percent increase in social
sector expenditure on Gross Domestic Product reduced the poverty rate by 0.5 per cent. Abiola,
A.Gbolagade and Mustapha, S.Atanda (2015) finds that federally government collected revenue and
aggregate expenditure increase poverty incidence in Nigeria.

4.5. Innovation forms of Bone local government in alleviating poverty

Poverty alleviation is not solely a task and responsibility for the central government but also
the local government. So many central government regulations related to poverty reduction either in
the form of presidential decree, domestic ministerial regulation, and presidential instruction include:

10
Presidential Regulation No. 15/2010 concerning Acceleration of Criminal Delivery which delegates
the establishment of main task and function of Coordination Team of Poverty Alleviation-TKPK in
the region; Presidential Instruction No. 3 of 2010 on Fairness Development Program as the direction
of implementation of poverty reduction acceleration programs; Regulation of the Minister of Home
Affairs No. 42/2010 concerning TKPK Provinces and Districts / Cities that regulate the function of
TKPK in coordination and control; Presidential Decree No.10/2011 on Coordination Team for
Improvement and Expansion of Pro-People Program. Furthermore, these regulations are operated by
local governments at both the provincial and district /city levels include in Bone District.
Bone District is the highest in number and percentage of poor people. Although in recent
years, the number and percentage of poor people decreases but it is still quite high. Therefore, the
attention of Bone local government to the problem of poverty is quite large. The high number and
percentage of poor people in Bone District are along with the population and the area of Bone
District. With a considerable area of 27 sub-districts can not be denied so many challenges and
problems faced in alleviating poverty.
Various efforts have been made by the local government of Bone District is reflected in a
number of policies / programs / and activities that have been poured into the documents of planning
either directly or indirectly to the poor. The programs undertaken by the local government of Bone
District in order to reduce poverty are guided by the policies and targets set forth in the Regional Mid-
Term Planning-RPJMD document for the period of 2013-2018. The target to be achieved at the end of
the RPJMD period is the decrease of the percentage of poor people in the range of 9-10 percent or
about 70 thousand people.
One form of creativity that has been done by the local government of Bone District as an
effort to overcome poverty is the release of the regulation of Bone Regent Decree No. 167/ 2012 on
the Establishment of TKPK Secretariat, Working Group and Poverty Prevention Program of Bone
District. As a follow up of the Leader of District Government Decree, Regional Development
Planning Agency in Bone District has developed the Regional Strategy for Poverty Prevention-SPKD
of the 2013-2018 and poverty mapping through high community participation. This is in line with
Manaf, Asnawi, et al.,(2016); Soviana and Kuhl (2010); and Mawardi and Sumarto (2003).

5. Conclusion and Recommendation

5.1. Conclusion
In the era of fiscal decentralization, the local government of Bone District has sought to
alleviate poverty through the implementation of pro-poor budget policy. Pro-poor budget policy is
budget policy related to poverty alleviation through programs and activities either directly or
indirectly accepted by the poor. The programs and activities planned by the local government of Bone
District are contained in RPJMD and the Strategic Planning of Regional Work Unit, as well as in
annual work plan of SKPD. Related to that, poverty alleviation programs in Bone District are divided
into three program groups; First, social security and protection programs, Second, community
empowerment programs, and Third, Micro and Small Enterprise Empowerment Program.
The budget allocated for poverty alleviation in 2015 was IDR 281.1 billion which are
distributed in social protection and protection programs of IDR 116.2 billion, community
empowerment program of IDR 162.8 billion and SME program of IDR 2 billion. However, the budget
realization is only IDR 126.2 billion or about 45 percent of the total poverty alleviation budget plan.
When compared to the total expenditure of Bone Regency in 2015, the figure is still relatively small.
The forms of innovation undertaken by the local government of Bone District to remain
committed in implementing the program and activity plan is the release of Decision of Bone Regent
No. 167/2012 on the Establishment of Poverty Reduction Coordination Team Secretariat, Working
Group and Poverty Prevention Program Group of Bone District.

5.2. Recommendation
The implementation of pro poor budgeting in Bone District is sufficient, as reflected in three
things: First, the number of programs and activities that have been formulated related to poverty
reduction efforts, both directly and indirectly has been sufficient, but not all those programs and
activities implemented in fiscal year. Second, the proportion of expenditure for poverty alleviation
programs to total government expenditure in Bone is relatively small. Third, some local innovations

11
have been undertaken such as the mapping of the poor through community participatory approaches
in villages, but not evenly distributed in all villages. Therefore, in the future some action plans need to
be considered: First, increasing the proportion of spending to finance all planned programs and
activities related to the poor based on priority programs; Second, increasing the proportion of
expenditures received directly by the poor; Third, the form of innovation still needs to be improved
and evenly distributed in all villages, especially remote villages.

12
References

Abdullah, Khubbi and Mursinto, Djoko. (2016). The effects of fiscal decentralization, economic
growth and income inequality on poverty rate of Indonesia’s 33 provinces. International
Journal of Advance Research. 4(2), 405-414
Abiola, Asimiyu G and Mustapha, Saidi A. (2015). Impact Assessment of Public Budget Indicators on
the Nigerian Poor. Journal of Economics and Development Studies: 3(3), 71-85
Agegnehu, Alene and Dibu, Worku. (2017). Does decentralization have a role in poverty reduction?
The Ethiopian experience. Journal of African Studies and Development. 9(1),1-6
Alexander, K. (2015). Inclusive growth: Topic guide. Birmingham, UK: GSDRC, University of
Birmingham. (online): http://www.gsdrc.org/docs/open/InclusiveGrowth.pdf. retrieved 12
November 2017
Azila-Gbettor, Edem Maxwell; Adjimah, H.P; and Tibu, Serlom Kwame. (2014). Fiscal
Decentralization and Poverty Reduction: Citizens View. Journal of Science Economics
Research. 1(6),118-128
Banwo. (2012) Fiscal Decentralization Policy and poverty Reduction: Lessons from Nigeria. Journal
of Emerging rend in Economic and Management Science 3 (4), 403 – 407.
https://www.mysciencework.com/publication/download/5247662755687be04253cb690ef4ca20
/aef9fd92dde91a5f308e76b0bfd32aa1. Retrieved 28 January 2017
Bappeda. (2016). LP2KD Bone District.
Bräutigam, Deborah. (2004). The People’s Budget? Politics, Participation and Pro-Poor Policy.
Development Policy Review. 22(60), 653-668
Boex, Jamson; Ortiz, Eunice Heredin; Martinez-Vazquez, Jorge; Timofeev, Andrey, and Yao,
Guevera. (2006). Fighting Poverty Through Fiscal Decentralization. USAID (online)
http://pdf.usaid.gov/pdf_docs/Pnadh105.pdf
Bossuyt, J. (2000). Decentralization and poverty reduction: Elaborating the linkages, ECDPM policy
management brief No. 12. Maastricht: ECDPM
http://www.hubrural.org/IMG/pdf/ecdpm-decentralization-and-poverty-reduction.pdf.
Retrieved 10 October 2017.
BPS, Economic Statistics of South Sulawesi various editions
Carter, Becky. (2015). Pro-poor national budgets. GSDRC Applied Knowledge Service.
www.gsdrc.org. Retrieved 5 November 2017.
Crook, Richard C and Sverrison, Alan S. (1999). Decentralization and Poverty-Alleviation in
Developing Countries: A Comparative Analysis or Is West Bengal Unique? Workshop on
Political System and Poverty. WDR Background Paper.
Jaén-García, Manuel (2017) A Demand Determinants Model for Public Spending in Spain.
International Journal of Economics and Financial Issues 7(4), 372-386.
Liv, Bjornestad. (2009). Fiscal Decentralization, Fiscal Incentive, and Pro-Poor Outcomes: Evidence
in Vietnam. ADB Economics WPS.
Lustianah, Meri. (2016). The Effect of Pro-Poor Budget Allocation on Human Development Index
With Local Original Income (PAD) As Moderation Variable Viewed From Tsarwah Sharia
Economics. Journal of Economics and Islamic Business. 1(2),85-98.
Kakembo, Sophie Nampewo. (2016). Progress on pro-poor budgeting in Uganda – highlights from a
roundtable meeting in Kampala. http://devinit.org/post/progress-on-pro-poor-budgeting-in-
uganda-highligh. Retrieved 5 October 2017
Maharajabdinul, Rahmatia, Paddu, H; and Nursini. (2015). Contribution of Fiscal Decentralization to
Poverty Reduction. IOSR Journal of Business and Management 17(12),53-60
Manaf, Asnawi; Setiyono, Budi; Wahyudi, Imam; Fisher, Micah; and Yuzal, Hendri. (2016).
Implementing pro-poor planning and budgeting: A case study of government-community
poverty alleviation partnership in Pekalongan City, Indonesia. International Journal of
Sustainable Society. 8(4), 302-317
Mawardi, S dan Sumarto, S. (2003). Pro-poor Poor Public Policy: Focus Pro Poor Budgeting. Smeru
Training Materials.
Moche, Tebogo J; Monkam, Nara; Aye, Goodness C. (2014). Fiscal decentralization and poverty in
South Africa: evidence from panel data analysis. Investment Management and Financial

13
 Innovations, 11(2), 69-76
Padriyansyah. (2015). Analysis of Implementation and Pro-Poor Budgeting Progress in South
Sumatra Province 2009-2013. Current Scientific Journal of Global Economics . 6(01),20-31
Rao, G.M. (1998). Poverty alleviation under fiscal decentralization, National Institute of Public
Finance and Policy, New Delhy.
Rono, Karen and Getachew Bekele, Martha. (2016). Towards pro-poor budgeting Analysis of
Kenya’s budget allocations. Briefing Papers. Development initiatives. http://devinit.org/post/is-
kenyas-201617-budget-pro-poor/# Retrieved 9 September 2017
Santos, De Sousa, Boaventura. (1998) “Participatory Budgeting in Porto Alegre: Toward a
Redistributive Democracy”, Politics and Society, 26(4),461-510
Sepulveda, Cristian F; Martinez-Vazquez, Jorge. (2010). The Consequences of Fiscal
Decentralization and Poverty and Inequality.ISP.WP.10-02 February.
Simson, Rebecca, (2012). Following the money: Examining the evidence on ‘pro-poor’ budgeting.
Overseas Development Institute (ODY).
Sintomer, Yves; Herzberg, Carsten; Rocke, Anja. (2008), “Participatory Budgeting in Europe:
Potentials and Challenges”, International Journal of Urban and Regional Research, 32(1), 164-
178
Soejoto, Ady., Subroto, Waspodo Tjipto; Suyanto. (2015) Fiscal Decentralization Policy in Promoting
Indonesia Human Development. International Journal of Economics and Financial Issues,
5(3), 763-771.
Soviana and Kuhl, Rainer. (2010). Towards a sustainable community-based management: an
assessment of community participation level. Int. J. of Sustainable Society. 10(4)341-354
Steiner, Susan. (2005). Decentralization and Poverty Reduction: A Conceptual Framework for the
Economic Impact. DUI WP-03/2005.
Valaris, Nicholas. (2012). Fiscal Decentralization and Its Effect on Poverty: Evidence from Panel
Data on the lower 48 American State. Capstone Projects Economics. paper 2.
http//ir.library.illinoisstate.edu/
World Bank, (2008). Pro Poor Budgeting: New Politics of Regional Budget Reform For
Poverty Reduction.
World Bank, (2012). Public Expenditure Analysis in South Sulawesi Province.

14