Jakarta. The government has disbursed Rp147.7 trillion ($9.4 billion) in regional transfers as of Feb. 28, up 8.1% from Rp136.6 trillion a year earlier, but economists warn the pace may still lead to a year-end spending rush by local governments.

Data from the Finance Ministry show the transfers account for 21.3% of the Rp 693 trillion allocation in the 2026 state budget. Most of the disbursement has been driven by revenue-sharing funds, general allocation funds, and non-physical special allocation funds, while some transfers are still pending administrative requirements from regional governments.

Economist Syafruddin Karimi of Andalas University said the pattern suggests routine operational spending is being prioritized over funds that typically drive local economic activity.

“If this pattern persists into the second quarter, many regional governments will likely concentrate spending in the second half of the year, which risks lowering spending quality as absorption targets take priority over outcomes,” he said.

He noted that early-year transfers mainly support salaries, schools, and public services, while funds with stronger multiplier effects, such as physical special allocation funds and village funds, remain limited.

Researcher Yusuf Rendy Manilet of the Center of Reform on Economics (Core) Indonesia said the current disbursement pace still reflects the typical start-of-year pattern when local governments finalize budgets and administrative documents.

However, he said the main issue lies in planning and execution capacity at the regional level, which often causes spending to accumulate in the third and fourth quarters despite funds being available earlier.

“Much of the transfer is structurally allocated for routine spending such as civil servant salaries and education services, meaning its role often leans more toward financing government operations rather than long-term development investment,” Yusuf said.

Finance Ministry data show regional transfers have supported 4.3 million civil servants’ salaries, operational aid for 42.3 million students, early childhood education assistance for 5.8 million children, and allowances for 616,000 teachers.