The Ministry of Finance has issued provisions on the Regional Fiscal Capacity (Kapasitas Fiskal Daerah/KFD) maps. KFD maps are stipulated in the Minister of Finance Regulation No. 116/PMK.07/2021 concerning Regional Fiscal Capacity Maps (MoF Reg. 116/2021). The ministerial regulation has been issued to implement the provisions of Article 13 paragraph (2) of Government Regulation No. 2 of 2012 concerning Regional Grants (Gov. Reg. 2/2012).
As per Article 2 of MoF Reg. 116/2021, KFD maps are used for three things. First, as a consideration in determining grant receiving regions. Second, the determination of the amount of counterpart funds by the local government, if so required. Third, other users as per statutory provisions.
KFD maps consist of two maps, i.e. the provincial KFD map and the regency/municipal KFD map. Provincial and regency/municipal KFD maps are listed in the Appendix which constitutes an integral part of this regulation.
Provincial and regency/municipal KFD maps are prepared in two stages. In the first stage, provincial and regency/municipal KFD are calculated. Next, in stage II, the provincial and regency/municipal KFD index is calculated. The calculation of provincial KFD and Regional Fiscal Capacity Index (Indeks Kapasitas Fiskal Daerah/IKFD) is based on the following formula.
Table 3 Formula for the Calculation of Provincial KFD and IKFD
The revenues referred to in the formula include local own-source revenue (pendapatan asli daerah/PAD), transfer revenues, and other legitimate local revenues. On the other hand, revenues with specified use include cigarette taxes, Revenue Sharing Funds (Dana Bagi Hasil/DBH) of tobacco products excise, DBH of reforestation funds for natural resources, physical Special Allocation Funds (Dana Alokasi Khusus/DAK), non-physical DAK, special autonomy funds, DBH of oil and natural gas natural resources in the context of special autonomy, special funds for the Special Region of Yogyakarta, and grants.
Non-physical DAK does not include local civil servant teacher professional allowances, additional funds of local civil servant teacher income, and special allowances for local civil servant teachers. The certain expenditure component in the formula, on the other hand, includes personnel expenditures, interest expenditures, and profit sharing expenditures. Next, provincial IKFD may be grouped into five categories as follows.
Table 4 Categories of Provincial KFD
The calculation of regency/municipal KFD and IKFD is based on the following formula.
Table 5 Formula for the Calculation of Regency/Municipal KFD and IKFD
The revenues referred to in the above formula include PAD, transfer revenues, and other legitimate local revenues. Next, revenues with specified use include six elements, i.e. DBH of tobacco products excise, physical DAK, non-physical DAK, special autonomy funds, village funds, and grants. Non-physical DAK does not include local civil servant teacher professional allowances, additional funds of local civil servant teacher income, and special allowances for local civil servant teachers.
Certain expenditures in the formula, on the other hand, include personnel expenditures, interest expenditures, profit sharing expenditures, and village fund allocations. Next, based on IKFD, regency/municipal IKFD may be grouped into five categories as follows.
Table 6 Categories of Regency/Municipal KFD
The above calculation of the provincial and regency/municipal KFD uses data from the Local Budget (Anggaran Pendapatan dan Belanja Daerah/APBD) for the 2021 Fiscal Year and Presidential Regulation No. 113 of 2020. When this ministerial regulation comes into effect, MoF Reg. No. 120/PMK.07/2020 is declared revoked and invalid. This policy was enacted on 1 September 2021.