Government Prepares Draft Regulation on DBHDAU

The government is set to align central and regional financial management through the preparation of a Draft Regulation of the Minister of Finance (“RPMK”) on the Management of Revenue Sharing Fund (Dana Bagi Hasil – “DBH”) and General Allocation Fund (Dana Alokasi Umum – “DAU”). This policy is in line with the reduction of fiscal incentive funds under Law No. 17 of 2025 (“Law 17/2025”) on State Revenue and Expenditure Budget (Anggaran Pendapatan dan Belanja Negara – “APBN”) for Fiscal Year 2026.

Minister of Finance, Purbaya Yudhi Sadewa, revealed that the 69.5% cut to DBH allocations in the 2026 APBN resulted from an evaluation of slow budget absorption at the regional level. Overall, transfers to regions (Transfer ke Daerah – “TKD”) also experienced a contraction of 24.66%.

This policy will replace Regulation of the Minister of Finance No. 67 of 2024 on the Management of Revenue Sharing Fund and General Allocation Fund (“PMK 67/2024”). This fiscal instrument will introduce a dynamic calculation mechanism, through determination of allocations that place greater emphasis on the state’s fiscal capacity and actual regional needs based on performance (performance-based budgeting).

“Toward the end of the first quarter heading into the second quarter, an evaluation will be conducted. It remains possible for TKD allocations to be increased,” Purbaya said.