Fiscal allocation and extreme poverty reduction: Patterns of regional targeting mismatch in Banten Province, Indonesia
DOI:
https://doi.org/10.22437/ppd.v14i3.54050Keywords:
Decentralised governance, Extreme poverty, Fiscal allocation, Fiscal tagging, Targeting alignmentAbstract
Decentralisation is expected to bring government closer to society, enabling fiscal resources to be directed toward public goods that support economic development and improve social welfare. However, this expectation remains underexamined in the context of extreme poverty reduction within a single Indonesian province, particularly when fiscal data are used to distinguish poverty-specific spending from general expenditure. Our study investigates the alignment between fiscal allocation and the burden of extreme poverty across regencies/municipalities in Banten Province, Indonesia, during 2022–2024. Using administrative fiscal tagging data from the BPKAD, combined with poverty data from Statistics Indonesia and P3KE, we applied descriptive statistics, Pearson correlation analysis, year-on-year change analysis, and quadrant-based targeting analysis. The findings reveal a negative and increasingly strong correlation between the poverty burden and per capita fiscal allocation, from −0.24 in 2022 to −0.61 in 2024, indicating a growing divergence between extreme poverty needs and the intensity of fiscal allocation. However, this pattern should be interpreted with caution because the number of extremely poor individuals constitutes the denominator of the per capita allocation measure. Kabupaten Tangerang, which has the largest population living in extreme poverty, persistently occupied the High Burden–Low Allocation quadrant throughout the observation period. These findings differ from studies using aggregate expenditure indicators that generally report positive fiscal–poverty alignment in Indonesia, suggesting that the choice of fiscal measurement may influence conclusions regarding targeting alignment. Rather than establishing a causal effect of fiscal spending on poverty reduction, our study demonstrates that fiscal tagging data can serve as a preliminary diagnostic tool for evaluating targeting alignment within a decentralised governance system.
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