The Effectiveness of Budgeting Policies to Optimize the Implementation of Poverty Alleviation and the Eradication of Extreme Poverty by Local Governments

Abstract

Poverty is a multidimensional issue linked not only to low income but also to limited public access to education, healthcare, productive employment, social protection, basic infrastructure, and economic opportunities. In the context of fiscal decentralization, local governments hold a strategic position, as the majority of public service and development interventions that directly impact the community are implemented through the Regional Budget (APBD). This study aims to analyze the effectiveness of local government budgeting policies in optimizing efforts to alleviate poverty and eradicate extreme poverty, as well as to identify the factors determining the effectiveness of budget allocation. The study employs a qualitative-descriptive approach, utilizing literature reviews and policy analysis of regulations, planning and budgeting documents, statistical data, and empirical research findings regarding local government spending and poverty. The analysis reveals that the effectiveness of budgeting policies is not determined solely by the size of the budget allocation but also by targeting accuracy, collaboration among local government agencies, the alignment between development planning and regional budgeting documents, the quality of beneficiary data, a results-oriented approach, and the monitoring and evaluation of policy implementation. Fragmented budgeting policies risk producing numerous programs with limited impact. Conversely, budgeting based on data, location, target groups, and results can enhance the effectiveness of local government interventions. Therefore, optimizing the regional budget for poverty alleviation and the eradication of extreme poverty requires a strategy that combines reducing expenditure burdens, increasing income, and addressing pockets of poverty through an integrated approach.