Improve budget management efficiency

Oct 13, 2025 by leolavanderia.com.br 59 views

Analysis of Regional Budget Financial Ratios (APBD) to Assess the Regional Financial Performance and Health of the Medan City Government Budget 2011-2015

The Importance of Regional Financial Management in Achieving Economic Growth

The government plays a crucial role in designing and implementing laws and regulations in a particular area. In the context of the Unitary State of the Republic of Indonesia (NKRI), the government aims to provide maximum public services without profit orientation. As revealed by Halim (2013: 4), the main purpose of the government is to improve services to the community. Every local government has the responsibility to improve the welfare of the community in a democratic, fair, and sustainable way. Efforts to improve this service are expected to have an impact on the welfare of the community, which one indicator is economic growth in an area.

The role of local governments in financial management is very important to encourage economic growth. Economic growth of a region is influenced by various factors, including investment, inflation, local revenue (PAD), the rate of population growth, and the contribution of the workforce. Therefore, to achieve optimal economic growth, economic development strategies and policies must be focused on existing potential sectors, both in the real, financial, and infrastructure sectors. Effective financial management is essential to achieve economic growth and improve the welfare of the community.

Analysis of the Medan City APBD Financial Ratio of the 2011-2015 Fiscal Year

In analyzing regional financial performance and health, one effective way is through the financial ratio contained in the Regional Revenue and Expenditure Budget (APBD). This ratio can provide an overview of the efficiency and effectiveness of the use of the budget in serving the community. The financial ratio is a crucial tool in assessing the financial performance and health of a local government.

1. Ratio of Regional Financial Independence

This ratio measures how much regional government dependence on funding sources from the central government. High financial independence shows that the region is able to manage existing resources independently, so as to reduce dependence on the allocation of funds from the center. During the 2011-2015 period, Medan City showed fluctuations in this ratio, which indicated challenges in PAD management. The ratio of regional financial independence is a critical indicator of a local government's ability to manage its resources effectively.

2. Budget Management Efficiency Ratio

The efficiency ratio measures how well the local government is to use the budget to achieve the desired output. The city of Medan must focus on increasing efficiency in expenditure, especially in important sectors such as health, education, and infrastructure. Analysis of the Efficiency Ratio of Medan City Budget Management for five years shows a significant improvement space. Improving budget management efficiency is essential to achieve optimal economic growth and improve the welfare of the community.

3. Economic Growth Ratio

High economic growth not only depends on the use of an efficient budget, but also on the ability of local governments to design policies that support investment and local economic development. During the 2011-2015 fiscal year, Medan City experienced diverse economic growth, where growth in a certain year showed a positive relationship with the policies taken by the local government. The economic growth ratio is a critical indicator of a local government's ability to design effective policies that support economic growth.

Conclusion

Through the analysis of the Medan City APBD financial ratio for the 2011-2015 fiscal year, it can be concluded that regional financial management still has challenges that need to be overcome to improve the welfare of the community. Local governments are expected to focus on the efficiency of the use of the budget and utilize local resources to increase financial independence. With the right steps, it is expected that the economic growth of the city of Medan can continue to increase, which in turn will have a positive impact on the welfare of the community. Effective regional financial management is essential to achieve economic growth and improve the welfare of the community.

Recommendations

Based on the analysis of the Medan City APBD financial ratio for the 2011-2015 fiscal year, the following recommendations are made:

Improve budget management efficiency: Local governments should focus on increasing efficiency in expenditure, especially in important sectors such as health, education, and infrastructure.
Increase financial independence: Local governments should utilize local resources to increase financial independence and reduce dependence on funding sources from the central government.
Design effective policies: Local governments should design policies that support investment and local economic development to achieve optimal economic growth.
Monitor and evaluate financial performance: Local governments should regularly monitor and evaluate their financial performance to identify areas for improvement.

By implementing these recommendations, local governments can improve their financial management and achieve optimal economic growth, which in turn will have a positive impact on the welfare of the community.
Frequently Asked Questions (FAQs) about Regional Budget Financial Ratios (APBD) and Medan City Government Budget 2011-2015

Q: What is the purpose of analyzing regional budget financial ratios (APBD)?

A: The purpose of analyzing APBD is to assess the regional financial performance and health of a local government. This analysis can provide an overview of the efficiency and effectiveness of the use of the budget in serving the community.

Q: What are the key indicators of regional financial performance and health?

A: The key indicators of regional financial performance and health include:

Ratio of regional financial independence: This ratio measures how much regional government dependence on funding sources from the central government.
Budget management efficiency ratio: This ratio measures how well the local government is to use the budget to achieve the desired output.
Economic growth ratio: This ratio measures the rate of economic growth in a region.

Q: What are the challenges faced by Medan City Government in managing its budget?

A: Medan City Government faced challenges in managing its budget, including:

Fluctuations in PAD management: Medan City showed fluctuations in PAD management, which indicated challenges in managing local revenue.
Low budget management efficiency: Medan City had low budget management efficiency, which meant that the city was not using its budget effectively to achieve the desired output.
Diverse economic growth: Medan City experienced diverse economic growth, which made it challenging to design policies that support investment and local economic development.

Q: What are the recommendations for improving regional financial management in Medan City?

A: The recommendations for improving regional financial management in Medan City include:

Improving budget management efficiency: Medan City should focus on increasing efficiency in expenditure, especially in important sectors such as health, education, and infrastructure.
Increasing financial independence: Medan City should utilize local resources to increase financial independence and reduce dependence on funding sources from the central government.
Designing effective policies: Medan City should design policies that support investment and local economic development to achieve optimal economic growth.
Monitoring and evaluating financial performance: Medan City should regularly monitor and evaluate its financial performance to identify areas for improvement.

Q: What are the benefits of effective regional financial management?

A: The benefits of effective regional financial management include:

Improved economic growth: Effective regional financial management can lead to improved economic growth, which can have a positive impact on the welfare of the community.
Increased financial independence: Effective regional financial management can lead to increased financial independence, which can reduce dependence on funding sources from the central government.
Improved budget management efficiency: Effective regional financial management can lead to improved budget management efficiency, which can ensure that the budget is used effectively to achieve the desired output.

Q: What are the next steps for Medan City Government in improving its regional financial management?

A: The next steps for Medan City Government in improving its regional financial management include:

Implementing the recommendations: Medan City Government should implement the recommendations made in this analysis, including improving budget management efficiency, increasing financial independence, designing effective policies, and monitoring and evaluating financial performance.
Continuously monitoring and evaluating financial performance: Medan City Government should continuously monitor and evaluate its financial performance to identify areas for improvement.
Seeking external expertise: Medan City Government may seek external expertise to help improve its regional financial management, including consulting with financial experts and conducting further research.