FINANCIAL INDEPENDENCE AND DEPENDENCE RATIO OF CITYGOVERNMENT IN SOUTHERN SUMATRA REGION 2020-2022

Abstract

This study aims to analyze the financial independence and dependency ratio of city governments serving as provincial capitals in Southern Sumatra with a case study of 5 (five) city governments, namely Bengkulu City,
Palembang City, Jambi City, Bandar Lampung City, and Pangkal Pinang City. This study was conducted using secondary data from the website www.djpk.kemenkeu.go.id in the form of APBD data for the 2020-2022 period to determine the level of financial independence and dependency ratio of these local governments. The financial independence of local governments indicates the extent to which a region canrely on local revenue sources without relying on transfers from the central government. This study uses a quantitative approach by measuring the ratio of regional financial independence and the ratio of dependency on transfer funds. The results of the study indicate that the financial capabilities of the five city governments are on average still not independent and still depend on
transfer funds from the central government. For the city government that is at the lowest level of independence is the Bengkulu City Government with an average ratio of 15.29%, while the city government that is at a medium level of independence is the Palembang City Government with an average of 27.09% and the Bandar Lampung City Government at 31.33%. For the lowest financial dependence ratio of the regional government, the ratio is the Bandar Lampung City Government, which is 48.83%, meaning that the level of dependence of the Bandar Lampung City Government is in a medium position. While the highest level of dependence is the Bengkulu City Government, which is 75.71%. The limitations of this study are because the researcher only studied five city governments in the Southern Sumatra region. So that the results of this study are expected to provide insight into
better regional financial management policies to support sustainable regional development.