The Political, Institutional and Economic Determinants of Budget Forecast Errors and Their Consequences on Economic Growth: evidence from Indonesia

This Studt aims to examine the effect of the political coalition, political competition, amount of population, government complexity, excess of budget financing (SiLPA) and fiscal space on budget forecast errors. We also explore the consequence of the budget forecast errors on the economic growth in Indonesia. The population of this study is all of local governments in 2015, i.e., 514. The writer took 197 local government from the population as the sample by using purposive sampling method. This study uses secondary data from website of local government and General Election Commission (KPU), amount of population and growth domestic regional product from Central Bureau of Statistics Republic of Indonesia (BPS) and softcopy of local goverment financial statement from Indonesian Supreme Audit Institution (BPK RI). Research data analysis in this research using regression analysis. The results show that political competition, amount of population, government complexity and fiscal space influence positively the budget forecast errors. The result also find that budget forecast error giving the negative consequence on economic growth. Errors in forecast budgets lead to welfare losses and weak economic growth achievements. We emphasize that quality of budget forecasting is important. The regional house of representative (DPRD) as supervisor have a duty to ensure that most of the budget is fully, timely and effectively utilized. To remedy this errors, DPRD need for increasing fiscal desentralization supervision, during the budget planning, formulation and implementation. In addition, DPRD also need to pay more attention to uncertainty and incumbency factor during budget forecasting