Potensi Terjadinya Soft Budget Constraint di Pemerintahan Daerah: Kasus Pengelolaan Keuangan Daerah Kota Ternate

Abstract

Fiscal decentralization does not only generate positive impact but also negative consequences. One of those consequences is soft Budget Constraint. This study aims to explore the potential occurence of soft budget constraints in the local Government in the case of the local finance management of Ternate Municipal. This study is a explanative study that focusing on the analysis of local government financial report. The results of this study are: (i) Ternate’s Fiscal conditions tend to deficit and even face short term insolvency cause inability cash and short term investment to cover short term liability. Ternate Government's commitment to adress this condition is very weak (ii) very high inequality vertical fiscal imbalance followed by regional borrowing autonomy is also high. Under these conditions, potentially lead to soft budget constraint in Ternate municipal government moreover there is guarantee from the law to rescue local government under financial insolvency