THE EFFECT OF GENERAL ALLOCATION FUNDS AND SPECIAL ALLOCATION FUNDS ON CAPITAL EXPENDITURE WITH BUDGET FINANCING RESERVATION AS A MODERATING VARIABLE
Diapati M. Mutiara, Diarespati, Fitriana

Student and Lecturer, Universitas Tadulako

Abstract

This study aims to analyze the influence of the General Allocation Fund and the Special Allocation Fund on Capital Expenditure with the Budgetary Financing Surplus as a moderating variable in 13 regencies/cities in Central Sulawesi Province during the 2020-2024 period. This study employs a quantitative approach using path analysis through Structural Equation Modeling-Partial Least Square (SEM-PLS). The results indicate that general allocation fund has a negative and significant effect on Capital Expenditure, suggesting that increases in General Allocation Fund tend to be utilized for routine expenditures rather than investment in regional assets. Special Allocation Fund has a positive but insignificant effect on Capital Expenditure, indicating that Special Allocation Fund allocations have not been fully realized as capital expenditure due to delays in absorption and specific earmarking. Budgetary Financing Surplus negatively moderates the relationship between General Allocation Fund and Capital Expenditure, meaning that higher Budgetary Financing Surplus weakens the effect of General Allocation Fund on Capital Expenditure. Conversely, Budgetary Financing Surplus does not significantly moderate the relationship between Special Allocation Fund and Capital Expenditure. These findings highlight that the effectiveness of central government transfers depends heavily on the capacity of regional governments to absorb and manage their finances. Local governments are advised to strengthen fiscal governance, accelerate budget absorption, and optimize the use of General Allocation Fund and Special Allocation Fund for productive capital investments.

Keywords: General Allocation Fund (GAF), Special Allocation Fund (SAF), Capital Expenditure, Budgetary Financing Surplus (BFS)

Topic: Accounting and Auditing