Aligning Public Financial Management with SDGs: Efficient Utilization of Privileged Funds for Enhancing Quality of Life

Objective: This study aims to assess the efficiency of privileged fund allocations in the Special Region of Yogyakarta and evaluate their contribution to Sustainable Development Goals (SDGs), focusing on indicators such as poverty alleviation, economic growth, and social equity. Theoretical Framework: The research explores public financial management (PFM) aligned with SDG targets, emphasizing asymmetric decentralization and PFM efficiency. This model grants regions like Yogyakarta fiscal and administrative autonomy to tailor local policies and manage privileged funds effectively, fostering regional economic growth. Method: The study employs a quantitative approach, analyzing secondary data on fund allocation efficiency from 2017 to 2020 using Data Envelope Analysis (DEA). This method compares the relationship between inputs—regional income, balancing funds, legitimate income, and privileged funds—and outputs such as economic growth, poverty reduction, the Human Development Index (HDI), and the Gini index (income equality). Results and Discussion: Findings reveal that Yogyakarta's fund management from 2017 to 2020 achieved an annual DEA score of 1.00, indicating optimal use of resources for improving quality-of-life measures. It confirms that strategic PFM supports SDG-related outcomes, particularly reducing poverty, enhancing HDI, and minimizing income disparity. The results underscore the role of asymmetric decentralization in enabling tailored fiscal strategies that meet unique socio-economic demands. Research Implications: This approach can serve as a reference for other regions with similar decentralized governance systems, aiding in transparent, targeted budgeting that supports sustainable and inclusive regional development. Originality/Value: This study provides a valuable model for evaluating fund allocation efficiency, presenting a practical tool for policymakers to prioritize impactful resource distribution. The insights can guide similar regions with decentralized governance, promoting transparent, effective budgeting for sustainable development.