The Effect of Fiscal Independence Ratio, Transfer Funds and Regional Expenditure on Poverty in Central Java Province 2020-2024

Poverty in Central Java Province has reached the second-highest level after the Special Region of Yogyakarta. This study aims to examine the effect of the fiscal independence ratio, transfer funds, and regional expenditure on poverty in Central Java Province for the 2020-2025 period. The data used in this study are secondary, the analytical method used is panel data regression, and the model used is a fixed effect model. Econometric testing tests classical assumptions, using the t-test, F-test, and coefficient of determination (R2) to test the hypothesis. The results show that the variables of fiscal independence, transfer funds, and regional expenditure have a positive and significant effect on the poverty rate in Central Java Province. This study shows that fiscal independence, transfer funds, and regional spending significantly impacted poverty in Central Java during the 2020–2024 period, but the direction of this influence is not aligned with the goal of poverty alleviation. Fiscal independence and regional spending actually increase poverty, while transfer funds, which should reduce poverty, have the opposite effect.