The impact of public policy on budget realization during the COVID-19 pandemic in Indonesia

Budget changes triggered by internal factors intend to realize budget effectiveness and save the budget. Meanwhile, Refocusing Activities and Budget Reallocation (RABR) tends to disrupt budget realization because external factors trigger it. This research focuses on the impact of budget policy during the COVID-19 pandemic in Indonesia. This research seeks empirical evidence of differences in budget absorption, tax revenues, and local revenue before and during RABR. This research contributes to filling the micro research gap regarding RABR policy and becomes a reference for public policy stakeholders. This study uses quantitative methods. Data published by 91 cities for four years, namely two years before RABR (2018-2019) and two years during RABR (2020-2021), were analyzed using descriptive statistics and difference tests. Data for 2022-2023 are also used to test robustness. The results of statistical tests show a decrease in budget absorption, tax revenue, and local original income during the implementation of the RABR policy. The results of the Wilcoxon test statistics for hypothesis testing and robustness tests conclude the same thing, namely that the levels of budget absorption, tax revenue, and local revenue before and during the implementation of RABR are significantly distinct. This study empirically tests the impact of public policy during the COVID-19 pandemic in Indonesia. The results of this research are that during the COVID-19 pandemic, public policy in Indonesia, known as Refocusing Activities and Budget Reallocation (RABR), significantly reduced budget absorption, tax revenue, and local original income. These results are explained through descriptive and inferential statistics and supported by robustness testing. This research contributes to filling the gap in micro research on public policy during the Covid-19 pandemic. Another contribution is to serve as a practical and theoretical reference on the impact of public policy on budget realization, tax revenues, and local original income. This research recommends the importance of measurable public policies that can be executed quickly so that they do not unduly interfere with achieving budgeted targets.