Challenges of managing the extra-budgetary funds in local government organizations

Abstract

This academic article focuses on analyzing the role, management, and impact of extra-budgetary funds in local administrative organizations, which are considered an important source of financial resources in addition to the budget allocated by the central government. The use of extra-budgetary funds in local areas has advantages in terms of flexibility and the ability to respond to urgent community needs. However, transparency and efficiency in management remain major challenges.

This article presents an analysis of issues such as the role, duty, and supervision of extra-budgetary funds, transparency, and financial accountability, as well as a study and analysis of the economic and social impacts of extra-budgetary funds. This study uses documentary research and case studies from local administrative organizations with different extra-budgetary funds management characteristics, emphasizing factors affecting success and failure in management, as well as policy recommendations that can reduce the risk of budget misuse and increase trust in the local financial system. Strengthening a clear regulatory framework, developing human potential, and disclosing information to the public are important factors that will help the use of extra-budgetary funds to be effective and sustainable, to appropriately respond to community needs, and to reduce risks that may arise from management that lacks transparency and accountability.