Disrupting the Poverty Trap: Political Budget Cycles and the Interlocking Movement in Decentralized Indonesia

This study examines the influence of fiscal and political factors on poverty in regency and city governments in Central Java Province from 2011 to 2023. Employing a mixed methods approach with a sequential explanatory design, this research utilizes panel data regression on 455 observations, combining 35 cross-sections with a 13-year time series, analyzed using EViews-10. The qualitative phase applies manual document analysis supported by expert informant interviews. The triangulation of both methods aims to construct a comprehensive model of poverty reduction in the context of local fiscal policy. Quantitative results show that Regional Original Income (PAD), Transfer Income (TKD), and Social Assistance Expenditures (BBS) have a significant negative effect on poverty, while Grant Expenditures (BDH), Capital Expenditures (BM), and Political Year (Dummy) variables do not. The model explains 10.60% of the variation in poverty, indicating that other factors play a major role. Qualitative findings confirm the presence of political budget cycles (PBC) that distort fiscal priorities, especially during electoral years, and reveal governance weaknesses that reduce the effectiveness of poverty programs. This study adopts the theoretical perspective of welfare economics and the social welfare function (SWF), which emphasize not only economic efficiency but also equitable distribution and inclusive well-being. Based on the analysis, the study proposes an interlocking movement model involving three components: technocratic budgeting, evidence-based poverty policy, and safeguards against political manipulation through clean bureaucracy, fiscal transparency, and strong regulatory mechanisms. The findings imply the need for institutional reform to align regional fiscal policy with long-term poverty alleviation goals and social welfare improvement.