Financial Performance Analysis of The Regional Government of Rokan Hulu Regency

Abstract

This study aims to analyze the financial performance of the Regional Government of Rokan Hulu Regency during 2020–2024 using regional financial ratio analysis. This study employed a descriptive quantitative approach using secondary data from the Budget Realization Reports (LRA) of Rokan Hulu Regency. The analysis used the Fiscal Decentralization Ratio, Financial Dependency Ratio, Financial Independence Ratio, Regional Original Revenue (PAD) Effectiveness Ratio, and Regional Financial Efficiency Ratio. The results show that the average Fiscal Decentralization Ratio was 8.05%, categorized as very low, indicating a low contribution of PAD to total regional revenue. The Financial Dependency Ratio averaged 88.50%, indicating a very high dependence on intergovernmental transfers. The Financial Independence Ratio averaged 9.12%, reflecting an instructive relationship pattern and limited fiscal autonomy. The PAD Effectiveness Ratio averaged 91.58%, categorized as fairly effective. Meanwhile, the Regional Financial Efficiency Ratio averaged 99.05%, indicating inefficient financial management. The low contribution of PAD was influenced by the less optimal management of local revenue sources, particularly taxes and regional retributions. Overall, the financial performance of Rokan Hulu Regency remained highly dependent on intergovernmental transfers, so optimizing local revenue sources and improving expenditure efficiency are necessary to strengthen regional fiscal capacity and financial independence.