<![CDATA[Village fiscal policy is a key instrument in strengthening village autonomy, expanding public services, reducing poverty and accelerating equitable development. However, the size of fiscal transfers to villages does not in itself guarantee that such allocations will yield optimal public benefits. This article aims to evaluate the Village Fund allocation policy by using three main dimensions as benchmarks: fiscal effectiveness, distributive justice, and legal accountability. The research employs a normative legal methodology, utilising a legislative approach, a conceptual approach, a policy approach, and a case study approach through a review of previous empirical research. The analysis examines the legal framework governing villages, changes introduced by Law No. 3 of 2024, Government Regulation No. 16 of 2026, Minister of Finance Regulation No. 7 of 2026, and the policy on the prioritised use of the Village Fund for 2026. The research findings indicate that the Village Fund policy has contributed to rural development and poverty reduction; however, the design of its allocation and the measurement of its success still face challenges: an expenditure orientation that places too much emphasis on administrative compliance, variations in the capacity of village governments, disparities in needs between villages, and the sub-optimal relationship between budget allocation and outcome indicators. Policy evaluation needs to shift from an absorption-based approach to one based on outcomes, risk, objective needs and the quality of public services. This article recommends strengthening a needs-based allocation formula, integrating data on poverty and regional characteristics, implementing risk-based oversight, ensuring digital transparency, and establishing performance indicators that link village expenditure to improvements in community welfare.]]>
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