This article attempts to explain the relationship between fiscal decentralisation and the capacity of village officials in village planning and budgeting. Research findings in this study, which was conducted in the Sipoholon sub-district, North Tapanuli, North Sumatera, show that the capacity of village officials in the village development process is still relatively weak, as indicated by their background resources, rare training sessions, poor budget planning and management, and incoherent vision and mission that are not in line with the District-level development plans. Consequently, they also fall prey to the predatory practices of corrupt district level government officials, NGOs and the media.

Key words: marga, adat, village, village governance capacity