Contact :
World Bank Office
Jakarta Stock Exchange Building
Tower 2, 13 Floor,Jl. Jend Sudirman Randy Salim
Tel :(62 21) 5299-3259
rsalim1@worldbank.org Sebastian Eckardt
Tel: 0811 934220
seckardt@worldbank.org
Performance of State Expenditures matters for Indonesia’s Economic and Social Development
Jakarta, May 26, 2008 – A one day International Conference concluded today that a more accountable and result oriented budgeting process is the backbone of good governance and a modernized public administration in Indonesia . “A more effective budget process has been one of the top priorities set by our Government. While there has been improvement over the past years, reforms need to be further accelerated,” said Minister of Finance Sri Mulyani, in her keynote address . “ We are seeking new ways to steer resources to those areas where the development impact is greatest. The objective is simple: making the state budget deliver better results to citizens.” The conference was hosted by the Association of Public Financial Management Professionals (APIK) and supported by a partnership of the Government of Indonesia, the World Bank Group, the International Monetary Fund, the Organizations for Economic Cooperation and Development, the European Commission and the Dutch Government. The event brought together more than 150 stakeholders and experts from the national government and from non-governmental organizations to discuss ways of making state expenditures more effective and responsive to citizen needs. “The conference provided an opportunity for Indonesia to draw upon regional and global experiences on budget reforms,” said Joachim von Amsberg, Country Director of the World Bank Indonesia. ” In designing and implementing a modernized budget system for Indonesia, key decision makers and practitioners could extrapolate from the wealth of experience of their counterparts from other countries that have successfully embarked on their own reform programs.” Throughout the world, the processes for determining how to raise, allocate and spend public resources constitute one of the foundations of good and effective government. Undoubtedly, the quality of government expenditures matters: roads are paved, children are educated, health care and poverty relief are provided. The budget process forces public policy choices to be made, and trade-offs to be identified. “Public policy and management in both developed and developing countries have been reshaped with the introduction of more result orientation, competition and private market discipline into public administration,” said Bill Dorotinsky of the International Monetary Fund. “Such reforms have the potential to transform bureaucratic culture and promote more open, accountable and results- and citizen-oriented governments.” To read more about the World Bank’s support for Indonesia visit: www.worldbank.org/id Indonesia’s Budget Reforms Indonesia’s public financial management and planning framework has been undergoing major institutional reforms. The present structure and the procedures for preparing and deciding on the budget are the result of a series of reforms initiated and implemented in a very short time starting in 2001. The impetus to the reform came from the financial and economic crises affecting the government finances at the end of the 1990s. Law 17/2003 on State Finances consolidated routine and development expenditures into a unified budget and provided for medium term expenditure planning and performance-based budgeting. Law 1/2004 on State Treasury stipulated provisions on budget execution, debt and asset management, and a consolidated Treasury Single Account for the whole of government administration. Law 25/2004 on Development Planning paved the way for better integrating planning and budgeting processes. “Since 2001 the government has made headway in reforming the regulatory framework for public financial management. Expanding from this initial step, we are committed to deepen change throughout the Government. Central to success of the proposed reform will be the evolution of Indonesia’s bureaucracy and organizational culture. Performance does not just happen. Political leaders and civil servants must start caring about results and actively search for ways of doing better. ” said Dr. Mulia Nasution secretary general of the Ministry of Finance Indonesia. A modern budget system has undeniable benefits. But how exactly does a government achieve it? With the general legal framework in place, strong leadership is essential in advancing the budgeting reform agenda. Direct involvement of the President, active engagement of cabinet and parliament are necessary to sustain the momentum over time. “Continued commitment and support at the highest level to improve is a primary success factor for successful change. This is arguably ‘the’ most important success factor for any public sector reforms. Any trial without continued commitment and support is in effect most likely to fail.” said Jon Blondal of the Organization for Economic Cooperation and Development. |
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