BUDGET ABSORPTION IMPROVING

By Andi Abdussalam

Jakarta, Dec 7 (Antara) - Implementation of the state budget has, so far, been hindered by the slow absorption of funds and late procurement, thereby leading to spending constantly accumulating at the end of the year.         Improvements made over the past four years have had an impact, so the realization of government spending no longer accumulated at the end of the year.         "This entire process is not static but dynamic, innovative, and reformed. This principle applies to all policy and decision holders," Budgetary Director General Askolani of the Finance Ministry stated on Wednesday (Nov 6).         Askolani explained that through improved budget absorption, the quality of spending could improve and become more effective since the start of the current fiscal year.         "If the improvement in absorption came late, ministries and institutions will only accelerate procurement without proper preparation. This was still happening a few years ago. We want spending to be done since January," he stated.

2018 BUDGET EXPECTED TO HELP MAINTAIN ECONOMIC MOMENTUM

by Andi Abdussalam

Jakarta, Oct 26 (Antara) - The 2018 state budget, with a spending set at Rp2,220.7 trillion and a revenue of Rp1,894.7 trillion, is expected to help maintain the current positive economic momentum.         The Bill on the 2018 State Budget was passed into law by the House of Representatives (DPR) at its plenary meeting on Wednesday. Hence, according to Finance Minister Sri Mulyani Indrawati, the government is optimistic of being able to maintain the current positive economic momentum.         Minister Indrawati remarked that the government lauded the support extended by the DPR's leadership and members, including the budget committee and all the commissions, which have worked along with the government, to implement the mandate of the Constitution by deliberating the 2018 state budget bill intensively and constructively.         Hence, the current positive economic momentum will continue to be strengthened in 2018, the finance minister stated.         "The government will maintain the economy and strengthen the momentum to reach 5.4 percent in 2018," Indrawati noted in Jakarta on Wednesday.

GOVERNMENT RELIES ON CONSUMPTION FOR GROWTH

by Andi Abdussalam

Jakarta, Aug 17 (Antara) - In line with its forecast of improved household consumption, investment, and export performance in 2018, the government has set a 5.4 percent economic growth target, slightly higher than its 2017 target of 5.2 percent.          If the government is able to maintain household consumption and investment performance, it will be able to achieve its economic growth target of 5.4 percent in 2018.          "As far as household consumption and an upward trend in investment could be maintained, the 5.4 percent growth target could be achieved," legislator Andreas Eddy Susetyo noted.          Susetyo of the financial Commission XI of the House of Representatives (DPR) had remarked on Wednesday that the important aspect is the improving trend that serves as a momentum for the government to set the growth target.          The legislator was referring to the economic growth target of 5.4 percent set by the government in its 2018 Draft State Budget (RAPBN 2018), which was delivered by President Joko Widodo (Jokowi) during the DPR Plenary Session at the Parliament building in Jakarta on Wednesday.      In his speech, Jokowi said the government has optimistically set the economic growth target at 5.4 percent in the RAPBN 2018 based on increased public consumption, investment, and export/import performance.

GOVERNMENT'S DEVELOPMENT PLAN RUNNING ON RIGHT TRACK

by Andi Abdussalam

Jakarta, June 5 (Antara) - In a bid to advance the country, the government is laying down its development programs on a Medium-Term National Development Plan (RPJMN) and long-term initiative called "Indonesia 2045 Vision."     The development carried out since the government of President Joko Widodo (Jokowi) came to power in late 2014 is believed to be running on the right track, National Development Planning Minister/Head of the National Development Planning Board (Bappenas) Bambang Brodjonegoro had stated in Jakarta on Tuesday, May 30.          The Bappenas minister said most of the programs in the RPJMN are on the right track. He made the statement after a meeting to discuss the implementation of the RPJMN 2015-2019 and to deliberate on the draft of the "Indonesia 2045 Vi

HIGHER GROWTH TARGET SET IN REVISED BUDGET REALISTIC

by Andi Abdussalam

Jakarta, June 5 (Antara) - Increasing export performance and investment coupled with the optimism demonstrated by the banking sector and corporations will help improve economic activities and boost growth this year.          The improving conditions are believed to be positive factors that will drive up economic growth to exceed the target set at 5.1 percent in the 2017 State Budget (APBN). Thus, it is reasonable for the 2017 Revised State Budget (APBNP) to set a higher growth target.          According to Agus Martowardojo, the governor of Bank Indonesia (BI/the central bank), an increase by 0.2 percent in the economic growth, set at 5.1 percent in the APBN, to 5.3 percent in the APBNP is realistic and logical.          Finance Minister Sri Mulyani has said the economic growth this year can exceed the target of 5.1 percent set in the APBN. Positive economic conditions can galvanize the growth in 2017 to reach 5.3 percent.          The finance minister indicated several factors raising optimism that the economy this year will grow better than the previous prediction. She, among others, pointed out better export performance.

GOVT CUTS BUDGET TO OVERCOME DEFICIT

By Andi Abdussalam

Jakarta, Aug 7 (Antara) - The government predicts that tax revenues will drop by Rp219 trillion from the targeted Rp1,539.166 trillion in the revised state budget 2016 this year, thus posing  potential to disturb the budget deficit performance.         Therefore, it is planning to cut its expenditure by about Rp133.8 trillion, consisting of  Rp65 trillion of the budget for ministries/state institutions  and Rp68 trillion of the spending for transfer to regions.     Chief Economic Minister Darmin Nasution said the state revenues up to the end of the year would not meet target set in the revised state budget. So, adjustment to the government expenditure should be made.         "We have discussed shortfall in a number of  revenue sources," Darmin said after attending a cabinet plenary meeting chaired by President Joko Widodo (Jokowi) on Wednesday, August 3.     Earlier Finance Minister Sri Mulyani Indrawati predicted that tax revenues would fall Rp219 trillion short of target  and the shortfall is potential to obstruct budget deficit performance.

GOVERNMENT TO CUT BUDGET EXPENDITURE BY 10 PERCENT

by Andi Abdussalam

Jakarta, Feb 26 (Antara) - The Indonesian government is contemplating on cutting down its routine budget expenditure in 2016 by some 10 percent due to a predicted decline in tax revenues and drop in oil prices.          In anticipation of the failure to meet the state's revenue target, the government is likely to cut its budget expenditure by Rp200 trillion of the targeted revenues in the state budget totaling Rp2,096 trillion. If realized, the revenue target in the state budget will be reduced to some Rp1,900 trillion.          Vice President Jusuf Kalla stated that the discourse on the reduction of expenditure for ministries/state institutions should be raised as the government needed to evaluate the revenue performance in the state budget.          "If the tax revenue goes down, the budget expenditure will also automatically be reduced," the vice president noted at the Indonesia Summit 2016 in Jakarta on Thursday.

BUDGET MAINLY ALLOCATED FOR POVERTY ALLEVIATION

by Andi Abdussalam

Jakarta, Sept 23 (Antara) - The government will prioritize its budget allocation in 2016 for programs and development projects, which will have multiple and significant effects on alleviating poverty and reducing the unemployment rate.          "One of the indicators of the quality of economic growth is its ability to provide jobs for workers. We set a target to provide 300 thousand to 350 thousand jobs for each percent of the economic growth," National Development Planning Minister/Head of National Development Planning Board (Bappenas) Sofyan Djalil stated after a working meeting with Commission XI on financial affairs of the House of Representatives (DPR) on Tuesday night.          The government and the DPR on Tuesday night discussed a revision in the assumptions made in the draft 2016 state budget, which was proposed by the government through its financial notes in August.           On Tuesday night, the government and the DPR agreed to maintain several people's welfare targets as set in the draft 2016 state budget, but the macro economic growth assumption was revised down from 5.5 percent to 5.3 percent.

REGIONAL DEVELOPMENT FOCUS OF GOVT'S BUDGET ALLOCATION

By Andi Abdussalam

Jakarta, Aug 15 (Antara) -- The government is paying serious attention to regional development in the country, as is evident from the significant amount of funds allocated for the purpose in the draft state budget for 2016.          As much as Rp782.2 trillion, which is 58.4 percent of the Rp1,339.1 trillion budget set for central government expenditures, was allocated for regional development.          "Funds to be transferred to regions and villages amounts to Rp782.2 trillion," President Joko Widodo said while presenting the government statement on the draft state budget for 2016 before the plenary session of the House of Representatives on Friday.          On Wednesday, President Joko Widodo, who is fondly called Jokowi, unveiled the government's 2016 budget plan amounting to Rp2,121.3 trillion. Of the total, Rp1,339.1 was allocated for central government expenditures and Rp782.2 trillion for transfer to regions, including village funds.          According to Finance Minister Bambang Brodjonegoro, the allocation of Rp782.2 trillion as regional and village funds was Rp117.6 trillion more than the Rp664.6 trillion allocated in the revised state budget for 2015.

INDONESIAN GOVERNMENT UNVEILS RP2,019.9 TRILLION BUDGET PLAN

By Andi Abdussalam

Jakarta, Aug 15 (Antara) - Indonesian government has unveiled its 2015 budget plan worth Rp2,019.9 trillion balanced with state revenues amounting to Rp1,762.3 trillion and a deficit of Rp257.6 trillion or about 2.32 percent of the gross domestic product (GDP).          "The deficit in the Draft 2015 State Budget is Rp257.6 trillion or 2.32 percent of the GDP, down from the deficit in the revised 2014 state budget set at 2.4 percent of the GDP," President Susilo Bambang Yudhoyono announced when delivering a speech on the Draft 2015 State Budget and its Financial Notes at the plenary session of the House of Representatives (DPR) here on Friday.         In broad lines, the 2015 state budget comprises state revenues worth Rp1,762.3 trillion, which consists of tax receipts amounting to Rp1,370.8 trillion, non-tax income of Rp388.0 trillion, and a grant of Rp3.4 trillion.

2013 STATE EXPENDITURE EXPECTED TO REACH 96 PCT

By Andi Abdussalam
Jakarta, Dec 21 (Antara) - The government hopes that state expenditures through the end of 2013 will reach 96 percent of the allocation set in the Revised 2013 State Budget of Rp1,726.2 trillion.          "We expect that about 96 percent of the total state expenditure set for 2013 at Rp1,726.2 trillion will be absorbed up through the end of the year," Finance Minister Chatib Basri said, commenting on  the budget spending for 2013 late last month.          He added that the budget expenditure so far used was the amount that had been disbursed, not the values of the projects covered by the budget.  "The projects are ongoing, but we only calculate expenditure of budget that has been disbursed, not the project values," Basri said.          Data at the Ministry of Finance indicated that until November 29, 2013, state expenditures had only reached Rp1,224 trillion, or 80.3 percent of the allocation set in the Revised 2013 State Budget, amounting to Rp1,726.2 trillion.          In the meantime, the collecting of state revenues in the same period has also reached Rp1,224 trillion, or 81.5 percent of the Revised 2013 State Budget of Rp1,502 trillion.

EXPERT RAISES QUESTIONS ON STATE BUDGET DEFICIT

By Andi Abdussalam

Jakarta, Aug 17 (ANTARA) - The government has set a deficit target of 1.6% in its 2013 state budget draft, which is lower than the 2.23 percent deficit in the current state budget, but an expert has expressed concerns over the projection, saying the absorption of external debt used to cover the budget deficit is low.          "Even though the deficit in the 2013 state budget draft has been set at a lower level compared with that of the 2012 revised budget, in which the budget deficit was 2.23 percent of the gross domestic product (GDP), there is no use if the absorption of external debts used to cover it is less than 90 percent," said Enny Sri Hartati, the director of the Institute for Development of Economics and Finance (Indef), on Thursday night.          She noted that the projected budget deficit for 2013, amounting to Rp150.2 trillion, or about 1.6 percent of the GDP, would be covered by external debt the absorption of which was unlikely to be optimum. "So far, the absorption of foreign debt used to cover state budget deficit has always been less than 90 percent. If that is the case, why we should borrow foreign money?" she asked.          Earlier on Thursday, President Susilo Bambang Yudhoyono unveiled the 2013 state budget draft at a plenary session of the House of Representatives (DPR). The budget amounted to Rp1,657.9 trillion, with total revenues expected at Rp1,507.7 trillion and a projected deficit of Rp150.2 trillion.        The deficit is the difference between the total revenues in the 2013 Draft State Budget (up 11 percent from the revenue target in the revised 2012 revised state budget) and state expenditures (7.1 percent higher than the expenditure set in the 2012 budget).          "In the 2013 state budget draft, we set the budget deficit at Rp150.2 trillion, or 1.6 percent of the GDP, which is less than the 2.23 percent figure in the 2012 revised state budget," the President said.          "Of the Rp1,507.7 trillion in revenues, about 80 percent will be derived from tax receipts, which have been set at Rp1,178.9 trillion, an increase by 16 percent from the 2012 revised state budget," he added.          According to the head of state, the funds to cover the budget deficit will come from the issuance of state securities (SBN). "Domestic financing sources are expected to provide Rp169.6 trillion, with foreign sources expected to contribute negative Rp19.5 trillion," the President stated.         "The external sources of funding would mainly be through programme loans and project loans, amounting to Rp45.9 trillion, excluding Rp7 trillion of existing debt principles and debt instalments worth Rp58.4 trillion," Yudhoyono added.          Meanwhile, Chief Economic Minister Hatta Rajasa said the government must achieve its  tax revenue target of Rp1,178.9 trillion in order to reduce the state budget deficit.         "We need to reach our tax and non-tax state revenue targets, as we don't want the deficit to widen," he said after attending the plenary session.          Hatta pointed out that the government had to rely more on tax revenues to reduce dependence on debts so it could cover the budget deficit. If state income fell short of the target, he added, the government would have to use more funds to plug the deficit, which could have a negative impact on the 6.8 percent economic growth target.          "We will then have to do what we don't want to, cutting spending, which would slow down growth," he said, adding that the deficit target of 1.62 percent was healthy for the state budget and for sustainable economic growth.          "In my opinion, a deficit of less than 2 percent is safe," Hatta stated.          Legislator Romahurmuziy, from the United Development Party (PPP), said the state budget draft reflected the government's prudence and optimism.          "The government's optimism is reflected in a conservative but moderate economic growth target of 6.8 percent, while its prudence is reflected in its rational budget deficit target of 1.6 percent," he explained.          Enny also suggested that the government must raise its tax ratio to help cover the state budget deficit.          "The government should boost its share of receipts from the tax sector. It should not be the same as the current budget tax to GDP ratio of 12.5 percent," she said, adding that the ideal ratio should be at least 14 percent.          However, with regard to the deficit target set at 1.6 percent, Enny noted that the absorption of funds used to cover the deficit so far was not optimum, being less than 90 percent. "At the end of the year it is always less than 90 percent," she added.          "The amount of the government's disbursed budget continues to increase every year, while the annual budget accumulates,¿ Enny pointed out.          "If the annual disbursed budget continues to accumulate, what is the use in drawing up a budget with a deficit?" she asked, adding that the government must implement its programmes with comprehensive planning.          Enny stated that the budget should be carried out on schedule, with clear and measurable output and outcome. "If it turns out later that the budget is not enough, then the government can take loans by citing budget deficit. But the budget should not need to be revised within 2-3 months, as has been happening lately. That means it was never planned properly," she said.***2*** (T.A014/INE/a014) (T.A014/A/KR-BSR/A/A014) 17-08-2012 16:51

RI TO REFORM ITS BUDGETING SYSTEM IN 2012

By Andi Abdussalam

Jakarta, Dec 5 (ANTARA) - The low capacity of government ministries and other agencies to absorb state budget funds  often causes unspent public money allocations to accumulate at the end of the year.          Capital expenditures are among the budget posts which the government bureaucracy cannot  absorb quickly enough , and this condition affects the performance of the ministries and other state institutions. According to the World Bank, ministries and other state institutions actually could increase their performance if the government increased its capital expenditures.          "Indonesia has a problem with budget absorption. It can be seen from the fact that it is unable to maximize its budget absorption at the end of the year," World Bank's Vice President and Head of the Poverty Reduction and Economic Management Otaviano Canuto dos Santos Filho said on Monday.          Otaviano Canuto said that developing countries tended to  face the same expenditure problem, namely the accumulation of expenditure funds at the end of the year. "This also happens with Indonesia, but Indonesia is one step ahead because its government has a good commitment to improving its budget management quality," Canuto said.          Canuto said that with an economic growth rate of over 6 percent, financial discipline and good fiscal performance become more important.          In order to overcome its budget absorption problem , the government  will make reforms in its national  budgeting and planning systems in 2012 by taking into account lessons from past experiences.          "The government is committed to optimizing the quality of its spendings to achieve better developmental results,"  Finance Minister Agus Martowardojo told a seminar themed "Linking Performance Evaluation to Budgeting" on Monday.          The budget  system reform was expected to overcome the low budget absorption capacity problem bugging the government almost every year.          According to the finance ministry, the realization of state expenditures up to November 7 this year, for example, has reached only 69.1 percent, or Rp912.1 trillion, of the assumption in the revised 2011 state budget set at Rp1,320.7 trillion.          Moreover, according to State Treasury Director General Agus Suprijanto, unspent state budget funds (SAL) which currently totaled Rp97 trillion were projected to increase by  Rp30 trillion at the end of 2011.         "There will be an additional amount of SAL because state revenues are expected to reach 100 percent  of their target while state expenditures have reached only about 95 percent of their target so that there will be a balance of between Rp20 trillion and Rp30 trillion," the director general said.          Agus said  the amount of SAL at present was about Rp97 trillion but it was likely to increase at the end of the year, particularly if the realization of expenditures --which were not equal to state revenues received by the state treasury-- was taken into account.          Speaking at a seminar on "Linking Performance Evaluation to Budgeting," the director general said that the estimate was based on the budget deficit projection of about 1.6 - 1.7 percent of gross domestic product (GDP).          He said that the SAL could be used to anticipate fiscal risks, sudden reversal (of capital inflow) and for emergency situation if crisis hit Indonesia.          "If the crisis happens, the people who are still under the poverty line would be hard affected and therefore, we need to anticipate it, one of the possible ways is to use the unspent budget (SAl)," the director general said.          Legislator Andi Rahmat of the House's Commission XI on financial affairs said that the slow absorption of state budget was caused by weak coordination  among the ministries and institutions concerned with goods and services procurement.          He said that capital expenditures for example had only reached 40.7 percent due to the weak coordination.  "Coordination is weak in terms of regulation policy at the ministerial level and at its lower level. The business world seems also to be unfamiliar with the procurement system," Andi said.           Andi said that the government and the Government Goods and Service Procurement Policy Agency (LKPP) had conducted a review of Presidential Decision No. 54/2010 on Goods and Services Procurement, which was suspected to be the cause of the slow absorption of budget for capital expenditure.          Therefore, according to Finance Minister Agus Martowardojo,  with the reforms in its  planning and budgeting systems, the government was expected to be able to improve the quality of its spendings.          "To reach  maximal results, Indonesia should learn more lessons from countries which have applied this system. By learning a lesson from other countries' experience, Indonesia will be able to develop a system better suited to its conditions," the minister said.          National Development Planning Minister Armida Salsiah Alisjahbana said meanwhile that the planning and budgeting systems to be implemented in 2012 were expected to create a better, more effective and efficient bureaucracy.          "This strategy requires several better reform steps because it will need institutional capacity to apply it," she said.          She said  research results had shown that the government had to improve many things, namely the overall work frameworks, starting from the performance-based budgeting to implementation of mid-term spending framework.           The government also needed to evaluate and include its results in budget allocations. The same thing should also happen with the development of incentives for performance.              "Information on performance should be used to reinforce the overall performance of the decision making process," she said.***5*** (T.A014/A/HAJM/23:19/A/S012) 06-12-2011 00:52:3

GOVT URGED NOT TO WASTE STATE BUDGET

by Andi Abdussalam

Jakarta, Nov 29 (ANTARA) - Finance Minister Agus Martowardojo has called on ministries and other state institutions to maximize the absorption of the state budget as up to November 7, the realization of state expenditures has only reached 69.1 percent.          The ministry of finance recorded that up to November 7, 2011, the realization of state expenditures reached only Rp912.1 trillion, or 69.1 percent of allocated budget for 2011.          Yet, lawmakers have criticized the habit of ministries and other government agencies in spending the state budget by having various non-essential activities in the run up to the end of the year.          "The habit of organizing meetings and seminars at the end of the year (to maximally use budget) must be stopped because the activities are useless," House Speaker Marzuki Alie said on Monday.          He called on the leaders of ministries and state institutions not to spend budget for wasteful activities only to catch up with budget absorption target at the end of the year.          According to the House Speaker, the efforts to spend budget without clear objectives should no longer be made. "I have received many reports from the people on how ministries and other state institutions spend the people's money without clear objectives," he said.          Deputy House Speaker Taufik Kurniawan supported Marzuki's argument, saying that ministries and other state institutions should stop their habit of accelerating the absorption of budget with non-substantial programs.          He said that Ministries and state institutions should not force themselves to carry out unclear programs if they were not able to absorb the budget that had been allocated for them.          According to Marzuki,  the habit of organizing nonessential seminars, workshops and meetings which were held only to use up budget was a bad practice. Regional governments and regional legislative assemblies (DPRD) also did the same things.          Therefore, all sides must follow the president's instruction on budget savings. "The country still needs a lot of funds to improve the quality of the people's life, education, health and other pro-society economic programs," the House Speaker said.          The House Speaker said if an activity was really urgent and needed there was nothing wrong for the ministries to do it but it should not be `orchestrated? for the sake of spending budget.          "I have checked the truth of the reports I received and you can see that hotels are full of activities by the government and state institutions. Hotels in the Puncak area (mountainous retreat area), for example, are full," he said.          These are wasteful activities and leave the impression that they have been spontaneously programmed  as part of their efforts to finish unspent budget, while actually according to Deputy House Speaker Taufik Kurniawan, the unused budget could be utilized for next budgetary year.         "If the budget is not absorbed, the ministries should change their pattern of thinking. They should not think that the budget is only for one year and if it is unused it will forfeit," he said.          He said that they should think that if the budget was not used they should return it to the state. "Admittedly, the money will not be given to the ministries concerned but it can be used for other programs in the following budget year," Taufik stressed     Taufik said that there had been an impression that if they fail to carry out the programs their performance was not good. It had been a public secret since long that ministries and other state institutions had always tried to spend budget by having non-essential programs.          The activities they were carrying out to accelerate the absorption of the budget were non-substantial programs and spontaneous in nature like seminars, discussions and workshops. "This practice must be ended. Ministries and institutions should draw up realistic programs that could be implemented without considering the nominal value of the budget they are going to get," the deputy speaker said.          Legislator Andi Rahmat of the House?s Commission XI on financial affairs said that the slow absorption of state budget was caused by weak coordination  among the ministries and institutions concerned with goods and service procurement.          He said that capital expenditures for example had only reached 40.7 percent due to the weak coordination.  "Coordination is weak in terms of regulation policy at the ministerial level and at its lower level. The business world seems also to be unfamiliar with the procurement system," Andi said.           Andi said that the government and the Government Goods and Service Procurement Policy Agency (LKPP) had conducted a review of Presidential Decision No. 54/2010 on Goods and Service Procurement, which was suspected to be the cause of the slow absorption of budget for capital expenditure.          Thus for next year,  Finance Minister Agus Martowardojo hoped that ministries/state institutions would maximize their absorption of state budget as of the beginning of 2012.          "We are preparing to kick off so that the budget absorption in 2012 should be maximized since the beginning and it would be better," the finance minister said.          According to the finance ministry, the realization of state expenditures up to November 7 this year has reached 69.1 percent, or Rp912.1 trillion, of the assumption in the revised 2011 state budget set at Rp1,320.7 trillion.***5*** (T.A014/A/H-NG/11:40/A/O001) 29-11-2011 11:45

GOVT TO FINISH 93.6 PCT OF ITS 2010 BUDGET-FUNDED PROJECTS

By Andi Abdussalam

Jakarta, Dec 28 (ANTARA) - The government is optimistic that it will finish about 93.6 percent of its 2010 budget-funded projects at the end of this year, and is committed to finishing all projects funded by the 2011 state budget next year.          Finance Minister Agus Martowadojo said the government targeted to absorb 93.6 percent of the 2010 state budget, which was higher than the budget absorption in the previous year.          "We have sometime ago simplified the procedures for the implementation of goods and service projects in order to accelerate budget absorption. Data on project realization until December 23 2010, and payments that are still to be made, indicate that the budget absorption until the end of 2010 would reach 93.6 percent," the finance minister said in a report during a handing over function of 2011 Budget-Funded Project Proposal Lists (DIPA) at the State Palace here on Tuesday.          In the 2010 revised state budget, state expenditure was set a Rp1,126 trillion and the state revenues and grant were valued at Rp992.40 trillion, with a deficit set at 2.1 percent from the gross domestic product or amounting to Rp133.75 trillion. The deficit was later revised down to Rp95.1 trillion or about 1.5 percent.          The government is convinced to absorb some 93.6 percent of the budget after it took several steps. Up to December 23, 2010, the absorption of DIPA 2010 had reached 83.4 percent of the 2010 revised state budget. The absorption until December 23 this year is actually smaller than that in the same period a year earlier which stood at 86.5 percent.          Yet, there are a number of indicators --such as letters of payment orders to projects already implemented -- that make the finance minister confident of budget absorption to reach 93.6 percent.          The disbursement of 2010 State Budget funds up to the end of November, for example, reached Rp817.2 trillion or 72.6 percent of the total amount of Rp1,126.1 trillion.          The ministry of finance said last week that of the disbursed amount, Rp525.6 trillion or 67.3 percent of the ceiling was spent by the central government. Expenditures by government ministries and state institutions totaled Rp249.6 trillion or 68.2 percent of the ceiling in the 2010 state budget. There was a slight decline in the expenditures compared to 70.7 percent in the 2009 budget.          The utilization of state budget funds by government ministries and state institutions had been influenced by among others delays in the issuance of disbursal approvals by the various budget funds utilization authorities. The same tendency was found in almost all working units at central and provincial levels.          The delays were said to have had something to do with the more prudent approaches taken by the ministries in light of the more progressive anti-corruption measures in Indonesia.          In addition, the slow move on the utilization of state budget has also been influenced by the tighter implementation of procurement processes for goods and services, in particular with the increasingly debated process of tenders as well as the reports by non-governmental organizations to police and prosecutors' office.          However, the government is committed to implementing all budget-funded programs next year.          President Susilo Bambang Yudhoyono when handing over the DIPA 2011 on Tuesday asked ministers and the heads of all government agencies and state institutions to develop a result-oriented mindset in the spending of state budget funds.          The President asked that the budget be used in more innovative, creative, and proactive manner.  "Let us change our mindset on the use of State Budget funds  from input-based to output- and outcome-based. Stop using budget funds  in  the 'business as usual' way," the president said.          The 2011 State Budget consists of state revenues and grants amounting to Rp1,104.9 trillion, up 11.3 percent from the previous year's budget. Allocation for state revenues  is Rp1,229.6 trillion which represents an increase of 9.2 percent from the previous year's budget while the budget deficit is projected to amount to Rp124.66 trillion, or 1.8 percent.          The handing over of DIPA 2011 is this year done  earlier than in previous budget years. It is implemented at the end of the year so that starting from the first day of the year 2011 all state treasury offices (KPPN) across the country can be ready to serve the disbursement of funds for all work units.          Punctuality in fund disbursements was of great importance for the success in the implementation of development programs which have been well and carefully planned.          The national priorities to be achieved in 2011 in accordance with the government's plan of action were bureaucratic reform and good governance, education quality improvement, implementation of health improvement efforts and percentage of drug availability, and poverty reduction.          Finance Minister Agus Martowadojo said that handing over of the DIPA 2011 at the end of 2010 indicated the government?s commitment to implementing all of its programs both in the central and regional governments.          "The early handing over of the DIPA 2011 in done in an effort to enable ministries and other government agencies to carry out their activities as soon as possible in 2011. Actions can be done at the end of 2010 so that the contracts could be concluded early in 2011 and are supported by all sides," the minister said.          The minister said that the 2011 state budget was made based on a performance-based budgeting system oriented to output and outcome so that goals that would be achieved could be taken for granted.          (T.A014/A/HAJM/17:15/f001) 28-12-2010 17:16:3

GOVT TO MAINTAIN EXPENDITURES FOR MINISTRIES

By Andi Abdussalam

Jakarta, Jan 13 (ANTARA) - The government has decided to maintain the ministries and state institutions' expenditures despite changes in the assumptions of the state budget for 2009.

        "The government will maintain the expenditures of ministries and state institutions worth Rp322.3 trillion," Finance Minister Sri Mulyani Indrawati, who is also acting coordinating minister for economic affairs, said after cabinet ministers' meeting here on Tuesday.

        Earlier, chief of fiscal affairs of the Ministry of Finance Anggito Abimayu said the macro assumptions in the 2009 state budget would undergo major changes in line with the change in a number of macro-economic indicators.

        "There will be changes in the rupiah exchange rate and crude price. The rupiah exchange rate was previously set at Rp9,400 per US dollar in the state budget and the crude price at US$80 per barrel. These should be changed," he said adding that the depreciation of the rupiah against the US dollar would have an impact on the state budget deficit.

        However, Finance Minister Sri Mulayani said that despite the change in the posture of the 2009 state budget, the government would maintain expenditures for ministries and state institutions to make sure that they would be able to carry out their programs without interruption.

        "We should learn a lesson from the previous experience when we should delay expenditures until 3 to 6 months each time there was a change in the state budget, because it required a change in the list of development projects (DIPA), she said.

        As an example, the government would not change the Rp207 trillion budget it has allocated for the education sector, which is 20 percent of the 2009 state budget, even though it would constitute 21 percent of the new (revised) 2009 state budget.

        The change in the posture of the 2009 state budget has caused the Rp207 trillion allocation to account for 21 percent of the budget.

        "In this case, if the 20 percent requirement should be met based on the law on the 2009 state budget, the budget for education should be cut by Rp9 trillion. But we have decided not to lower it," the minister said.

        The government is changing the 2009 state budget posture in connection with the change in a number of macro-economic indicators due to global and national economic conditions.

        The 2009 state budget undergoes a change as the government altered assumptions in the country's economic growth, oil prices and the rupiah exchange rate against the US dollar. However, assumptions on inflation, bank Indonesia (BI)'s benchmark interest rate and oil lifting remained unchanged.

        The change in the assumptions of macro-economic indicators brought major impacts to the state revenues and expenditures. "State revenues are estimated to undergo a decline by Rp128 trillion from Rp985.7 trillion to Rp857.7 trillion.

        This is due to lower economic growth, change in the rupiah exchange rate and incentives that the government would provide," the minister said.

        Tax revenues will also decline by Rp54 trillion from Rp725 trillion to Rp671 trillion. While non-tax revenues will become Rp74.51 trillion due to the change in the fuel oil prices and the rupiah exchange rate as well as the decline in state-owned dividends.

        With regard to the government's plan to lower fuel oil prices on January 15, 2009, Anggito Abimayu said that the government will no longer provide a subsidy for premium gasoline though its price is to be lowered further from Rp5,000 per liter to Rp4,500 per liter.

        "The government no longer provides a subsidy for premium gasoline. The fuel oils which are still receiving subsidies from the government are diesel oil and kerosene," Abimayu said here on Tuesday.

        The lowering of the diesel oil price and its subsidy were a policy to provide a stimulus to households and the business world. With the lowering of the diesel oil price, it was possible for the electricity tariff to be lowered so that it would provide a stimulus for the business world and households.

        "So, there will be three kinds of stimuli, namely stimuli for households, for businesses and for infrastructure which is expected to create job opportunities," he said.

        Abimayu said that with the lowering of fuel oil prices, fuel oil subsidy expenditure in 2009 would be lower than the estimate in the state budget at Rp54 trillion. (T.A014/HNG/A/H-YH) 13-01-2009 23:53:50

DESPITE DEFICIT, RP45 TRILLION OF BUDGETS REMAIN UNSPENT

By Andi Abdussalam

Jakarta, Dec 12 (ANTARA) - The steep decline in the world crude price from US$147 a barrel in July 2008 to below US$50 in December has cut the state budget deficit from Rp94.3 trillion in the 2008 revised state budget to about Rp50 to Rp70 trillion.

        If only the government were able to predict the world crude price and calculate central and regional governments' expenditures realistically, it might not have to set a deficit in its 2008 budget.

        Approaching the year end, it turns out that about Rp45 trillion of the regional budgets for all regions in Indonesia remain unspent. This is regretted by Finance Minister Sri Mulyani Indrawati.

        "Many regions could not absorb the whole of their regional budgets (APBD) so that there are unspent budgets amounting to Rp45 trillion," the finance minister said when opening a "Fiscal Decentralization Policy 2008 Forum" at the Aston Atrium Hotel on Thursday.

        In the revised 2008 state budget, the government had set the budget deficit at 2.1 percent of GDP or Rp94.3 trillion with state expenditures estimated at Rp989.3 trillion and state revenues and grants at Rp895 trillion.

        The government estimates the deficit in the 2008 state budget will be lower than 1.9 percent of the country's gross domestic product (GDP) due in part to a recent drop in global crude prices.

        Virtually, with the crude price drop, the amount of deficit in the state budget for 2008 should have been very small. After all, unspent budgets (SILPA) amount to Rp45 trillion.

        Finance Minister Mulyani regretted the fact that the regional budgets were not absorbed maximally while there was a relatively big deficit in the state budget which reached Rp50 to Rp70 trillion.

        "The deficit means expenditures exceed revenues. Some of the budgets for expenditures were transferred to the regions so that we hope the regions will use them maximally," the minister said.

        Previously, the director general for financial balance of the Ministry of Finance, Mardiasmo estimated that the absorption of budgets transferred to the regions from the 2008 revised budget would reach 95 percent of the total funds of Rp292.4 trillion.

        "We hope that with 95 percent, the absorption this year will increase from that last year, because the funds for Aceh special autonomous region for example has spent 100 percent, and now we are waiting for a report from Papua province on its spending. In the meantime the public allocation funds (DAU) have also been absorbed 100 percent," he said.

        He said that the absorption realization of transferred funds to the regions up to December 9, 2008 had reached about 89 percent. The ceiling of transferred funds to the regions in the 2008 revised budget were recorded at Rp292.4 trillion, consisting of financial balance funds worth Rp278.44 trillion and special autonomous and adjustment funds amounting to Rp13.99 trillion.

        The financial balance funds consisted of Rp179.51 trillion in DAU, Rp77.73 trillion in profit-sharing funds (DBH) and Rp21.20 trillion in special allocation fund scheme (DAK).

        Mardiasmo said that the DAU funds had been distributed 100 percent to the regions, among others for the educational sector while the DBH funds were still waiting for disbursement.

        Although the amount of unspent regional budgets reaches Rp45 trillion this year, the government has no plan to cut its expenditures next year. After all, it is expected that the impact of global financial crisis will begin to be felt in 2009.

        "We are not going to cut the budget as we did last year. Cuts in spending will only be made as a last resort," the finance minister said.

        She said budget cuts or changing the budgets of ministries / government institutions and the regions would only disturb the absorption of budgets in general.

        "We fear that budget cuts will slow budget spending as has happened so far. So, unless absolutely necessary, we will not cut the budget," she added.

        The minister said that new and effective programs were really needed to prevent layoffs or to create new job opportunities for laid off or new workers whose number continued to increase annually by about two million.

        Mulyani said that the 2009 budget included various programs designed to anticipate layoffs, such as the smallholder's credit scheme (KUR) and the national program for people's empowerment (PNPM).

        "Workers' layoffs are likely to happen. So, we have included KUR and PNPM programs in the state budget. We hope it will at least help if layoffs take place or create new job opportunities," the minister said.

        She admitted that the inclusion of priority programs in the state budget for 2009 could cause a bigger deficit in the 2009 budget than those in 2008.

        Citing an example, the minister mentioned the deficit in the revised 2008 budget which was set at 2.1 percent of Gross Domestic Product but its realization was predicted to be one percent only.

        "From the receipt aspect, if the economic activities decline, the revenue target could also decline and thus it will automatically generate bigger deficit," she said.  (T.A014/A/HAJM/19:45/a014) 12-12-2008 19:55:24