2007年-世界发展银行全球_Indonesia___Budget_Reform_Strategy_Priorities_72页_967kb

Summary of Indonesia's Budget Reform Strategy Priorities

Core Content

This report, prepared by a joint mission of the International Monetary Fund (IMF) and the World Bank, outlines a budget reform strategy for Indonesia, focusing on the introduction of a medium-term expenditure framework (MTEF) and a performance-based budgeting system. It provides a comprehensive analysis of the current budgeting system and offers recommendations to streamline the process, improve fiscal transparency, and enhance efficiency in public spending.

Main Objectives

• To develop an overall road map for budget reform.
• To introduce a multiannual and performance-based budgeting system.
• To improve fiscal transparency and public financial management.
• To align the budget process with macroeconomic and fiscal stability.

Key Recommendations

1. Strengthening the Macro-Fiscal Analysis and Forecasting

• The Fiscal Policy Office (FPO) should be strengthened to support the development of the Medium-Term Fiscal Framework (MTFF) and MTEF.
• The technical committee should meet regularly to update and finalize the MTFF.
• Improved revenue projections and forward expenditure estimates are essential for medium-term planning.

2. Streamlining the Budget Preparation Process

• Simplify the budget appropriation structure, especially by refining the program structure and linking programs to outcomes and outputs.
• Introduce a two-stage budget scrutiny and approval process:
  • Stage 1: Focus on the medium-term fiscal strategy and sector/program-level budget envelopes.
  • Stage 2: Approval of detailed annual budgets.
• Set indicative amounts for transfers to local governments in May-June and communicate them to all 33 provinces and 434 districts.
• Liberalize virement rules to allow greater flexibility in reallocating expenditures, with some limits on salaries.
• Improve the efficiency of parliamentary budget reviews, including budget committees and sectoral commissions.

3. Developing a Medium-Term Expenditure Framework (MTEF)

• The MTEF and performance-based budgeting are closely linked and should be developed in parallel.

• Short-term measures (2007–2008):

  • Prepare and publish a simple MTFF/MTEF with the 2008 budget.
  • Refine medium-term revenue estimates to support affordable expenditure programming.
  • Form a joint working group between MOF and BAPPENAS to:
    • Define programs, subprograms, and activities for the entire government.
    • Clarify the operational distinction between existing and new expenditure programs.
    • Develop a reliable procedure for forward estimates and full cost calculation of existing subprograms.
  • Select pilot programs for cabinet approval and implement medium-term expenditure programming with key performance indicators.

• Medium-term measures (by 2011):

  • Expand "bottom-up" expenditure programming to more subprograms and ministries.
  • Implement annual budgets based primarily on program structures.
  • Establish a capacity-building program for line ministries and agencies in expenditure programming and cost accounting.
  • Begin medium-term expenditure projections in selected provinces and districts.
  • Strengthen the capacity of the Indonesia Supreme Audit Institution (BPK) for value-for-money audits.

• Long-term measures (by 2015):

  • Complete the migration to a largely programmatic MTEF for the central government.
  • Extend medium-term revenue and expenditure projections to the general government.

4. Improving Budget Documentation

• Include forward expenditure projections (by ministries and existing programs) for a three-year period.
• Publish a fiscal risks statement.
• Develop a citizen's guide to the budget that provides clear and understandable information on the fiscal outlook and budget proposals.

5. Developing the Reform Strategy

• Establish a high-level budget reform committee chaired by the Minister of Finance and the Minister of Planning, comprising senior officials from MOF, BAPPENAS, and the Coordinating Ministry of Economic Affairs.
• Create working groups to address:
  • Program review
  • Budget process reform
  • Performance measurement
  • Outreach, socialization, and capacity building
• Publish a public statement of the proposed reform strategy, summarizing key actions and expected benefits.
• Develop a detailed action plan based on the report's recommendations and the government's own priorities.
• Leverage donor support, including from the World Bank and the Australian government, through resident or peripatetic experts.

Key Challenges

• The current budget structure is complex and input-driven, with a large number of budget entities and detailed line-item scrutiny.
• The parliamentary involvement is frequent and detailed, which may hinder efficiency.
• DIPAs are excessively detailed, requiring revision to align with the reform agenda.
• Rigid civil service rules and salary-setting systems may constrain reform progress.
• The introduction of a performance-based system requires cultural and behavioral changes in the public service.

Legal and Institutional Context

• The legal framework for budgeting and planning has been updated with the adoption of new laws (2003–04) and regulations.
• The restructuring of the Ministry of Finance (MOF) has been progressive, with the establishment of DG Treasury, DG Debt, and the FPO.
• The Government Finance Statistics (GFS) system has been introduced for budget classification.
• The SPAN system (Computerized State Treasury and Budget System) is being developed to modernize treasury operations and enhance cash management.

Conclusion

The report emphasizes that the budget reform process is complex and long-term, requiring careful planning, institutional coordination, and legal adjustments. It outlines a phased approach to reform, starting with short-term measures such as simplifying the budget structure, improving documentation, and pilot programs, followed by medium-term and long-term initiatives. The reform strategy should be transparent, inclusive, and supported by donor expertise to ensure success and sustainability.