2008年-世界发展银行全球_Increases_in_Surpluses_of_Regional_Governments_in_Indonesia___An_Empirical_Analysis_94页_1mb

Summary of Increases in Surpluses of Regional Governments in Indonesia: An Empirical Analysis

Core Content

This report examines the rapid increase in regional government surpluses and bank deposits in Indonesia from 2004 to 2006. By the end of 2006, regional governments had accumulated IDR 68.5 trillion in bank deposits, a tenfold increase from IDR 7.4 trillion in December 2000. This growth coincided with a significant rise in regional government surpluses, raising concerns among the Ministry of Finance and prompting the Decentralization Support Facility (DSF) to investigate the causes.

Main Findings

Key Finding 1: Unplanned Surplus Accumulation

• Regional governments did not plan to save, as net investments in contingency funds (dana cadangan) accounted for less than 5% of the IDR 47 trillion increase in bank deposits during 2004–2006.
• This indicates that the surplus growth was largely accidental rather than intentional.

Key Finding 2: Revenue and Expenditure Discrepancies

• Regional governments collected more revenue and spent less than budgeted, contributing to surplus accumulation.
• Surpluses were primarily due to:
  • Higher than expected revenue (especially from PAD and DBH)
  • Lower than expected expenditure (both operational and investment)

Key Finding 3: Underestimation of Revenue and Underspending

• Underestimation of revenue and underspending were the main causes of surplus build-up.
• These two factors accounted for over 80% of the IDR 79 trillion difference between actual and budgeted surpluses during 2004–2006.

Key Finding 4: Limited Investment in Financial Assets

• Regional governments have not invested surplus cash in financial assets beyond bank deposits.
• This is attributed to:
  • Lack of vision
  • Risk-averse behavior
  • Government anti-corruption drive
  • Administrative constraints on loan repayment and pre-payment

Key Information

Revenue and Expenditure Overview

• PAD (Own-source Revenue) and DBH (Shared Revenue) were the primary revenue sources.
• Operational expenditure and investment expenditure were the main expenditure categories.
• The discrepancy between actual and budgeted figures was significant, with actual revenue often exceeding expectations and actual expenditure falling short.

Financial Reporting and Accounting Systems

• Simple cash-based accounting was used before 2003, recording only cash inflows and outflows.
• Modified cash-based accounting (KepMendagri 29/2002) introduced recording of income, costs, and financial transactions, but did not fully capture the true financial position.
• Cash surplus is defined as "revenue - expenditure - net financial costs," equivalent to SiLPA (Sisa Lebih Perhitungan Anggaran).
• Operational surplus is defined as "revenue - expenditure," equivalent to the surplus in the modified accounting system.

Surplus Trends

• Provincial and district governments both saw increases in surpluses, with the most significant growth occurring in 2005 and 2006.
• Provincial governments saw their cash balances increase from IDR 3.7 trillion in 2001 to nearly IDR 16 trillion in 2006.
• District governments also experienced a surge, with their cash balances increasing from IDR 7.4 trillion in 2000 to IDR 68.5 trillion in 2006.

Surplus Composition

• Surplus increases were driven by:
  • Revenue underestimation: PAD and DBH were the main contributors.
  • Expenditure underspending: Both operational and investment expenditures were lower than expected.
  • Underfinancing: Limited investment in financial assets, particularly shares in municipal enterprises and loan repayments.

Policy Recommendations

1. Performance-based contracts for tax collection agencies (DIPENDA and state-owned enterprises) to reduce revenue underestimation.
2. Establish trust funds in resource-rich regions to ensure long-term benefits for citizens.
3. Relax restrictions on expenditure budgets to allow more efficient spending.
4. Improve the quality of investment and financing:
   • Disseminate best practices for investment and financing.
   • Make surplus information public to enable comparison between regions.
   • Encourage regional development banks (BPD) to invest surplus deposits in development projects rather than low-risk securities.

Conclusion

The report highlights that the increase in regional government surpluses and bank deposits is largely due to underestimation of revenue, underspending, and limited investment. These findings underscore the need for improved financial management and policy reforms to ensure that surplus funds are used effectively for development rather than accumulating in bank accounts. The recommendations aim to address these issues by promoting transparency, efficiency, and strategic investment.