2014年-世界发展银行全球_Cash_Management_Reform_in_Indonesia___Making_the_State_Money_Work_Harder_244页_1mb

Summary of Cash Management Reform in Indonesia

Core Content

This document provides an in-depth analysis of Indonesia's cash management reform, highlighting the institutional, procedural, and technological frameworks that have been established to improve the efficiency and transparency of public financial management. The reform, initiated after the 1997 Asian financial crisis, aimed to reduce costs, enhance control over public finances, and improve accountability in the management of state funds.

The reform was implemented in collaboration between the Ministry of Finance (MOF) and the World Bank, with support from the Multi Donor Trust Fund for Public Financial Management (PFM MDTF). It involved the establishment of the Treasury Single Account (TSA), which consolidated government cash balances and streamlined financial operations.

Main Objectives of Cash Management Reform

• Reduce costs for taxpayers by minimizing idle cash and optimizing returns.
• Improve control over state cash and public money.
• Enhance accountability and transparency in the management of public finances.
• Support budget execution through better cash planning and forecasting.
• Strengthen coordination between cash and debt management, and with the Central Bank (Bank Indonesia).
• Leverage technology to enable real-time cash monitoring and reduce transaction costs.

Key Components of the Reform

Institutional Arrangements

• The Directorate General of Treasury (DG Treasury) and the Directorate of Cash Management are central to the reform.
• The Treasury Single Account (TSA) was established in Bank Indonesia (BI) to consolidate government cash balances.
• A Treasury Notional Pooling (TNP) mechanism was introduced to manage cash flows across different government units.

Regulatory and Procedural Framework

• The reform included the development of a modern legal and regulatory framework for cash management.
• Procedural reforms focused on improving the planning, forecasting, and execution of cash flows.
• Coordination mechanisms were established between the Ministry of Finance, Bank Indonesia, and commercial banks.

Information Technology (IT) Systems

• The implementation of SPAN (State Budget and Treasury System) and SAKTI (Institution-Level Financial Application System) enhanced the efficiency of cash management.
• Real-time gross settlement (RTGS) and electronic fund transfer (EFT) systems were adopted to streamline payment processes.
• BI's electronic banking system (BIG-eB) and automated accounting systems (BI SOSA) were developed to support the reform.

Capacity Building and Incentives

• Training and capacity building were emphasized to improve the skills of spending units and financial officers.
• A reward and sanction mechanism was introduced to encourage better cash planning and execution.
• The Asset and Liability Management Committee (ALMC) was established to oversee cash and debt management.

Implementation and Outcomes

• The TSA implementation was a phased process, involving regulatory changes, institutional restructuring, and the consolidation of government bank accounts.
• TSA helped in reducing transaction costs, streamlining cash flows, and improving fiscal transparency.
• Key benefits included:
  • Cost savings from reduced interest expenses and improved cash utilization.
  • Better control over public finances and reduced corruption.
  • Improved efficiency in revenue collection and expenditure disbursement.

Challenges and Ongoing Improvements

• Initial resistance from line ministries was faced due to loss of autonomy in managing cash.
• The TSA was implemented gradually, avoiding a "big-bang" approach, which allowed for learning by doing.
• Ongoing challenges include:
  • Improving cash forecasting by spending units.
  • Enhancing the TNP mechanism.
  • Expanding the ALMC membership to include Bank Indonesia.
  • Consolidating large cash balances outside the TSA, including those held by local governments and public service agencies.

Conclusion

The cash management reform in Indonesia has been a successful and ongoing process, significantly improving the efficiency and transparency of public financial management. The TSA has played a central role in achieving these improvements, and the collaboration between the Ministry of Finance and Bank Indonesia has been key to the reform's success. Continued efforts are required to refine the system, improve coordination, and ensure that the full benefits of the reform are realized.

Key Writers and Contributors

• Wibawa Pram Sihombing, Akhmad Budhisusetyo, Vijay Ramachandran, and Hari Purnomo were key writers of the document.
• The World Bank and the Ministry of Finance teams received valuable inputs from various government units and institutions.

Funding and Support

• The reform was funded through the Multi Donor Trust Fund for Public Financial Management (PFM MDTF), with contributions from Canada, the European Union, the Netherlands, Switzerland, and USAID.

International Context

• The reform drew on international practices and experiences, including those from the IMF, World Bank, and other countries.
• The IFMIS (Integrated Financial Management Information System) and PEFA (Public Expenditure and Financial Accountability) frameworks were used as benchmarks.

Quantifiable Benefits

• The TSA implementation led to annual benefits of IDR 2-4 trillion (USD 200-400 million) in 2012 and 2013.
• Remuneration of surplus cash in BI contributed to revenue generation for the government.
• The TSA also improved the efficiency of revenue collection and expenditure disbursement through electronic payment systems.

Future Directions

• The Treasury Dealing Room (TDR) is planned for implementation in coordination with the Debt Management Directorate (DGDM).
• The TSA is expected to continue evolving to better meet the needs of public financial management in Indonesia.