From Government of Indonesia

Govt. to Urge Regions to Spend

Coordinating Minister for the Economy Boediono said Monday (8/01/07) the government will help the regions secure the more expeditious approval of their budgets from their local councils, and is devising policies to ensure that development funds are actually spent on time, rather then being parked in central bank treasury bills.

"We acknowledge that a number of regions are experiencing technical problems in having their budgets approved by their local councils, and in disbursing the allocated funds. We will help them," Boediono was quoted as saying by The Jakarta Post.

He did not elaborate on how the government plans to do this, but said he expects that the period between the disbursement of government development funds to the regions and the approval of their local budgets could be shortened, to discourage regions from parking idle funds in central bank treasury bills and government bonds.

This would also be in line with a new government policy of approving regional projects and disbursing the necessary monies out of the General Allocation Fund (DAU) by as early as possible at the beginning of the year.

Regional budgets -- many of which still rely on a large extent on assistance from the General Allocation Fund -- are usually approved by local councils only during the first quarter of the year.

Several regions have, however, adjusted their budgetary cycle in line with the latest central government policy, including Jakarta, whose council approved the 2007 local budget in December 2006, as opposed to April as had been the case in previous years.

The government has since last year been speeding up project approvals and development fund disbursements to help spur higher economic growth from government spending.

By January 2, it had disbursed Rp763.5 trillion ($84.8 billion) under the 2007 national budget -- Rp504.8 trillion in central government spending and Rp258.7 trillion for the country's 34 provinces.

Separately, Finance Minister Sri Mulyani Indrawati said Monday that the government is considering putting in place budgetary mechanisms that would prevent the regions from parking funds in treasury bills in the future so as to ensure that the money is actually spent on development projects.
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