Finance Minister Sri Mulyani Indrawati on Monday said she was confident the government could still spend nearly 60 percent of this year’s allocation to infrastructure-related stimulus projects within the next seven weeks - even though it had spent only 42 percent during the first nine months of the year.
The government allocated Rp 11.55 trillion ($1.22 billion) to infrastructure spending - to build ports, airports, toll roads and bridges and other vital infrastructure - as part of this year’s economic stimulus package. The National Development Planning Board (Bappenas) reported last week that as of October it had spent only 42 percent of that money.
The report also revealed that ministries’ lack of preparation was a factor in the low disbursement rate, along with volatile exchange rates that had postponed spending on some projects.
Responding on Monday, Sri Mulyani said the central government was optimistic it could encourage regional governments, generally the final recipients of such allocations, to spend all of the money by the end of the year.
“The public works minister is pushing them [to disburse stimulus funds],” she said.
She did not elaborate on precisely how the minister, Djoko Kirmanto, was doing that.
The infrastructure portion of the stimulus package was in addition to the Rp 70 trillion allocated to infrastructure in the revised 2009 budget.
The Ministry for Public Works received the largest portion of the infrastructure stimulus package, at Rp 6.601 trillion. Of this, the Bappenas report noted that about half - Rp 3.308 trillion - had been spent and half of the work had been completed.
Defending the low spending figure, the Finance Ministry’s director general for budget management, Anny Ratnawati, said the Bappenas report did not necessarily reflect how much work had been completed on projects, some of which were 90 percent finished.
“Often, there is a time lag between finishing the physical work [on projects] and fund disbursements,” Anny said, adding that the lag varied depending on the type of project.
Earlier this year Anny had noted that the government often disbursed half or more of a project’s funding only after all work had been completed.
Silmy Karim, the deputy chairman for business development at the Association of Young Indonesian Entrepreneurs (Hipmi), said he would be surprised if the government was able to spend all of the money allocated by the end of the year.
“If the government suddenly said that all the package has been spent, this would only raise more questions,” he said.
He said that the outcome so far showed that the government was not taking the stimulus spending seriously enough.