BPKP to audit central government loan to regions
Fitri Wulandari, The Jakarta Post, Jakarta
The Development Finance Comptroller (BPKP) is investigating possible misuse by regional governments of investment funds provided by international financial agencies through the central government.
The audits follow the failure of the regional governments to repay a total of Rp 5.4 trillion (US$606 million) in debts, including interest, principal payments and fines, over the past six years.
"The BPKP is conducting an investigative audit into possible irregularities in the use of the funds," said Paskah Suzetta, a member of the House budget committee on Monday, adding that the audit came at the request of the government.
The BPKP met on Monday with the regional governments as represented by the Association of Regency Administrations, the Association of Indonesian Governors and the Association of Municipalities to discuss the issue.
The regional governments' representatives asked for cuts in their debts to ease their financial burdens.
According to Paskah, most regional governments have invested the regional development investment (RDI) funds in building infrastructure, such as markets and transportation facilities. Some regions channeled the funds to their own water companies.
Paskah said the results of the BPKP investigation would determine the next step regarding the repayment of the debts. The debt may be rescheduled, restructured or cut.
The RDI funds are provided by international lending agencies, such the World Bank and International Monetary Fund, to promote investment in the regions.
However, the funds are channeled through the central government because under the prevailing laws the regions the regions are not allowed to directly take out foreign loans. The funds are thus treated as central government loan's to the regions.
R. Nuriana, the West Java governor, argued during the meeting that many regions had failed to repay their debt because they were financially incapable of meeting their obligations.
"We thus ask the government for such a policy (debt reduction, rescheduling and restructuring) as each region has a different ability to repay its debt," he said.
While admitting that many regions could not pay back the RDI funds to the central government, Nuriana said that the BPKP audit was necessary to see if it this was the result of mismanagement or irregularities.
The regions also hoped that the current inability of many regions to repay their debts should not prevent them from requesting new loans from the central government in the future, the governor said.
The RDI funds for 2001 stood Rp 7.3 trillion while for 2002, they were slightly down at Rp 6.3 trillion.