Govt programs require 'coordination'
Urip Hudiono, The Jakarta Post, Jakarta
Out of control corruption is apparently not the only factor hindering the successful implementation of many development programs in the country.
According to a recent study by the Manila-based Asian Development Bank (ADB), if a government fails to properly plan the programs and budgetary needs of the state institutions that will implement them, then it is very likely they will miss their target.
Such poor management of public finances will also lead to further corruption and poverty, unless they can manage funds in a more systemic and institutionalized manner.
In its Country Governance Assessment Report specific on Indonesia that it launched last week, ADB pointed out that without synchronizing planned policies with their budgets, a disorientation in their implementation would occur.
"The government must link budget formulation with policy planning so that the budget identifies institutional responsibility toward the policies," the report said.
When budgets do not identify costs associated with the delivery of programs, the report explained, institutions do not regard medium-term planning.
"As a result, the budget planning process does not take contingent liabilities and program continuity into account."
In other words, institutions tend to operate on the basis of separate, short-term programs instead of linking them into a broader, long-term development policy.
Such a condition will also result in a higher possibility of underspending and unjustified year-end activities of the budget, both of which are prone to corruption.
ADB therefore suggests changes in the budgetary process and in the organizational design of the system of administration.
"The government should review the procedures and practices associated with revising budgets, closing books, and carrying over funds at the end of the financial year," the report said.
Even though Indonesia's Government Regulation No. 105/2000 on regional government financial management and accountability stipulates performance-based budgeting, training and capacity building -- especially for regional administration officials -- would still be needed to overcome the changes.
"The budget planning process in the regions is also overshadowed by uncertainties related to fiscal transfers, especially for regions that are highly dependent on the central government's general allocation funds (DAU) and have little revenue beyond that," it said.
The report explained that as most public institutions have larger expenditure obligations than their received budgets can cover, many of them finance a significant proportion of their operations from revenues that are not registered in the budget, or off-budget sources, mostly in the form of funds from state- owned enterprises.
"Such 'shadow budgets' lacks transparency and the flow of its funds are impossible to control, thus inviting corruption," the report said.
ADB said that an independent and well-functioning external audit function and efficient internal audit functions are therefore important to detect such corrupt practices.
Giving the Supreme Audit Agency (BPK) more authority would mean more time and more budgetary commitments from the government, as the external auditing agency is still understaffed and underfunded.
The BPK currently has a staff of about 2,800 -- or only a third of the government's internal audit agency, the Development and Finance Comptroller (BPKP) -- to audit the activities of some 3.5 million civil servants in more than 30 ministries and 437 districts in 32 provinces.
In comparison, BPKP has a staff of 6,800, including 5,500 certified auditors, operating through seven directorates in its head office and 25 regional offices.