Govt programs require 'coordination'

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.