House begins deliberating three state finance bills

JAKARTA (JP): The House of Representatives starts today (Monday) the deliberation on three new bills on regulating state financial affairs which are crucial in creating a clean government.

One of the bills called the draft law on state treasury, stipulates that government treasurers as well as government officials who have directly or indirectly caused financial losses to the state will face penalties which include the seizure of their personal assets, and administrative and legal sanctions.

The government said the bill was proposed as the existing law on state treasury was no longer applicable because it was inherited from the Dutch colonial era.

The two other bills are called the draft law on state finance, and the draft law on the audit on the accountability of state finance.

The government via the finance ministry proposed the three bills to the House in September last year.

The draft law on state treasury was strongly criticized last year by the head of the Supreme Audit Agency (BPK) Satrio B. Judono as being too weak in preventing systemic corruption in the country's bureaucracy.

Judono insisted that government treasurers must be independent, and not subordinate to ministers, heads of government agencies/institutions or heads of government sponsored projects.

He reasoned that it would be difficult for treasurers to prevent corruption in ministries and institutions if they were not independent.

Judono said treasurers should ideally be staffs of the finance ministry and report to the finance minister.

He called on the government to revise the bill.

Prijadi said on Friday that he had met with Judono, and they shared the same opinion regarding the bill.

"I have already met with Billy (Judono), and we have the same perception with regards to the bill," he said.

Corruption was rampant during the 32-year rule of the former authoritarian president Soeharto. Indonesia is regarded as one of the most corrupt countries in the world.

According to some estimates, around 30 percent of state funds including foreign borrowings have been embezzled.

The current administration of President Abdurrahman Wahid is under strong pressure to complete the trial of Soeharto over his alleged corruption.

Abdurrahman has also been accused of corruption by his political opponents, including in the Bulog financial scandal, which centers around the embezzlement of funds from the National Logistics Agency (Bulog) by people close to the President, and in the Brunei financial scandal, which concerns US$2 million donation made by the sultan of Brunei through Abdurrahman for humanitarian aid in the restive province of Aceh.

The new bill on state finance will provide the legal basis for the government when drafting and implementing the state budget.

Under the bill, if the government has a budget deficit, it must seek sources to finance the deficit.

The bill also allows regional administrations to seek funds to cover any budget deficits.

The government launched earlier this year the new autonomy law which gives greater power to provincial and regency administrations to manage their social and economic affairs.

One of the concerns with the launching of the new autonomy law is that regional administrations may embark on a borrowing spree to help finance their administrations. The International Monetary Fund (IMF) has said that this could jeopardize the overall economy.

Following pressure from the IMF which has arranged a multibillion dollar bailout program for the country, the central government has told the regional governments not to start borrowing money.

The bill also stipulates that Bank Indonesia should consult the government if the bank's policies could burden the state budget.

Bank Indonesia has been an independent central bank since 1999.

Meanwhile, the bill on the audit of the accountability of state finance gives BPK the legal authority to make the necessary inspections. (rei)