Shake-up at MoF to produce new treasury unit

Shake-up at MoF to produce new treasury unit

Fitri Wulandari, The Jakarta Post, Jakarta

The planned reorganization of the Ministry of Finance (MoF)
will produce a new treasury unit responsible for managing state
funds.

Mulya P. Nasution, deputy head of the reorganization
committee, said the treasury unit would not only have authority
over the allocation of funds to ministries and government
agencies but would also be responsible for finding resources to
finance the state budget.

"When there is a mismatch between revenue and spending, it
(the treasury unit) will have the responibility of finding
cheaper funding sources," Mulya told The Jakarta Post in a recent
interview.

Mulya said the unit, which will be called the Directorate
General of Treasury Management, was crucial so as to ensure the
availability of funds to finance government activities.

The unit would serve as a kind of fund manager for the state,
with the authority to seek cheap funds and decide on how to
invest any surplus funds.

In summary, the treasurer's responsibilities include preparing
state financial reports, cash management, debt management,
lending operations, procurement policy and asset management.

The reorganization of the ministry is partly aimed at curbing
corruption as huge amounts of state funds have been embezzled in
the past.

Minister of Finance Boediono was supposed to endorse the
reorganization blueprint in April, but this was delayed due to
what insiders said was a political struggle over the dismissal of
certain senior officials and the selection of new ones in the
reorganization process.

In addition to the treasury unit, the ministry will also have
other units, namely the Fiscal Policy Unit and the Directorate
General for Budgetary Affairs and Fiscal Balance.

The Fiscal Policy Unit will be responsible for designing
government fiscal policy to be presented to the House of
Representatives during the deliberation of the state budget bill.

The Directorate General of Budgetary Affairs and Fiscal
Balance will be responsible for designing the state budget and
fiscal balance between the central and local governments.

The creation of three separate key units in the Ministry of
Finance is to help boost efficiency and avoid overlapping of
duties.

At present, the three functions of treasury management, fiscal
policy and budget preparation are spread throughout several
directorate generals and agencies, including the State Accounting
Agency (Bakun), Fiscal Analysis Agency, the Directorate General
of the State Budget, Directorate General of Fiscal Balance and
Decentralization (PKPD), Directorate General of Budgetary
Affairs, Directorate General of Financial Institutions, and the
Bonds Management Center under the Secretary General.

Aside from the question of efficiency, these often produce
policies that overlap or go against each other, Mulya said.

Economist Raden Pardede of Danareksa said the separation of
the three functions would result in a clear-cut distribution of
responsibilities between the fiscal, monetary and macroeconomic
areas.

"The policy will be more integrated and clearer. For example,
how to rake in financing from domestic resources," Raden told the
Post.

Raden said that with the current organization, policies
produced by directorate generals within the ministry often went
against macroeconomic policy and vice versa.

Mulya said Bakun, PKPD and Fiscal Analysis Agency would be
scrapped as a result of the reorganization.

He added that the blue print was still being finalized but
declined to say when it would become effective.

"But in essence, the Ministry of Finance will be backed up by
a more professional team in providing good financial management,"
he said.