WB, govt set performance measures for regions

Riyadi Suparno, The Jakarta Post, Kuta, Bali

Representatives of two multilateral lending institutions, a bilateral lending agency and a non-governmental organization (NGO) came to a municipality at the same time, and asked the mayor and his subordinates very similar questions that the they found rather annoying.

The lending institutions wanted to do an appraisal to see if the municipality was eligible for their funding, including matters related to financial accountability. Without reliable data and information on the real condition in municipalities and regencies nationwide, the institutions had no choice but to go directly to local governments.

Such difficulties were revealed by World Bank representatives, and working together with the Ministry of Home Affairs, they designed a standardized measurement for local government performance, particularly in public financial management.

"A very simple set of standardized indicators measuring the performance of all local governments, and made available to the public, would do a great service to Indonesia's decentralization process," Wolfgang Fengler, senior economist at the World Bank office in Jakarta, said here on Monday.

The results of the measurements then could be used by all relevant institutions for their own purposes, including lending institutions, NGOs, the central government, and even local people to assess their leaders.

"This would allow all stakeholders, particularly the voters in the municipalities and regencies, to assess their elected officials," Fengler added.

Director general for regional finance administration at the home affairs ministry Daeng Mochamad Nazier concurred, saying his office would use results of the performance measurement to design an intervention program to assist weak local governments improve their capacity to manage their finances.

"We do want to help those weak local governments. But to help them, we need to know which regions still need our help, and which regions are already strong in their financial management, who might be able to help the weak regions," he said.

Indonesia has pursued a major decentralization process, which the World Bank termed as a "big bang", since the 2001, and yet there has been no single unified measure of local government performance to ascertain whether the current process of decentralization has achieved its desired goals and outcomes.

A number of institutions such as the World Bank and the Asia Foundation have conducted surveys at selected local governments on issues related to decentralization. Yet, they are far from enough to present the real situation following decentralization.

The measurement framework that is being developed by the World Bank, however, will only focus on local government's financial management.

The argument of focusing on financial management is that the decentralization has shifted significant amounts of public money from the center to local governments.

Currently, local governments spend around 30 percent of all public monies, and yet there is no measure, and thus no information, on how this fiscal decentralization is being actually managed locally.

Rajiv Sondhi, senior financial management specialist at the World Bank office in Jakarta, explained that public financial management measurement was developed based on similar experiences in other countries, especially those in Pakistan and Uganda.

The measurement framework tries to access local governments' performance in nine key areas of public financial management, starting from local regulatory framework, planning and budgeting to cash management, procurement, accounting and reporting, internal audit, public debt and investment, asset management and external audit.

From the nine areas, the World Bank developed 27 key outcome indicators, each of which is further elaborated into detailed indicators.

The World Bank tested the performance measurement in two local governments, i.e. Blitar municipality in East Java and Sleman regency in Yogyakarta.

The Ministry of Home Affairs then tested the financial performance measures in six other regencies and two municipalities in Java, Sulawesi and Kalimantan.

"Results vary among the eight local governments. Some of them have no regulations or systems in place, especially in public debt and investment. But others are already advanced," Daeng said.

"Whatever the results, this is the kind of information we need before we can design intervention measures for them to improve their financial management."