WB, govt set performance measures for regions

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."