PLANNING AND BUDGETING REFORM

IN INDONESIANATIONAL DEVELOPMENT PLANNING AGENCY

October, 6th 2011

Presentation OutlinePresentation Outline

• Introduction : Indonesia• Planning and Budgeting Reform• Example

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INTRODUCTION : IndonesiaINTRODUCTION : Indonesia

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Indonesian : BriefIndonesian : Brief

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o Indonesia is a republic with the total population of 237 million

o Last August, Indonesia celebrated the 66 years of independency

o This country has 33 provinces and 497 regencies / citieso The President is the Head of State / Head of Government

and directly elected by the peopleo The President appoints and dismisses cabinet ministero The parliament watches, holds the legislative function

and approve the budget.

o Indonesia is a republic with the total population of 237 million

o Last August, Indonesia celebrated the 66 years of independency

o This country has 33 provinces and 497 regencies / citieso The President is the Head of State / Head of Government

and directly elected by the peopleo The President appoints and dismisses cabinet ministero The parliament watches, holds the legislative function

and approve the budget.

Governmental System in IndonesiaGovernmental System in Indonesia

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President- Head of State - Parliament

Cabinet MinistriesCabinet

Ministries

Constitutional Court

Supreme Court

Executive FunctionExecutive FunctionLegislative Function

Legislative Function

Judicative FunctionJudicative Function

To watch ;To approve

state budget

To watch ;To approve

state budget

Independent Role

Appointed by President

Independent Role

Appointed by President

Appointed by

President

Appointed by

President

Planning,Budgeting, and Planning,Budgeting, and Evaluation in IndonesiaEvaluation in Indonesia

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FrameworkFrameworko Law No. 25/2004 : NATIONAL DEVELOPMENT

PLANNING SYSTEM• Policy Intervention• Budget Intervention

o Law No. 17/2003 : STATE-FINANCE• Unified Budgeting• Performance Based Budgeting• Medium-Term Expenditure Framework (MTEF)

o Presidential Decree 54/2009 : Presidential Work Unit for Development Control & Monitoring

• Finished within 5 years ( since Law 17/2003 established as stipulated under Govt. Regulation 21/2004

• Useful for the implementation of bureaucracy reform

• Finished within 5 years ( since Law 17/2003 established as stipulated under Govt. Regulation 21/2004

• Useful for the implementation of bureaucracy reform7

Planning, Budgeting, and Evaluation; The RolesPlanning, Budgeting, and Evaluation; The Roles

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Prepare the National Documents Plan Long-Term

Development Plan (RPJP)

National Medium-Term Development Plan (RPJM)

Prepare of Government Working Plan (RKP)

Hold National Development Forum (Musrenbang)

Collect and analyze the results of monitoring the implementation of each line ministry

Prepare the National Documents Plan Long-Term

Development Plan (RPJP)

National Medium-Term Development Plan (RPJM)

Prepare of Government Working Plan (RKP)

Hold National Development Forum (Musrenbang)

Collect and analyze the results of monitoring the implementation of each line ministry

• Develop fiscal and macroeconomic framework

• Draft state budget and its amendment

• Implement the collection of state revenue established with the parliament

• Carry out the functions of the state general treasurer

• Prepare financial statements as liability of the budget implementation

• Develop fiscal and macroeconomic framework

• Draft state budget and its amendment

• Implement the collection of state revenue established with the parliament

• Carry out the functions of the state general treasurer

• Prepare financial statements as liability of the budget implementation

BappenasBappenas

Responsible for assisting the President in carrying out supervision anddevelopment control

Conduct duties in capacity, effectiveness, acceleration, performance and accountability prescribed

Assist the President : in managing the implementation of synchronization and consistency planning, monitoring, control and accelerated program developments,

Responsible for assisting the President in carrying out supervision anddevelopment control

Conduct duties in capacity, effectiveness, acceleration, performance and accountability prescribed

Assist the President : in managing the implementation of synchronization and consistency planning, monitoring, control and accelerated program developments,

MoFMoF UKP4UKP4

Planning and Budgeting Planning and Budgeting ReformReform

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Framework of Planning and Budget ReformFramework of Planning and Budget Reform

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Aggregate Fiscal DisciplineAggregate Fiscal Discipline

-Tax ratio-Deficit ratio-Debt ratio

-Tax ratio-Deficit ratio-Debt ratio

Allocative Efficiency(Allocation on Priority)

Allocative Efficiency(Allocation on Priority)

Allocation on Priority-Program outcomes-Activity output

Allocation on Priority-Program outcomes-Activity output

Operational Efficiency(Spending Efficiency)

Operational Efficiency(Spending Efficiency)

- External Control- Internal Control- Management Accountability

- External Control- Internal Control- Management Accountability

2010 2011 2012 MTFF: Medium Term Fiscal FrameworkMTFF: Medium Term Fiscal Framework

MTEF: Medium Term Expenditure FrameworkMTEF: Medium Term Expenditure Framework

Culture:- Performance Culture (PBB)- Efficiency through The Market Price (Robust Market)

- Bidding - Official Travel(at cost)

Culture:- Performance Culture (PBB)- Efficiency through The Market Price (Robust Market)

- Bidding - Official Travel(at cost)

PBB: Performance Based BudgetingPBB: Performance Based Budgeting

Unified BudgetUnified Budget

Forward EstimatesForward Estimates

*) The National Medium-Term Development Plan (RPJMN) (5 YEARS DEVELOPMENT PLANNING, WITH 3 YEARS ROLLING PLAN THROUGH GOVERNMENT ANNUAL WORK PLAN (RKP) AND STATE REVENUES AND EXPENDITURE BUGDET (APBN))*) The National Medium-Term Development Plan (RPJMN) (5 YEARS DEVELOPMENT PLANNING, WITH 3 YEARS ROLLING PLAN THROUGH GOVERNMENT ANNUAL WORK PLAN (RKP) AND STATE REVENUES AND EXPENDITURE BUGDET (APBN))

Notes: Performance Based Budgeting also include the authority’s separation of government - society/among government institutions/central-local

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2010 2011 2012 2013 2014

GROWTH (%)5,5 - 5,6

6,0 - 6,3 6,4 - 6,9 6,7 - 7,4 7,0 - 7,7

UNEMPLOYEMENT (%) 7,6 7,3 - 7,4 6,7 - 7,0 6,0 - 6,6 5,0 - 6,0

POVERTY (%)12,0 -13,5

11,5 - 12,5

10,5 - 11,5

9,5 - 10,58,0 - 10,0

Prosperity of People

Democracy

Justice

Strengthening Four Track Strategy (Pro growth, pro poor, pro job, pro environment), inclusive and just

development

Consolidating democracy

Enhancing law enforcement, corruption eradication and reducing inequality

Reform Implementation (RPJMN 2010-2014)Reform Implementation (RPJMN 2010-2014)

Scheme of Architecture Program and ActivityScheme of Architecture Program and Activity

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ExampleExample

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Tasks of Poverty ReductionTasks of Poverty Reduction

Remarks: with this program/activity-restructuring, there will be no overlap among line ministries, so that each function is in accordance with its task and function. 14

CONTINUED…CONTINUED…

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OUTCOMEAchieving equitable access in education

OUTCOMEAchieving equitable access in education

ACTIVITYThe Assurance of

education services for elementary student

ACTIVITYThe Assurance of

education services for elementary student

MoEMoE

INDICATORThe number of poor

students who received

scholarships(3.640.780 elementary students)

INDICATORThe number of poor

students who received

scholarships(3.640.780 elementary students)

Cluster I

OUTCOMEIncreasing

people Empowerment

OUTCOMEIncreasing

people Empowerment

ACTIVITY Increased

empowerment of rural communities

(PNPM-MP)

ACTIVITY Increased

empowerment of rural communities

(PNPM-MP)

MoHAMoHA

INDICATORThe scope of

implementation for PNPM - MP

(PNPM Core 5.020 Sub-Districts)

INDICATORThe scope of

implementation for PNPM - MP

(PNPM Core 5.020 Sub-Districts)

Cluster II

OUTCOMEIncreasing

Cooperative and Small Medium

Enterprises Performances

OUTCOMEIncreasing

Cooperative and Small Medium

Enterprises Performances

ACTIVITY The expansion

of KUR

ACTIVITY The expansion

of KUR

SMEsSMEs

INDICATORThe number of SMEs which

assisted and can access KUR

(27.520 Small Medium

Enterprises /UMKM)

INDICATORThe number of SMEs which

assisted and can access KUR

(27.520 Small Medium

Enterprises /UMKM)

Cluster III

OUTCOMEIncreasing

housing provision

OUTCOMEIncreasing

housing provision

ACTIVITYThe provision

of low-cost housing

ACTIVITYThe provision

of low-cost housing

Public HousingPublic

Housing

INDICATORThe number of

housing(62.500 houses)

INDICATORThe number of

housing(62.500 houses)

Cluster IV

Thank YouThank YouDankie jyDankie jy

Terima KasihTerima Kasih

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