Transcript PLANNING AND BUDGETING REFORMS IN INDONESIA: Past

PLANNING AND BUDGETING
REFORMS IN INDONESIA:
Past Achievements and
Future Challenges
Wismana Adi Suryabrata
Director for Allocation of Development Funding,
BAPPENAS
OUTLINE OF THE PRESENTATION
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PLANNING AND BUDGETING FRAMEWORK
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RULES AND REGULATION
THE FRAMEWORK
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PAST ACHIEVEMENTS
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AGGREGATE FISCAL DISCIPLINE
ALLOCATIVE EFFICIENCY
OPERATIONAL EFFICIENCY
MEDIUM-TERM PLAN (RPJMN 2004 -2009)
ANNUAL WORK PLAN (RKP 2005-2009)
FUTURE CHALLENGES
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SHORT-TERM (2008-2009): PREPARATION OF
MEDIUM-TERM PLAN (RPJMN) 2010-2014
BEYOND (2010 – ONWARD)
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PLANNING AND
BUDGETING FRAMEWORKS
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RULES AND REGULATIONS
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LAW 25 : NATIONAL DEV’T PLANNING
SYSTEM
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REGULATORY INTERVENTION
BUDGET INTERVENTION (app. 20% of GDP)
LAW 32 : DIV. OF RESPONSIBILITIES
BETW. CENTRAL & LOCAL GOV’T
LAW 17 : BUDGET INTERVENTION
LAW 33 : BALANCED FUND
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PLANNING AND BUDGETING FRAMEWORK
Aggregate Fiscal Discipline
- Tax/GDP Ratio
- Deficit/GDP Ratio
- Debt/GDP Ratio
Allocative Efficiency
Allocation to Priorities
- Program  outcome
2010 2011 2012
MTFF: Medium Term Fiscal Framework
MTEF: Medium Term Expenditure
Framework
Forward Estimates
PBB: Performance Based
Budgeting
- Activity  output
Unified Budget
Operational Efficiency
- External Control
- Internal Control
- Management Accountability
• Performance Culture (Performance Based
Budgeting)
• Good Governance :
- Bidding
- Official Travel (at cost)
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*) RPJMN (5 YEAR DEV’T PLAN, WITH 3 YEARS ROLLING PLAN THROUGH RKP AND APBN)
Source : Taken from presentation by Dr Kay Brown, National Treasury, Government of South Africa
*) Credible 5 year Baseline (realistic government programs with assured financing availability).
**) Reviewed every year through the 3 year rolling Government Work Plan and Budget – APBN
– for new initiatives ( drawdown savings and contingency reserve).
***) Challenge : credible resource envelope -- the size of contingency reserves
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ALLOCATIVE EFFICIENCY
Performance budgeting categories (OECD)
Type
Link between
performance
information and funding
Planned or actual
performance
Main purpose in
budget process
Presentational
No link
Performance targets
and/or performance
results
Accountability
Performance
informed
budgeting
Loose/indirect link
Performance targets
and/or performance
results
Planning and/or
accountability
Direct/formula
performance
budgeting
Tight/direct link
Performance results
Resource allocation and
accountability
OECD definition : A form of budgeting that relates funds to measurable results
Source : Taken from presentation by Leslie Fischer, National Treasury, Gov’t of South Africa
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LOGIC MODEL THEORY
Source: Framework for Managing Programme Performance Information, National Treasury, Republic of South Africa, May 2007
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Performance Information in the
MTEF Guidelines
INDICATOR TITLE
Identifies the title and whether it is an outcome or
output indicator.
SHORT DEFINITION
Provides a brief explanation of what the indicator is, with
enough detail to give a general understanding of the
indicator.
PURPOSE/IMPORTANCE
Explains what the indicator is intended to show and why
it is important.
SOURCE/COLLECTION OF DATA
Describes where the information comes from and how it
is collected.
METHOD OF CALCULATION
Describes clearly how the indicator is calculated.
DATA LIMITATIONS
Identifies any limitations about the indicator data,
including factors that may be beyond the department’s
control.
CALCULATION TYPE
Identifies whether the information is cumulative or
noncumulative.
Source : Government of South Africa
REPORTING SCHEDULE
Identifies if an indicator is reported quarterly or annually
NEW INDICATOR
Identifies whether the indicator is new, has significantly
changed, or continues without change from the previous
year.
DESIRED PERFORMANCE
Identifies whether actual performance that is higher or lower
than targeted performance is desirable (e.g., a disease rate
lower than targeted is desirable).
INDICATOR RESPONSIBILITY
Identified the individual/organization responsible for the
definition, data analysis, interpretation and reporting in
connection with the indicator.
INDICATOR DATA ADMINISTRATOR
Identifies the individual/organization responsible for ensuring
the data for the indicator is collected and assembled
according to the schedule defined.
INDICATOR ROLL-OUT DATE
Expected date for start of data collection for the indicator.
INDICATOR STANDARD
Identifies the standard level of performance
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CHALLENGES
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Difficult to link resource allocations to
results
Refining outputs (focus on quantitative
instead of qualitative results)
Difficulty in defining indicators
Concurrent functions (implemented by
central, provinces and districts)
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Standardised indicators for provinces and
districts.
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Continued..
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Capacity constraints
Monitoring and evaluation feedback into
policy making and resource allocation
Aligning policy planning with
organizational accountability
Streamlining documents for planning,
budgeting and monitoring and evaluation.
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OPERATIONAL EFFICIENCY
Source : Allen Schick, A Contemporary approach of Public Expenditure Management, IBRD, 1998
*) Issues : moving gradually from external control to managerial accountability
- Striking the balance between flexibility and accountability
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- Produce cost estimates of output and running cost
PAST ACHIEVEMENTS
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MEDIUM-TERM DEVELOPMENT
PLAN (RPJMN) 2004-2009
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AGGREGATE FISCAL DISCIPLINE
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TARGET TO REDUCE DEBT/GDP RATIO TO 31.8%
ALLOCATIVE EFFICIENCY
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STRATEGIC PRIORITIES AND TARGETS
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REGULATORY INTERVENTION
BUDGET INTERVENTION
NO RESOURCE CONSTRAINT ON STRATEGIC
PRIORITIES
OPERATIONAL EFFICIENCY
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WEAK COSTING OF POLICIES
IT HAS BEEN REVIEWED (ADJUSTED AND DEVELOPED) AND
IMPLEMENTED THROUGH THE ANNUAL GOVERNMENT WORK PLAN 200514
2009 AND BUDGET 2005-2008
AGGREGATE FISCAL DISCIPLINE
• ALLOCATION OF “TOP-DOWN” INDICATIVE
CEILINGS BY MINISTRY/AGENCY AS
CONSTRAINTS TO PROGRAM AND ACTIVITY
PREPARATION (SINCE 2005)
• INTEGRATING NON-ENERGY SUBSIDIES
SUCH AS RASKIN, FERTILIZER, SEEDLINGS,
CREDIT, ETC. W/ MINISTRY/AGENCY’S
BUDGET (SINCE 2008)
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ALLOCATIVE EFFICIENCY
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SUBSTANCE
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Standardized Activities (Outputs, Costs)
Policy planning : Priorities (e.g. agricultural revitalization, Focus
priorities (Coordination among Ministries/Agencies, e.g. food
security), Priority Activities (seedling supply – MOA, Irrigation –
MOPW, etc).
Ministry/Agency Accountability : indicative ceilings for each line
Ministry/agency w/ agreed performance output.
Integration of Subsidy and Special Purpose Grants (Dana Alokasi
Khusus or DAK) policies with line ministries/agencies budget.
PROCESS
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Trilateral Meetings (Performance Contracts)
Musrenbangnas (Coordination for Regional Government Work
Plans)
Cabinet decision : Presidential Decree on the Government Work
Plan (RKP).
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OPERATIONAL EFFICIENCY
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STANDARDS ARE BEING DEVELOPED
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UNIT COST (GENERAL STANDARD UNIT
COSTS AND SPECIFIC STANDARD UNIT
COSTS)
OFFICIAL TRAVEL AT COST
PROCUREMENT (BIDDING)
USE OF CLASSES OF EXPENDITURE
(INTERNAL CONTROL) TO CONTROL
SPENDING
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INTERNAL CONTROL
CLASSES OF
EXPEND.
APBN
2006
APBN
2007
Initial
Estimation
(Realization)
2008
RAPBN
2008
APBN
2008
GOODS AND
SERVICES
46.0
71.6
83.8
52.4
69.4
ASSETS
58.7
73.1
84.2
101.5
95.4
SOCIAL
ASSISTANCE
40.7
49.4
59.2
64.4
63.2
*) 2006 – 2007 : spending for goods and services (especially the nondiscretionary) increased to the levels of asset spending, and is predicted
to continue in 2008.
**) In the RAPBN (proposed budget) 2008 spending for goods and
services is constrained. In the APBN (budget) 2008 it increases but does
not exceed the APBN 2007 levels.
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FUTURE CHALLENGES
FUTURE CHALLENGE:
SUSTAINING REFORMS
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SHORT-TERM (TAHUN 2008 – 2009):
PREPARING THE RPJMN 2010-2014
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MTFF : CREDIBLE RESOURCE ENVELOPE
MTEF : INDICATIVE BASELINE
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ALLOCATIONS BASED ON RESOURCE CONSTRAINTS
ALLOCATIONS FOCUS ON ACHIEVEMENT OF RESULTS (OUTPUT,
OUTCOME) – PROGRAM RESTRUCTURING
IMPLEMENTATION OF FISCAL DECENTRALIZATION (DIVISION OF
AUTHORITY/FUNCTIONS WITH FINANCING CAPABILITY)
DEVELOP M & E TO LINK PROGRAM AND ACTIVITY PERFORMANCE TO
ALLOCATION OF RESOURCES
IMPLEMENTING THE RPJMN : THE FORTHCOMMING RKP
 3 YEARS ROLLING PLAN, ADDING NEW INITIATIVES
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AGGREGATE FISCAL DISICPLINE
BUDGET ITEMS
REVENUE
EXPENDITURE
 LINE MINISTRIES/AGENCIES
 SUBSIDIES, INTEREST, Etc
 o/w energy subsidy
 TRANSFER TO REGION
DEFICIT
BUDGET
2008
PROPOSED
1ST REVISION
17.4
19.1
7.0
5.8
1.7
6.3
19.6
21.6
6.3
8.6
4.3
6.6
1.7
2.0
*) LG Budget is substantial, requiring a clear division of functions between central and regional
governments.
**) Challenge: credibility of resource envelope –> determining contingency reserves (on average in
other countries it is at 2% of total spending – in Indonesia it is at approx. 0.4% of GDP, while the
fluctuative energy subsidy is at 2.5% of GDP resulting in a cut of line ministries expenditure by
0.9% GDP).
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ALLOCATIVE EFFICIENCY:
PROGRAM RESTRUCTURING
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BASIC PRICIPLES
Alignment Principle :
Each program is aligned
to a government
objective
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Each program ‘collects’
spending which
contributes to an
objective, and
Relates spending to
performance indicators
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Congruence Principle :
Each program is
congruent with an
organizational unit
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This ensures
accountability for
improving levels of
performance indicators
and targets
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PROPOSED PROGRAM ARCHITECTURE
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SME Example
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Food Security Example (MOA)
04. Economy
Agriculture, Forestry and Fishery
Revitalization, and Rural
Development
Secure Level of Rice Availability,
a Minimum 90% of Total
Domestic Need
04.03. Agriculture, Forestry,
Fishery and Marine
Food Production and
Improvement of Household
Access to Food
Provide Adequate Agriculture
Infrastructure
Achieve Food Security Trough
Production Increase and
Consumption Diversity
Ministry Of Agriculture
DG. Land and Water
Management
Water Management
Directorate
Food Security Improvement
Facilitate and Improvement of
Food Security to the Level of
Household
Increase Food Distribution, Trough
Institution Capacity Building and Rural
Infrastructure Improvement and
Development
Development and Improvement of
Agriculture Infrastructure to Support
Food Security
Irrigation Scheme for 145.000 Ha
Rice field
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Food Security Example (MPW)
04. Economy
Agriculture, Forestry and Fishery
Revitalization, and Rural
Development
Secure Level of Rice Availability,
a Minimum 90% of Total
Domestic Need
04.03. Agriculture, Forestry,
Fishery and Marine
Food Production and
Improvement of Household
Access to Food
Provide Adequate Agriculture
Infrastructure
Water Supply for Household,
Housing, Agriculture and
Industry increased
Ministry Of Public Works
DG. Water Resources
Directorate Irrigation
Irrigation Scheme, Swamp and
Other Irrigation Scheme
Management and Development
Manage Irrigation Scheme, Swamp
and Other Irrigation Scheme to
Support Food Sustainability
Irrigation Scheme
Rehabilitation
Irrigation Scheme for rice
fields functioning
Irrigation Scheme for
1.516.748 Ha Rice field
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Linking Presentational Performance
Information to Spending (Public Works)
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Linking Presentational Performance
Information to Spending (Agriculture)
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Continued …
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BEYOND (2010 – ONWARD)
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ALLOCATIVE EFFICIENCY
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FOCUS EFFORTS ON THE PILOT PROJECTS (6
MINISTRIES/AGENCIES: PUBLIC WORKS, AGRICULTURE,
EDUCATION, HEALTH, FINANCE, AND BAPPENAS)
GRADUALLY INCLUDE OTHER MINISTRIES/AGENCIES
REVIEW M & E FOR LINKING PLANNING TO THE
BUDGETING FRAMEWORK, (improve performance-informed
budgeting, moving gradually to direct/formula performance
budgeting)
IMPROVING THE REGULATORY FRAMEWORK AND ANALYSIS
OPERATIONAL EFFICIENCY
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IMPROVING COSTING
MOVING GRADUALLY FROM INTERNAL CONTROL TO
MANAGERIAL ACCOUNTABILITY
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Next Steps
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Strengthen and stabilize a compatible
legal and regulatory framework
Focus on aggregate fiscal targets and
strategic objectives in medium-term plan
(RPJMN)
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Medium term costs of existing policies
Roll over into Annual Work Plan and
Budget
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Update policy and parameter changes
Strengthen internal control systems
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Continued..
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Develop performance evaluation, but
simplify the documents (planning,
budgeting, and reporting).
Greater application of IT but simplify the
system
Improve processes (trilateral meetings,
musrenbangnas, cabinet meetings) for
contesting and coordinating policies.
Keep participants focused on objectives
Strengthen consumer feedback
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THANK YOU
DISCUSSION
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