Budgeting
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1. The document discusses local public budgeting and finance management in Indonesia following laws passed in 2004 regarding regional autonomy and fiscal decentralization. 2. It outlines principles of sound budgeting such as comprehensiveness, legitimacy, predictability, honesty, transparency and accountability. 3. Common weaknesses of traditional budgeting systems are mentioned, such as an input focus, incremental decision making, and lack of public orientation. Reforms aim to improve performance, accountability, and value for public money.
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Budgeting
- 1. 1 PENYUSUNAN ANGGARAN DAN MANAJEMEN KEUANGAN DAERAH (Local Public Budgeting and Finance Management)*
- 2. 2 • UU No. 32 dan 33 tahun 2004 • Era otonomi dan desentralisasi fiskal • Isu sentral: manajemen keuangan daerah • Perubahan paradigma pengelolaan keuangan daerah: Public oriented
- 3. 3 “A plan for introducing programs deal with objectives and goals within a period, including an estimate of resources required, usually compared with past periods and showing future requirements”
- 4. 4 What does the budget represent? • A plan • An agreement • A controlling device • A legal obligation • A symbol
- 5. 5 • Suatau dokumen yang dikeluarkan oleh pemerintah daerah yang merepresentasikan rencana dan prioritas pembangunan selama periode tertentu • APBD = dokumen politik = public budget = dokumen public
- 6. 6 UU.NO. 17 TAHUN 2003: Keuangan Negara • APBD merupakan wujud pengelolaan keuangan daerah yang ditetapkan setiap tahun dengan Peraturan Daerah. • APBD terdiri atas anggaran pendapatan, anggaran belanja, dan pembiayaan.
- 7. 7 Responsible Government and Budgeting • Responsible to whom? “Constituency” • Responsible for what? “Revenue and expenditure control”
- 8. 8 Principles of Sound Budgeting and Financial Management (APBD yg baik) • Comprehensiveness and Discipline • Legitimacy • Predictability • Honesty • Information • Transparency and Accountability
- 9. 9
- 10. 10 Traditional Budgeting • Berorientasi pada input • Penyusunan anggaran yang didasarkan atas pendekatan incrementalism • Struktur dan susunan anggaran yang bersifat line-item.
- 11. 11 • Public oriented • Akuntabilitas • Value for Money • Honesty • Transparansi • Pengendalian
- 12. 12 Hak masyarakat (Public Right) • Hak untuk mengetahui (right to know) • Hak untuk diberi informasi (right to be informed) yang meliputi hak untuk diberi penjelasan secara terbuka atas permasalahan tertentu yang menjadi perdebatan publik. • Hak untuk didengar aspirasinya (right to be heard and to be listened to).
- 13. 13 Common Weaknesses in Public Sector Performance • Poor planning • No links between policy making, planning, and budgeting • Poor expenditure control • Inadequate funding of operations and maintenance • Little relationship between budget as formulated and budget as executed • Inadequate accounting systems
- 14. 14 Common Weaknesses in Public Sector Performance, cont. • Unreliability in the flow of budgeted funds to agencies and to lower levels of government • Poor management of external aid • Poor cash management • Inadequate reporting of financial performance • Poorly motivated staff
- 15. 15 The Characteristics of Budget Systems Requiring Reform • Almost exclusive focus on inputs • Input focus takes a short-term approach to budget decision making • Cabinet and/or central agencies extensively involved in micro decision making • Last minute, across-the-board cuts, including during budget execution • Weak decision making and last-minute cuts cause unpredictability of funding
- 16. 16 The Characteristics of Budget Systems Requiring Reform, cont. • Incentives to spend everything in the budget early in the year • Existing policy subject to very little scrutiny from one year to the next • A lack of clarity as to purpose and task and therefore poor information on the performance of policies, programs and services, and their cost • Few incentives to improve the performance of resource use
- 17. 17 Improving Public Expenditure Management • A greater focus on performance • Adequate links between policy making, planning, and budgeting • Well-functioning accounting and financial management systems • Attention to the links between budgeting/financial management systems and other government systems/processes
- 18. 18
Editor's Notes
- A plan implies strategic thinking about where a government wants to be in the future. A plan means that there is consideration for what types of equipment, capital, programs and activities the government will need to provide (expenditures) is balanced against the resources that the government has available (revenues). An agreement means that budgets are the outcome of deliberations among a number of budget players: the executive and legislative branches; the public (in the United States, this includes individuals, yet more predominantly special interests that are better able to articulate group causes and focus energy into direct access with decision makers); the media; the economy (both here and abroad); and external events (for example, international conflict or unrest, natural disasters, etc.) The budget represents an agreement among these budget players as to next year’s revenue and expenditure levels. A budget is a controlling device; it stipulates how much money is expected, which items and activities are to be funded and in what amounts, and total amounts of spending allowed for the next fiscal year. In this way, the budget confines government activity and spending; securing some accountability for the dollars spent A budget in the form of an appropriation or ordinance is a legal document binding government agencies and officers to certain levels of revenues available and expenditure categories and amounts. The budget understood as a legal document implies protocol to collecting and spending money as well as sanctions or penalties for the conduct of these activities in an unlawful manner. The budget as a symbol means that such documents (in whatever form) illustrates the value that budget players have placed on the activities and purchases of governments. In this sense the budget is a policy document; what government does is determined by how much money is allocated to various functions and in what manner such functions are then carried out. By looking at budget totals and making comparisons, we can get an idea of how different governments, and the citizens within them, value different activities.