Regional Spending Supports Real Sector

Kompas/Priyombodo

Residents exercising during the National Campaign Do Not Slack on Discipline on Wearing Masks, at the Gelora Bung Karno Main Stadium, Senayan, Jakarta, Sunday (30/8/2020). At this activity, masks were distributed free of charge to people who were exercising.

JAKARTA, KOMPAS - Although regional governments are still struggling to prevent the spread of Covid-19 and to protect the health of citizens, they are asked not to ignore the importance of the quick disbursement of the local budget to support the local economy.

Local governments need to speed up the budget disbursement so that the budget spending can support the real sector which has been sluggish in recent months due to the Covid-19 pandemic.

According to the Finance Ministry, of the Rp 572 trillion (US$39.4 billion) of the central government’s funds allocated for regional government, including those for village development funds, which had been transferred as of 30 Sept. 2020, about Rp 239.5 trillion is still kept in local government accounts in banks. The disbursement of the funds which are allocated for various government programs to create job opportunities and support the real sector need to be accelerated so that the national economy can grow.

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Finance Minister Sri Mulyani Indrawati said in Jakarta on Tuesday (3/11/2020) a large amount of the funds that had been transferred to regions had not been immediately spent by the local governments. In fact, the amount of funds kept in local government accounts increased by Rp 12.4 trillion as of September 2020 as compared to the figure recorded in August 2020.

"Even though the central government has transferred the funds, the regional governments do not immediately spend them as expected," the minister said.

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Sri Mulyani explained that the low disbursement of the regional government budges was reflected in the regional budget (APBD) posture in which the average realization of the local government spending as of September 30, 2020 only reached 53.3 percent or slightly better than that in September 2019.

KOMPAS/PRIYOMBODO

Finance Minister Sri Mulyani Indrawati

The increase was relatively small if compared to the disbursement of the central government budget in September 2020 which increased by more than 20 percent compared to that in the same month, last year.

Separately, the director general of the financial balance at the Finance Ministry, Astera Primanto Bhakti, said that the regional governments planned to disburse the budget more quickly in the fourth quarter of 2020 as reflected in the increase in their demand deposits compared to the previous month, which indicates funds are ready for disbursement.

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The Finance Ministry regularly monitors the disbursement of the TKDD funds to ensure the money would not stay in the regional government accounts and can be immediately used to support the economy. Home Minister Tito Karnavian previously complained about the low disbursement of the regional budgets as of 30 Sept. 2020, such as in Papua, which reached only 32.21 percent, Southeast Sulawesi (39.15 percent), and West Sulawesi (39.75 percent). . The home minister also highlighted the high amount of the regional funds deposited in banks. The amount of the funds owned by provincial governments deposited in banks reached a total of Rp 76 trillion while those owned by regency/city governments totaled Rp 167 trillion.

Providing jobs

The local government of the Surabaya city , East Java said that it had funds of around Rp 4 trillion in banks which would be used to finance several infrastructure projects and pay salaries of honorary (non-permanent) employees. The mayor of Surabaya, Tri Rismaharini said in Surabaya on Tuesday that the funds currently deposited in banks would be used to finance a number of projects. Despite the Covid-19 pandemic, which has occurred since March 2020, a number of infrastructure projects were continued so that they could provide jobs for residents, she said. "If there are no projects, many people will have no jobs which will result in the decline in the purchasing power," she said.

According to Erna Purnawati, the acting head of the Surabaya City Development Planning Agency, almost all of at least 20 projects in the city run as planned. The reallocation of the budget for the handling of Covid-19 caused the decline in the 2020 Surabaya city budget from Rp 10.32 trillion to Rp 8.88 trillion.

HUMAS PEMKOT SURABAYA

Mayor of Surabaya Tri Rismaharini, Monday (12/10/2020), continues to motivate residents to adhere to health protocols so that the economy continues to grow.

Other local governments are also struggling to accelerate the budget disbursement. The Papua provincial government until October 2020 has spent 68 percent of this year’s total budget which reached the Rp 14 trillion.

The head of the Regional Financial and Asset Management Agency of the Papua provincial administration, Nus Weya said in Jayapura that it took time to adjust the budget ceiling and programs following the budget reallocation for the handling of Covid-19. He denied that the Papua provincial government intentionally kept the funds in the bank which had resulted in the low disbursement of the funds."We are trying to accelerate the fund disbursement until the end of December. Now, the auction of a number of projects such as the construction of the PON national games and other physical projects, has almost been completed, "he said.

The disbursement of the local budget will improve the productivity of the business sector.

Although the disbursement of the Papua regional budget has already reached 68 percent, economics lecturer at the University of Cendrawasih, Jayapura, Meinarni Asnawi, is of the opinion that the Papua provincial government could actually speed up the budget expenditures in order to drive the local economy by initiating relief programs for micro, small and medium enterprises affected by Covid-19.

"The increase in the local budget disbursement for procurement and other expenditures is not an indicator of the economic growth. However, the disbursement of the local budget will improve the productivity of the business sector, "said Meinarni.