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Govt to accelerate budget disbursement by year-end
Adianto P. Simamora , The Jakarta Post , Jakarta | Fri, 10/10/2008 10:56 AM | Business
The government will speed up budget disbursement for development projects during the last quarter of this year as part of efforts to stimulate the real sector and compensate for an anticipated slow down in exports following the global downturn.
"We are optimistic we will be able to disburse over 90 percent of the budget allocated to development projects prior to the year-end," State Minister for National Development Planning Paskah Suzetta said, following a limited Cabinet meeting chaired by Vice President Jusuf Kalla on Thursday.
"Speeding up budget disbursement is crucial to stimulating the real sector and strengthening the domestic economy."
Of the 2008 state budget, Rp 286 trillion (around US$31.2 billion) has been earmarked for development projects, of which over half has been disbursed up to the end of September.
"We aim to spent the remaining Rp100 trillion within three months. To meet the target, Pak Kalla has given us one week to review the regulatory framework on public procurement procedures so as to speed up the process," he said.
He said that there would be a presidential revision of the regulations on public procurement to allow adjustments to project prices taking into account the rising costs of raw materials in the last three months -- a move that would encourage contractors and private partners to implement projects.
Paskah said that budget disbursement had been low so far this year partly because existing procurement rules did not facilitate such adjustments, scaring away private partners and putting planned projects on hold.
Public Works Minister Joko Kirmanto, whose ministry gets a fair share of development project funds, admitted that many contractors had threatened to pull out from bidding processes due to the absence of price adjustment mechanisms.
"The contractors complained about the higher price of raw materials such as cement and iron. If the regulations were not revised they would simply withdraw from tenders," he said.
Meanwhile, Education Minister Bambang Sudibyo said his ministry had so far disbursed 56 percent of the budget for development projects by September.
"I hope to reach the target of disbursing 93 percent of the education ministry development budget prior to the end of the year," he said.
Efforts are also being made to facilitate budget disbursement for next year's development projects.
"All state ministries could start the bidding process for 2009 development projects during October 2008 when the 2009 state budget bill is expected to be endorsed by the House of Representatives," Paskah said.
He said President Susilo Bambang Yudhoyono would also issue a presidential instruction requiring all state offices to promote the use of local products in public procurement processes.
He said that the bidding process should not exceed 18 days.
