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Unclear projects to be aborted
President Joko âJokowiâ Widodo has called on all ministries to rein in spending for the rest of the year in an effort to save state funds
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P
resident Joko 'Jokowi' Widodo has called on all ministries to rein in spending for the rest of the year in an effort to save state funds.
Ministries should scrap projects that, by the end October, remained unrealized, or whose prospects remained uncertain, Finance Minister Bambang Brodjonegoro said after a meeting at his office late on Friday with representatives of all 34 ministries in the so-called 'Working Cabinet'.
'If the ministries have projects that they have not carried out by [the end of] October, they should cancel them. How can they realize the projects before the end of the year if the procurement process has not even begun?' he announced after the meeting.
The cancellation could save funds already allocated in the revised 2014 state budget, Bambang said, adding that any savings would likely be small.
Government spending, which accounts for less than 10 percent of Indonesia's gross domestic product (GDP), is notorious for being disbursed at the last minute. The government has been criticized for not disbursing state funds earlier so that they could have a more stimulating effect on the overall economy.
Central government spending in the 2014 revised state budget totaled Rp 1.23 quadrillion, or two-thirds of the overall Rp 1.88 quadrillion in state spending. The remaining Rp 596.5 trillion was for transfers to regions.
- Ministries should scrap projects that, by the end of October, remained unrealized or unclear
- Projects cancellation could save funds, won't affect growth
As of September, about two-thirds of the funds allocated for state spending, or Rp 1.23 quadrillion, had been disbursed, according to Finance Ministry data. Central government spending reached 62 percent of the total, while transfers to regions reached 73.9 percent.
Despite the plan to cancel projects left unrealized, Bambang remained optimistic that overall, the state budget's absorption rate would reach between 93 percent and 95 percent, versus 93 percent last year.
Deputy Finance Minister Mardiasmo said that the project cancellations would not significantly impact the full-year economic growth target, as there are only two months left until year-end.
Cabinet Secretary Andi Widjajanto, who also attended the Friday meeting, said that ministries would begin coordinating with all of their directorates to identify the projects hanging in limbo on Monday.
'We do not want to rush the projects because of the concern that their quality will be undermined. That may cause problems if the BPKP [the Development Finance Comptroller] or the BPK [Supreme Audit Agency] carries out an audit,' he said.
