New system: âA woman walks past the Bank Indonesia (BI) building on Jalan Thamrin, Jakarta
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Bank Indonesia (BI) has supported the finance minister's decision to deliver general allocation funds (DAU) and revenue sharing funds (DBH) through a non-cash instrument, namely treasury notes starting this year, in the hope that it will reduce idle money in the nation's banks.
"Regional governments that recorded slow spending will receive the funds in the form of treasury notes. This will lead to a more efficient allocation as they will not deposit idle cash in regional banks anymore," BI Governor Agus Martowardoyo said on Jan. 22 in Jakarta.
The former cash distribution mechanism created problems as regional governments used to put the funds, which were mostly idle, in regional banks. Even the newly launched Dana Desa (Village Funds) allegedly sat idle in various regional banks.
Creco Consulting economist Raden Pardede said there was around Rp 280 trillion (US$20.23 billion) in funds sitting idle in the regional banks. 'It seems like the regional governments do not know what to do with the money and the easiest thing to do is put it in regional banks," he told thejakartapost.com.
As a result, the Finance Ministry announced that non-cash instrument transfers would be applied started from Jan. 13. Under the new regulation, the non-tradable notes can be cashed in at the end of the three first quarters of the year.
"It will be applied only for regional governments that have idle cash exceeding three months allocation," Finance Ministry general director Budiarso Teguh Widodo said. (ags)(+)
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