The execution of the state budget starts with the enactment of the budget execution document (DIPA). In the DIPA, the budget established by law is broken down into line items of ministry budget ceilings. If a fiscal stimulus is added to the budget, the DIPA must be revised. Revision of the DIPA is required before fiscal stimulus funds can be released to various ministries, departments, agencies and regional governments enumerated in the budget.

The PEN budget is of particular importance because it aims to address the COVID-19 pandemic and help the economy recover. The PEN budget is grouped into six categories: the health sector, which will receive 12.5 percent of the funds, social protection (29.4 percent), sectoral line ministries and regional governments (15.3 percent), support for MSMEs (17.75 percent), financing for corporations (7.70 percent) and business incentives (17.35 percent).

In the health sector, the PEN budget is distributed to different ministries, such as the Health Ministry, the Defense Ministry, the National Police and the National Disaster Mitigation Agency (BNPB). The same applies to other categories of the PEN budget, where the money is allocated to several government agencies. That means the PEN budget will be allocated not through just one DIPA but a number of DIPAs managed by ministries and their respective working agencies.

After the DIPAs are revised and approved, the money should be distributed and paid to target beneficiaries (e.g. households, businesspeople, corporations, line ministries and regional governments) throughout the archipelago.

The next stage of the budget execution is known as “commitment making”, in which purchase orders are made and contracts are signed. After commitment making, the budget can only be disbursed, or the payment check (SP2D) can only be issued, by the Finance Ministry based on government agency initiatives in the form of payment order (SPM) letters. Checks are issued at the Finance Ministry and also at State Treasury Service Offices (KPPN).  

The pressing question is what needs to be done to expedite the disbursement of funds. As the budget execution process involves numerous actors, delays in payments, administrative issues and bottlenecks cannot be viewed only as a problem of organizational management, such as bureaucratic incompetence. Instead, budget execution should be conceptualized as an implementation subsystem full of messages, messengers, channels and targets. In order to increase the likelihood of compliance and speedy execution of the budget, unclear messages should be clarified, while clarity and consistency of policies and goal congruence among budget executors should exist.

The main barriers hindering prompt budget disbursement are related to administrative and accountability processes that are closely related to the capacity of implementers throughout the country. Delays occur in budget execution, including in the DIPA revision process. DIPA revision is a prerequisite for spending agencies before money can be disbursed. This process cannot be done by the Finance Ministry alone without the initiative of spending agencies. The slow process has occurred despite the flexibility given by the government in the budget process during the pandemic.

The delivery of the DIPA means the budget is already allocated for each spending agency. But several requirements should first be fulfilled before the money in the DIPA can be disbursed according to its categories.  Unless the government agencies that manage the DIPA fulfill all requirements, the DIPA cannot be disbursed. During the pandemic, the government has relaxed some procedures, but the many different implementing participants are not always well informed about the new procedures.

Having said that, there are several things that need to be done. First, extensive dissemination of new policies, programs, regulations and procedures is of critical importance. During the pandemic, the budget has operated under a number of new financial regulations. To respond to the COVID-19 pandemic, these new regulations are supposed to be immediately implemented. However, not all implementing agencies were widely informed, let alone fully understand the process. Just as the pandemic is unprecedented, massive changes in budget regulations and procedures are also unprecedented and necessitate mass information dissemination.

However, it does not make any sense if the information campaign is conducted only by the central government or policymakers. It should instead be run by all levels of the government, from the top level to the front lines involved in the budget implementation process.

Second, given the magnitude of the issue, the government can direct civil servants to be active agents of communication to explain the budget execution process to implementing agencies. In today’s digital world, they can utilize social media platform such as Twitter, Facebook, Instagram, YouTube and Zoom. The use of social media platforms is helpful to inform target beneficiaries of the new policies, programs and regulations, especially in fulfilling administrative prerequisites for payment, helping the government clarify the underlying assumptions of the budget and enhancing the knowledge and capacity of implementing organizations.

Third, creating strong vertical coordination between the central government and regional governments and horizontal coordination between units within government agencies and departments is a must. Apart from social media platforms and electronic mail, WhatsApp seems to be the most convenient platform and can be accessed by general public for coordination purposes.

Old-fashioned official letters with signatures and stamps are no longer suitable. Digital transformation in bureaucracy is not an option anymore, rather it is required to facilitate communication and coordination.

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The writer is an executive at the Finance Ministry’s Treasury Directorate General. The opinions expressed are her own.