Indonesia – The Challenges of Implementing a Performance-based Budget System

Posted by Ian Lienert

Small_flag_of_indonesia At the 2007 Annual Meeting of the IMF and World Bank, while some delegates were escaping from the high-security barriers and benefiting from a walk during the wonderful October weather of Washington, D.C., other delegates were spending their Saturday afternoon crammed into a conference room to learn more of the challenges of implementing a Performance-based Budget System (PBS).

Mrs. Sri Mulyani Indrawati, Indonesia's Minister of Finance, had kindly taken time from her hectic schedule to accept an invitation from the IMF to participate in a seminar, brief delegates of the progress so far in changing budget practices in her country and outline the challenges ahead for implementing a PBS.

Progress to date. The Minister informed the seminar participants that in Indonesia:

Challenges ahead. The Minister outlined the challenges for implementing a PBS:

Various questions were asked

The Director of the IMF's Fiscal Affairs Department, Mrs. Ter-Minassian, who chaired the meeting, asked questions concerning whether the budget was already program based (the answer is 'yes', although the Indonesian budget classification structure has other dimensions, including functional, administrative, and economic) and how well prepared spending ministries are to benefit from a PBS. Participants in the seminar also asked a number of questions, including those related to the extent to which parliament had initiated the new budget-related laws in 2003-05 and the role that decentralized governments may play in a PBBS.

Summary

Indonesia is in the early stages of implementing a PBS. The Minister noted that her country could benefit from learning about other countries' experiences with implementing such budget systems.

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