Assertive! In front of the Indonesian Parliament, Sri Mulyani Complaints about Bad Regional Budget Management, Which One?

Finance Minister Sri Mulyani (Photo: Doc. Ministry of Finance)

JAKARTA - Minister of Finance, Sri Mulyani, mentioned the need to improve financial relations between the central and local governments.

According to her, there are still many problems in the region in terms of quality and effective budget management. Whereas so far the disbursement of funds continues to increase.

"The allocation of Financial Transfers and Village Funds (TKDD) to local governments has increased tremendously significantly", she said while delivering the Macroeconomic Framework and Fiscal Policy Principles (KEM PPKF) at the Plenary Meeting with the Indonesian Parliament, Thursday, May 20.

In the Minister of Finance's record, the TKDD budget in the period 2000 only amounted to IDR 31 trillion. The amount then ballooned to IDR 795.5 trillion in 2021.

"It's been an incredible leap", she added.

In fact, the Minister of Finance hopes that the use of TKDD funds can be used for the equalization of capabilities between regions. In addition, another target targeted is the development of access to education and health.

"But we must also recognize that regional financial management has not been done efficiently, effectively, disciplined, and there is still fiscal performance inequality between regions", she said.

For example, the former IMF and World Bank boss revealed the fact that Gross Regional Domestic Product (GDP) is only about 2.65 percent.

"Meanwhile, we see the Regional Budget (APBD) is still dominated by very high employee spending with an average of 34.7 percent", she explained.

In fact, continued the Minister of Finance, there is one area where the amount of employee spending in its budget reaches 53.9 percent.

Sri Mulyani's fury continued when revealing the low portion of capital expenditure.

"Capital expenditures are very important for development on average only 20.27 percent. In fact, there are areas where the share of capital expenditure is only 7 percent", she said.

Furthermore, the Minister of Finance also informed in the Plenary Meeting if enough budgets have not been optimized and are still parked in the holding bank account.

"Local government funds held in banking are also very high. We found that in the last month (April 2021) it was still around IDR 183 trillion or an average of IDR 100 trillion at the end of the budget. This shows that inequality between regions is still very wide", said Sri Mulyani.