Gov’t Issues Presidential Instruction Number 4 of 2017 on Budget Efficiency

In a bid to improve and secure the priorities of the implementation of the 2017 State Budget, President Joko “Jokowi” Widodo on 22 June 2017 signed a Presidential Instruction Number 4 of 2017 on the Budget Efficiency Measures in Ministries/Institutions Expenditures on Goods in the Implementation of the 2017 State Budget.

Under that Presidential Instruction, the President instructed: 1. Working Cabinet Ministers; 2. Indonesian National Police Chief; 3. Attorney General of the Republic of Indonesia; 4. Cabinet Secretary; 5. Presidential Chief of Staff; 6. Heads of Non-ministerial Government Institutions; and 7. Heads of State Institution Secretariats to take Budget Efficiency Measures in Ministries/Institutions Expenditures on Goods in the 2017 State Budget according to their respective tasks, functions, and authorities that are based on the provisions of the Law.

“Budget Efficiency Measures on Expenditures on Goods are applied to official travels, meeting packages, honorarium of team/activity, other office operational fees, service expenditure, maintenance expenditure, and expenditure on goods, both operational and non-operational goods,” the second dictum of the Presidential Instruction says.

The Presidential Instruction also stated that the 2017 Budget is cut by Rp16 trillion for budget efficiency for all ministries/institutions.

Budget efficiency on expenditure on goods is not applied to: a. budget from loans and grants. b. Pure Accompanying Rupiah unless cannot be implemented until the end of the 2017 Budget Year; c. budget from Non-Tax State Revenues (PNBP-BLU); d. Additional expenditure on the results of the discussion of the Law on the State Budget for 2017 Fiscal Year (Optimization Fund) which is not in accordance with the criteria according to the Review of Finance and Development Supervisory Agency (BPKP); and e. reserve budget output.

Self Blocking

In the implementation of the measures, President Jokowi in the Instruction instructs each and every Ministry/Institution to do independent identification to programs/activities in the working plan and budget of ministries/institutions in 2017 Budget Year that will be cut and to make sure that the budget is not disbursed (self-blocking).

Furthermore, Ministers/Heads of Institutions shall submit the revision of the self-blocking Budget Implementation List (DIPA) by including it at Note Page IV DIPA to Minister of Finance c.q. Directorate General of Budget to be endorsed at least 7 (seven) days since the Presidential Instruction is issued in line with the mechanism of the prevailing budget revision.

“For 2017, the implementation of budget efficiency on expenditure on goods included in the ministries’/institutions’ DIPA will be conducted after the enactment of Law regarding the Amendment to Law Number 18 of 2016 on the 2017 State Budget,” states the fifth dictum of the Instruction.

The President also instructs Coordinating Ministers, Minister of National Development Planning (PPN)/Head of National Development Planning Agency (Bappenas), and Presidential Chief of Staff to monitor the implementation of budget efficiency measures of the 2017 State Budget.

“Budget Efficiency Measures on Expenditures on Goods as intended by the second dictum is the expenditure ceiling for goods in the 2018 Ministries Planning for Budget and Activities (RKA-K/L),” states the eight dictum of the Instruction.

 (Pusdatin/ES) (RA/MMB/YM/Naster)