Gov’t Issues Presidential Instruction Number 8 of 2016 on Budget Cut

In an effort to control and secure the 2016 Revised State Budget, President Joko ‘Jokowi’ Widodo on 26 August 2016 signed a Presidential Instruction Number 8 of 2016 on Austerity Measures in the  Spending of Ministries/Institutions in the 2016 Revised State Budget.

The Instruction is given to: 1. Ministers of the Working Cabinet; 2. Chief of the Indonesian National Police; 3. Attorney General of the Republic of Indonesia; 4. Commander of the Indonesian National Defense Forces (TNI); 5. Cabinet Secretary; 6. Presidential Chief of Staff; 7. Head of Non-ministerial Government Institutions; and 8. Head of State Institution Secretariats.

To those officials, President Jokowi instructed them to take necessary measures in line with their respective tasks, functions, and authorities to implement the austerity measures in the 2016 Revised State Budget based on the provisions of the laws and regulations.

In the implementation of the measures, President Jokowi instructs each and every Ministry/Institution to do independent identification to programs/activities in the working plan and budget of ministries/institutions in 2016 budget year that will be cut and ensures the budget is not disbursed through self-blocking.

“The detailed budget cut per Ministries/Institutions as intended by the Annex of the Presidential Instruction,” says the second dictum of the instruction.

In the annex, it is stated that the detailed budget cut of 83 ministries/institutions reaches Rp 64.712 trillion.

The instruction also states in the austerity measure, Ministers/Heads of State Institutions continue to secure priority programs that become their responsibilities.

“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,” states the second dictum of the instruction.

The carbon copy of the revised self-blocking budget implementation list as intended shall beextended to Coordinating Minister for the Economy, Minister of National Development Planning/Head of the National Development Planning Board, as well as Presidential Chief of Staff.

In the third dictum of the Presidential Instruction, it is stated that the austerity measure is applied to official travels, meeting packages, honorarium spending, subscription of service and power, honorarium of team/activities, meeting fees, advertisement, other office operational fees, maintenance of buildings, office equipment’s, as well as construction of office buildings, provision of vehicles, the remaining auction/funds/self-managed funds, budget from activities that have not been in contract or the one that will not be implemented until year-end,  as well as other activities that are not urgent or can be carried over to the next budget year.

“The austerity measures is not applied to: a. budget from loans and grants. b. Pure Accompanying Rupiah unless cannot be implemented until the end of the 2016 Budget Year. c. budget from Non-Tax State Revenues (PNBP-BLU) unless deposited to the state coffer for the 2016 budget year,” the fourth dictum of the Instruction says.

Through the Presidential Instruction, President Jokowi instructs Minister of Finance c.q. Director General of Budget and Director General of Treasury to together coordinate the efficiency of budget through self blocking and/or postpone/delay the disbursement of funds of activities subject to austerity measures.

Afterwards, Minister of Finance shall report the implementation of the measure to the President.

President Jokowi instructs Coordinating Minister for the Economy, Minister of National Development Planning/Head of the National Development Planning Agency(Bappenas), and the Presidential Chief of Staff to monitor the austerity measure of the 2016 Revised State Budget.

The Presidential Instruction also said that when the Presidential Instruction comes into force, Presidential Instruction Number 4 of 2016 on Austerity Measures and Budget Cut in Ministries/Institutions in the implementation of the 2016 Revised State Budget is declared to be still in operation provided that it has not been amended or is not regulated by this Presidential Instruction.

“(Related sides) shall implement this Presidential Instruction with full responsibilities,” said the 8^th dictum of the Presidential Instruction Number 8 of 2016. (Pusdatin/ES)  (EP/YM/Naster)