When most of European countries now have problem with their budget deficit, the challenge in public finance management of Indonesia is in its budget underspent. Underspent? Yes, at the end of fiscal year, Indonesia’s government have surplus in its budget. Somehow this condition is not ideal. when the government had made new debt for that fiscal year to finance its budget deficit, while at the end of the year, most of those debt aren’t used. But we still ‘ve got to pay for the interest which accounted for about 10% of annual budget. There should be reformed in government spending management, to channel the budget so that the trickle down effect of the budget can be realized.
However, the target to use this budget (which has grown more than 200% in the last 7 years) doesn’t mean that the quality of spending or specifically, the governance of the spending would be undermined. In the last few years, there are increasing amount of fraud in government spending. As an accountant, I would say improving government internal control system is one of the solution.
Besides from the preventing side (internal control system), tackling the fraud in government spending can also be done through improving in government audit (detecting side) and reforming the law enforcement (punishing side). BPK (indonesia’s supreme audit institution) have to strengthen its role and increase its findings follow up rate. Currently, I guess less than 60% of its findings have been followed up, while for GAO USA, its rate is around 80%.