"This has resulted in unequal as well as less-than-optimal development output and outcome in several regions," she said during a work meeting with Commission XI of the House of Representatives (DPR) here on Monday.
The minister said regional spending is not yet efficient and effective due to unfocused spending, with a plethora of programs and activities: there are currently 29,623 programs and 263,135 activities offered in regions.
"This what we called tiny spending for all without thinking whether it would yield an output and outcome," Indrawati explained.
In addition, regional spending is not yet productive with employee spending pegged at 32.4 percent, and infrastructure and public service spending at just 11.5 percent, which has happened due to unsuitable General Fund Allocation (DAU) and Special Fund Allocation (DAK), she said.
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The essence of DAU is to provide basic services to the people and to reduce inequality, while the essence of DAK is to support the entirety of the regional budget (APBD) and Transfer to Region and Village Fund (TKDD), she pointed out.
Moreover, regional governments' funds in banking remain high, with their value reaching Rp173.73 trillion as of July 2021 due to a high spending absorption pattern that has continued as usual in the fourth quarter, she said.
"This is despite the fact that we monitor every transfer that can be directly felt by citizens during COVID-19," she elaborated.
In addition, finance management accountability still needs to be improved, Indrawati said. While it has improved from an administrative standpoint, there is still some work that needs to be done from a material standpoint, she observed.
"The synergy and movement of APBN (state budget) and APBD is not yet optimal, so strengthening is required to maintain the synergy and sustainability of the fiscal," she emphasized.
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Translator: Astrid Habibah, Fadhli Ruhman
Editor: Suharto
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