Budget Training Marks Major Overhaul of Colonial System

As they practiced with an online budgeting program during training with the Ministry of Finance, participants from district courts hailing from as far as Jayapura, Papua were part of a historical change in Indonesia.

In 2004, the Government of Indonesia passed a law entrusting the Ministry of Finance with the responsibility of being the country's Chief Financial Officer. This law also tasked the Ministry with obtaining financial expenditure data from government institutions in a faster, more transparent way. The training of budget and finance officers from the court system across the country was part of a national roll-out of a computer application to make this reporting feasible.

Prior to 2004, Indonesia used a cash basis system inherited from the Dutch during colonial times. Under this system, institutions were not required to provide a balance sheet and cash flow, opening the system to corruption and abuse.

The newer system is a double entry system in which institutions are required to track their expenditures and report them to the Ministry of Finance. Government officers will be held responsible for recording both incoming and outgoing money, increasing transparency and accountability.

This system is part of an overall framework by the GoI for all planning, budgeting, and administrative aspects of public expenditure management in Indonesia. The goal is greater alignment between functional needs of various institutions, their performance, and budgetary allocations (performance-based budgeting system). This means that the government will link financing of GoI institutions to their outputs, rewarding good performance.

The MCC Indonesia Control of Corruption Program, implemented by USAID-Indonesia is supporting the GoI's efforts in establishing a performance-based budgeting system. In addition to training the court's budget and finance officers, the program is providing technical assistance to help the court prepare for the public release of budget information; streamlining budget processes; and training leaders within the Court on strategic budgeting.

All MCC Threshold Program activities