Forward Estimates for Intergovernmental Transfers in Indonesia: Is It Possible?

Handra, Hefrizal (2012) Forward Estimates for Intergovernmental Transfers in Indonesia: Is It Possible? In: Regional Development and Finances: Challenges for Expanding and Financing Public Services. Andalas University Press, Padang, Indonesia, pp. 141-162. ISBN 9786028821360

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Abstract

This paper discussed the possibility of implementing medium term expenditure frameworks (forward estimates) for Intergovernmental Transfers in Indonesia. It is argued that forward estimates for intergovernmental transfers is a very important tool for Indonesia to reducing uncertainties in relation to future grants and shared revenues and to facilitate the introduction of medium-term expenditure framework (MTEF) approaches at sub-national government (SNG) levels. The study combines a review of international experiences, assessments of Indonesia’s intergovernmental transfers and of regulations. The paper concludes that, generally, forward estimate for the aggregate figures of intergovernmental transfers in Indonesia is possible, especially for three types of transfers (shared revenues, general purpose grants and special autonomy fund) since they are clearly regulated. However, there are difficulties to estimate the specific grants since the amount of these grants is not clearly regulated (not guaranteed by any Law). The paper suggests that the Government of Indonesia should have a clear medium term intergovernmental policy direction which will not only facilitate forward estimates for transfers but also help the provision of medium term projections of available fund for all Central Ministries.

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