Reform of Planning, Budgeting of State Revenue and Expenditure and Management of State Finance Based on Law No 17 Year 2003 on State Finance

Abstract

Indonesia public financial management and planning framework has been undergoing major institutional reforms. The present structure and the procedures for preparing and deciding on the budget are the result of a series of reforms initiated and implemented in a very short time starting in 2001.The impetus to the reform came from the financial and economic crises affecting the government finances at the end of the 1990s. Law 17/2003 on State Finances consolidated routine and development expenditures into a unified budget and provided for medium term expenditure planning and performance-based budgeting. Law 1/2004 on State Treasury stipulated provisions on budget execution, debt and asset management, and a consolidated Treasury Single Account for the whole of government administration. Law 25/2004 on Development Planning paved the way for better integrating planning and budgeting processes.