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Ministry of Home Affair, UGM and World Bank Kick-Off Cooperation to Improve Sub-National Public Financial Management

June 30, 2010

Jakarta, June 30, 2010 – The Ministry of Home Affairs’ (MoHA) Regional Finance Administration Unit, Gadjah Mada University (UGM) and the World Bank today signed a Memorandum of Understanding, kicking off a new program to enhance central government capacity in supporting public financial management at the sub-national level. This capacity building program is one component of a larger sub-national public financial management program implemented by local Indonesian institutions with support from the World Bank, and funded by the Canadian International Development Agency and the Australian Agency for International Development.

The Director General of the Ministry’s Regional Finance Administration Unit (BAKD), Ir. Timbul Pudjianto said, “I welcome today’s activity, which constitutes the formation of a strategic partnership or alliance amongst us, to strengthen the formulation and implementation of strategic and comprehensive policies that are also sustainable, in an effort to enhance sub-national public financial management. I hope we can further develop this strategic cooperation in the times ahead”.

The Acting Country Director of the World Bank in Indonesia, Dr Chris Hoban added that “Public expenditures at the sub-national level are increasingly important for Indonesia's development, and are impressed by the commitment of the Ministry of Home Affairs to improve sub-national public financial management.  We welcome this opportunity to work with MoHA and UGM to strengthen national capacity and bring more assistance to local institutions”.

The kick-off, which was held at BAKD’s offices in Jakarta, included a seminar on sub-national public financial management theories and their application in Indonesia, delivered by UGM’s Professor Wihana Kirana Jaya. The World Bank’s Amin Subekti followed up with a session on the benefits of conducting public expenditure analyses in Indonesia’s provinces and districts.

Over the next two years, officials from the Ministry of Home Affairs will be trained to better monitor and evaluate sub-national government budgets. Ministry officials will also receive technical assistance to revise and disseminate a new ministerial regulation for Evaluating Sub-National Budgets (Permendagri 65/2007). Finally, the program will provide for three national conferences, which will serve to consolidate the work being done across all components of the program.

This program is consistent with the World Bank’s country partnership strategy of investing in Indonesia’s institutions. By supporting the Ministry of Home Affairs and UGM, the World Bank hopes to enhance the capacity of both institutions to affect long-term, sustainable improvements in sub-national public financial management in Indonesia.

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