The Progress of Implementation of The Progress of Implementation of Medium Term Expenditure Framework Medium Term Expenditure Framework

(MTEF) in Indonesia(MTEF) in Indonesia

Go to Modern Budget System : Credible, Transparent, and Accountable

MINISTRY OF FINANCE – REPUBLIC OF INDONESIA

2

MTEF FrameworkMTEF Framework

APBN

Long-term Development PlanningLong-term Development Planning

MTDP

Govt Work Plan

OutcomeOutputActivityProgram

Strategic Plan

Work Plan

RKA-KL

MTEF

National Goals

PresidentPlatforms

To achieveNational Dept/Agency

20

5

1

Performance-based

3

MTEF IllustrationMTEF Illustration

2014201320122011

Policy decided as

baseline

(R)APBN Forward Estimate

Budget Implication

MTEFMTEF

Forward Estimate

Objectives and Conceptual Based of MTEFObjectives and Conceptual Based of MTEF

4

Objectives

Conceptual Based

allocative efficiency

improve quality of planning)

best policy option

fiscal dicipline

fiscal sustainability

rolling budget

1.

2.

3.

4.5.

Parameters

Baseline

Baseline Adjusment

additional budget for new initiatives

1.2.

3.

4.

5.

5

MTEF ProgressMTEF Progress1. Setup macro economic assumptions to

perform medium term fiscal framework (MTFF);

2. Setup tax ratio, deficit target, revenue target, expenditure limit to formulate medium term budget framework (MTBF);

3. Setup MTEF as an indicative ceiling for National Medium Term Plan (RPJMN) and MTEF for all Line Ministries/Agencies in preparing Strategic Plan (Renstra K/L);

4. Formulate 3-years forward estimates in Government Work Plan (RKP);

5. Calculate baseline and 2-years forward estimates for all LM/A in RKA-KL.

6

Medium Term Expenditure Framework:Medium Term Expenditure Framework: Setup baseline;

Determine the parameters;

Formulate 3-year forward estimates;

Forward estimates adjustment;Strategic review of Policy/Program.

Some ChallengesSome Challenges

7Formulate FE Apply per

ProgramForward Estimate

Parameter Index :2013, 2014, 2015

• Existing Policy : actual, trend analysis, adjustment;

• New Policy : assessment.

MTEF Context : Implementation Steps MTEF Context : Implementation Steps

Costing Process

Existing Government Policy

Re-priorities

Total = Existing + New

• Continued;• Terminated;

• Lapsing.

• Continued;• Lapsing;

• New Policy.

Set-up Parameters

Determine Baseline

2013 2014 2015

Review

Decide

Evaluate & Assess

determine

Take into account

8

Review

• DG Budget MoF• Dept/Agency

Set-up FE

• Bappenas• Dept/Agency

• MoF

• DG Budget MoF• Dept/Agency

Costing Process : • Existing Policy;

• New Policy.

• Continued;• Lapsing;

• New Policy.

Apply per Program

Parameter Index :2013, 2014, 2015

Govt. Policy: • Continued;• Terminated;

• Lapsing.

Determine Baseline

2013 2014 2015

Re-prioritas & Decide

Evaluate & Assessment

Set-up Parameter

Take into Account

• Bappenas• Dept/Agency

• MoF

•DG Budget MoF• Bappenas

• FPO MoF• Team Assumption

Units Involve and roles : Units Involve and roles :

9

Long-term TargetsLong-term Targets

Gives more flexibility to Department/ Agency in managing the budget;

Implementing Efficiency Dividend in line with Incentive/Disincentive Policy;

Introducing “Sunlight” project in order to motivate Budget Honesty Management.

10

DATADATA

2013 2014 20151 General Public Services 122.173 124.494 126.5442 Defence 65.908 67.518 70.0503 Public Order and Safety 25.268 25.783 26.9164 Economic Affairs 86.932 86.070 85.3715 Environmental Protection 10.064 9.914 9.267

6 Housing and Communities Ammenities 25.706 26.520 13.361

7 Health 13.412 7.679 6.3848 Tourism and Culture 2.070 2.081 2.0499 Religion 1.848 1.884 1.93510 Education 92.666 91.930 80.79711 Social Protection 5.234 4.555 4.598

451.281 448.430 427.272

Forward Estimate (Baseline)

JUMLAH

BUDGET ALLOCATION BY FUNCTION (BASELINE) , 2013-2015(billion rupiah)

No. FUNGSIAPBN 2012 2013 2015

- Economic Growth (%) 6,7 6,7-7,4 7,0-7,7 7,0-8,0

- Inflation (%) y-o-y 5,3 3,5-5,5 3,5-5,5 3,5-5,5

- Interest Rate of SPN 3 m (%) 6,0 5,0-7,0 5,0-7,0 5,0-7,0

- Exchange Rate (Rp/ US$1) 8.800 8.800-9.200 8.800-9.200 8.900-9.300

- ICP (US$/ barrel) 90 80-100 80-100 80,0-100,0

- Lifting (million barrel/ day) 950 970-990 970-1.000 1.000-1.010

ECONOMIC MACRO ASSUMPTIONS, 2012-2015

URAIAN 2014

11

DATADATA

APBN2012 2014

A. REVENUES AND GRANTS 1.311,4 1.437,8 1.614,1 1.815,1I. DOMESTIC REVENUES 1.310,6 1.437,3 1.613,7 1.814,7

1. Tax Revenues 1.032,6 1.165,3 1.335,3 1.530,1a. Domestic Tax Revenues 989,6 1.122,0 1.289,2 1.480,8b. International Trade Tax 42,9 43,3 46,1 49,3

2. Non-tax Revenues 278,0 272,0 278,4 284,7a. Oil and Gas 159,5 153,0 152,9 155,4b. Non Oil and Gas 118,5 119,0 125,5 129,3

II.GRANTS 0,8 0,5 0,4 0,4B. EXPENDITURES 1.435,4 1.546,1 1.680,5 1.777,0

I CENTRAL GOVERNMENT 965,0 1.025,0 1.107,0 1.133,91. Line Ministries 508,7 567,5 624,0 675,2

a. Baseline - 451,3 448,4 427,3b. New Initiative - 116,2 175,6 248,0

2. Non Line Ministries 456,3 457,4 482,9 458,7II.TRANSFER TO REGIONS 470,4 521,1 573,6 643,1

1. Balanced Fund 400,0 443,6 488,4 550,72. Special Autonomy and Adjusted Fund 70,4 77,6 85,2 92,4

C. PRIMARY BALANCE (1,8) 32,5 80,7 184,0D. BUDGET DEFICIT (A - B) (124,0) (108,3) (66,4) 38,0

% GDP (1,5) (1,2) (0,6) 0,3E. FINANCING 124,0 108,3 66,4 (38,0)

I. DOMESTIC FINANCING 125,9 123,0 91,3 (9,3)II.FOREIGN FINANCING (NETO) (1,9) (14,7) (24,9) (28,8)

Source: Ministry of Finance, RI

APBN 2012 & FORWARD ESTIMATE 2013-2015(trillion rupiah)

ITEMForward Estimate

2013 2015

12