Abstract

The main objective of this study is to support the Government of Indonesia, in particular the Fiscal Policy Office, in exploring reforms to improve line ministries’ budget execution in the infrastructure sector. The specific objectives are as follows: (i) to identify the constraints to budget execution in the infrastructure sector, focusing on 2010 budget execution; (ii) to assess the effectiveness of the reforms that have been introduced to accelerate budget execution in 2011; and (iii) to offer policy recommendations on ways to improve budget execution particularly within the infrastructure sector. The scope of work for the study includes an assessment of factors constraining budget execution through every step of the budget execution process, from budget preparation through to the completion of the project. It covers an assessment of factors constraining 2010 budget implementation at each stage, analysis of the effectiveness of reforms that have been introduced recently to improve budget execution in 2011, and the formulation of policy recommendations to accelerate budget execution going forward. The study also involves surveys and field visits to gather information from key stakeholders, such as Satker personnel, the local treasury offices (KPPN) and contractors covering four sample provinces, namely DKI Jakarta (as a pilot), West Java, North Sumatra, and South Sulawesi. Thirty-six DIPA (Daftar Isian Pelaksanaan Anggaran (Budget Warrant)) were selected as samples within three line ministries: the Ministry of Public Works, the Ministry of Transport, and the Ministry of Energy and Mineral Resources. The field survey activities included: in-depth interviews, focus group discussions, and field observations. This study involved tracking the constraints in budget execution at every stage of the process, from budget and work plan preparation through to project completion