Optimization Funds in State Budget Reaches Rp 49.9 trillion

Optimization funds in the draft of the 2016 state budget revision are estimated to reach Rp 49.9 trillion (US$3.76 billion). As usual, the House of Representatives has the room to participate in determining the allocation of these funds. This time, the legislature has a share to distribute of Rp 25.4 trillion.

The optimization funds are additional funds obtained from changes in assumptions in both spending and revenues in the state budget. The optimization funds appear during the revision of the state budget every year.

Changes in the basic assumptions of the targets of a number of sources of state revenue in the draft state budget revision were approved last week. On Tuesday, June 21, 2016, the Finance Ministry briefed the House's budgetary committee (Banggar) about the new budget posture following the adjustment in the state revenue target.

Finance Minister Bambang Brodjonegoro, National Development Planning Board head Sofyan Djalil, Law and Human Rights Minister Yasonna Laoly and Bank Indonesia Governor Agus DW Martowardojo were present during the meeting, which was led by the budgetary committee's chairman Kahar Muzakir of the Golkar Party faction.

Based on Kompas' records, optimization funds worth Rp 49.9 trillion were obtained from an increase in the assumption of oil prices and the volume of net oil production.

Indonesia's oil price assumption was increased from $35 a barrel to $40 a barrel in the draft of the revised 2016 state budget to $40 dollars a barrel, while the assumption of the volume of the net oil production went from 810,000 barrels per day to 820,000 barrels per day.

The largest part of the optimization funds, about Rp 18 trillion,will be allocated as additional expenditure for a number of ministries and state agencies. As much as 7.4 trillion will be allocated for regional transfers.

The details for the allocation of the optimization funds will be jointly determined by the House's budgetary committee and the FinanceMinistry, according to the ministry's budget director general.

The other parts of the optimization funds will be used to reduce deficit targets, debt interest payments, as well as to meet quota obligations for education and health budgets.

The Indonesian Forum for Budget Transparency's advocacy and investigation coordinator, Apung Widadi, said the use of the optimization funds, which were considered tactical funds,was more flexible.

"The optimization funds are therefore prone to abuse such as for private interests and certain political interests. In the end, the larger part of the funds will be used to serve interests of the elite. It should be supervised," Apung said.

Source Kompas, Wednesday, June 22, 2016