Operationalizing the Central Government Transfer Intercept Mechanism
In October 2004, the Government of Indonesia (GOI) issued law 33/2004 concerning the Fiscal Balance between the central government and the regional governments. Like its predecessor, law 25-1999, the law stipulates a series of administrative sancti...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/816711468284352781/Operationalizing-the-Central-Government-transfer-intercept-mechanism-final-report http://hdl.handle.net/10986/28245 |
| Summary: | In October 2004, the Government of
Indonesia (GOI) issued law 33/2004 concerning the Fiscal
Balance between the central government and the regional
governments. Like its predecessor, law 25-1999, the law
stipulates a series of administrative sanctions that the
Government may impose on regional governments that do not
comply with certain of its provisions. These sanctions will
take the form of a deferment or cut, depending on the
specific nature of the non-compliance, in the general
allocation (Dana Alokasi Umum or DAU) or shared revenues
(Dana Bagi Hasil or DBH) to which the region would otherwise
be entitled. The Ministry of Finance (MoF) is currently
preparing a decree to operationalize this so-called
intercept mechanism, and has requested the
Decentralization Support Facility (DSF) to provide advice on
the development of an effective DAU and DBH intercept
mechanism. This final report presents the findings of a
consultant ("the Consultant") contracted by DSF to
provide this advice. Chapter two discusses administrative
requirements to decrees and regulations that govern the
allocation of DAU and DBH to regional governments, to ensure
that the intercept mechanism remains effective. Chapter
three describes the key features of an accounting mechanism
that directs intercepted funds to the treasury, and remits
the balance of the transfer to the defaulting regional
government. The annex to this report contains the results of
simulations the consultant has performed at the request of
DJPK since the publication of the interim report. |
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