Indonesia's Push for Treasury Transparency
| Author | Ian Lienert |
| Position | IMF Fiscal Affairs Department |
| Pages | 12-13 |
Page 12
Indonesia is pursuing public financial management reforms with the support of IMF technical assistance and other donors. The measures aim to bring greater transparency to treasury operations and allow the ministry of finance (MOF) to exercise fuller control over central government operations.
At the time of the Asian financial crisis in the late 1990s, treasury management in Indonesia was particularly lax. Within the ministry of finance, there was no treasury directorate general (DG): all treasury operations were subsumed under the budget DG.
During this period, diagnostic studies by the IMF recommended the establishment of a fully functional treasury DG, as well as the modernization of the legal framework for fiscal management (see Box 1), which had not been updated since Dutch colonial times. However, the government was preoccupied with the country's financial, banking, and exchange rate crises, and, as a consequence, institutional reforms in public financial management barely advanced.
In 2006, the authorities published and disseminated a report on fiscal transparency. It was used to identify areas of public financial management in which development partners, including the IMF's Fiscal Affairs Department, could provide technical assistance to help the authorities improve fiscal transparency and accountability.
The government acted to improve the transparency of government financial operations, taking steps, for example, to consolidate government bank accounts. This was partly in response to the external auditor's report, which called for greater clarity in the government's financial accounts.
Prior to the Asian financial crisis, thousands of bank accounts had been opened in the name of the government. These are now seen to represent nontransparency in central government financial operations. To address the issue, new government regulations were adopted in July 2007 that allow the finance minister to bring all government bank accounts under treasury control.
During 2003-05, the minister of finance oversaw the establishment of a treasury DG. The internal restructuring of the MOF was modeled in line with what was advocated during 1998-2001.
By 2005, new laws relating to the budget, national planning, the treasury, and external audit were adopted by...
To continue reading
Request your trial