Decentralization Alters Indonesian Fiscal Foundations
Monday, 12 February, 2007 | 16:47 WIB

TEMPO Interactive, Jakarta: The World Bank has said it considers that decentralization has changed Indonesia’s fiscal foundations.

According to Wolfgang Fengler, a senior economist at the World Bank, public fund transfers in 1996 from the central to regional governments increased significantly to US$25 billion from the previous US$8 billion.

The World Bank has projected that the fund transfers will continue increasing up to US$28 billion this year.

“Provinces and regencies are now managing about 40 percent of Indonesian public expenditure and half of public investment,” he said on Monday (02/12) in Jakarta.

The World Bank has pointed out that fund transfers to regions have been larger.

Today, the challenge is how the regional governments can spend the funds effectively.

According to the World Bank, Indonesia has now a chance to make use of enormous resources for handling poverty.

“This is truly a great opportunity that Indonesia must not miss.”

AGUS SUPRIYANTO