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Ministry of Finance
Republic of Indonesia
Integrating Poverty-Environment-Climate
in Budgeting
(Indonesia case)
Adi Nugroho Dwiutomo
Deputy Director for State Budget Expenditure
DG Budget – Ministry of Finance
Poverty and Environmental Initiative (PEI) Asia Pasific Regional Meeting
Dhaka, 2 June 2016
Outline
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A
Background PEI Indonesia
B
The Role of Ministry of Finance in Sustainable
Development
C
Integrating Poverty-Environment-Climate into
Budgeting, Approach and Tools
D
Challenges and the Way Forward
A. Background
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PEI Master
Indonesiatitle style
A
B
C
D
• PEI Indonesia operationalized under SDF(Sustainable
Development Financing) Project
• SDF project document signed in October 2014
• Environmental issues as an entry point as Indonesia’s
development challanges
• Environmental activities is limited to Climate change
and biodiversity
• PEI Indonesia collaboration with SIDA and BIOFIN
Indonesia’s
toward sustainable
development
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 Indonesia’s GHG emission is
predicted to increase from 2.1 to
3.3 GtCO2e between 2005 and
2030 (Second National
Communication, 2010)
3 Indonesia’s
Action Plan
CC Mitigation
 Indonesia is vulnerable to changing CC Adaptation
climate. Potential economic loss
due to climate change and climate
disaster in 2100 is predicted 7%
from GDP (WB,2010, ADB,2010)
 Indonesia is Mega-biodiversity
country. Biodiversity is national
capital asset, but the full potential
is undervalued and it is decreasing
(MoEF, 2014)
Biodiversity
 The three action
plans have not
yet translated to
budget
documents at
national and subnational level.
 No mechanism in
place to monitor
the budget
allocation and
tracking
 Limited fiscal
instrument to
support actions.
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B. The Role of Ministry of Finance in Sustainable Development
Fiscal Policies
Revenue Policies
Expenditure Policies
Financing Support
Domestic Resource
mobilization
Fiscal incentives and
disincentives policies
for strategic sectors
Budget optimization
 Budget reallocation
to productive spending
Targeted spending
Direct investment
Government facility or risk
guarantee
Public private partnership
SDF
Contribution
Pathway towards sustainable
development
Human
Development
High quality education,
linkages between
education and
industrial needs,
vocational education,
innovation and
productivity
enhancement
Sustainable
Natural
Resource
Management
Downstream
Industries,
fisheries,
agriculture
Inclusive
Growth
Investment
Climate
Macroeconomic
Stability
Poverty
Alleviation
Social protection
Financial inclusion
Public and private
partnership,
Connectivity,
Logistic,
Technology
Sustainable growth
Prudent fiscal and
monetary policy,
Incentives
mechanism,
purchasing power
Indonesia Planning and Budgeting System
President
Platform
SDF
Contribution
5 Yr
Mid-term National
Development Planning
LM/A Strategic Plan
1 Yr
Government Work Plan
LM/A Work Plan
1 Yr
State Budget
Budget Document
Presidential Decree on
Budget Detail
Budget Execution Document
6
Indonesia Planning and Budgeting System
Trilateral
Meeting
Cabinet Meeting
Preliminary
discussion
Process
Cabinet Meeting
Indicative
Ceiling
CCM
Temporary
Ceiling
RKA-KL
Budget
Committee
LM/A
WP
GWP
CCM
CCM
Commission
Cabinet Meeting
CCM
FN
Budget
Law
Assessment Forum
Draft
Budget
Law
RKA-KL
compilation
K/L
CCM
Budget doc assessment
RKA-KL
adjustment
CCM
Presidential
Decree
Commission
CCM
Draft State
Budget
Agreement
Definitive
Ceiling
LM/A
DIPA
LM/A
Climate Change Mitigation
7
Poverty and Climate Change Related Program in Indonesia’s
Development Planning
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Strategy
Targets
Poverty
 Comprehensive social
protection program
 Sustainable livelihood
development
 Basic service
provision for poor
 Decrease in poverty rate
 Decrease in gini ratio
 Decrease in unemployment
rate
Climate
Change
 Level of Greenhouse
 Eco friendly
emissions reduction in 5
agriculture activity,
priority sectors (forestry,
renewable energy
agriculture, energy,
utilization, domestic
transportation, and waste)
waste management
 Number of vulnerable areas
 Private and people
which increase in resilience
contribution for GHG
of people caused by CC and
emission
 CC fiscal insentives
the National Action Plan for
 Optimizing the
CC Adaptation.
implementation of
implementation
RAN API
Mid Term
Target
2016
Target
 7-8 %
 0,36
 4 - 5%
 9-10 %
 0,39
 5,2 5,5%
 26%
 19,1%
 15 areas
 4 areas
RESULT AT NATIONAL LEVEL : 2014 – 2015
Increase in Climate Change Responsive Budget Allocation
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*The calculation includes budget allocation associated with mitigation and adaptation of
Climate Change, including on forestry, environment, and renewable energy sectors.
Source: Website DG Budget, Ministry of Finance
AT SUB NATIONAL LEVEL : Climate Public Expenditure Review
Increase in Climate Change Responsive Budget Allocation
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Jambi Province
DI Yogyakarta Province
Central Java Province
Finding: No system in place to monitor and track the CC expenditure. Climate Expenditure
Review was done manually. Sub-National Financial system is different with National.
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Bangka Belitung - Mitigation Public Expenditure (Billion Rupiah)7.4
7
6.5
Mitigasi
6
5.3
5
Forestry and Peatland
4
Agriculture
3
Waste
2
1
0.9
0.3
0.3
0.1
Total Mitigasi
0.7
0.5
0
2012
2013
2014
(Bangka Belitung, Adaptation Public Expenditure
(Billion Rupiah)
88.7
90.0
80.0
Economy Security
65.8
70.0
64.7
Social and livelihood Security
60.0
50.0
40.0
43.6
Ecosystem security
35.7
Special District Security
30.0
21.319.2
20.0
10.0
5.7
1.0 0.5 0.4
10.9
6.7
4.1
1.4
11.7
6.5 6.0
Total Adaptation
2012
2013
Supporting System
2014
Indonesia’s Actions towards Sustainable Development
PRO POOR AND GREEN PLANNING
BUDGETING
PERFORMANCE-BASED
BUDGETING
BUDGET TAGGING:
Tracking climate
change-related budget
Prioritization of climate
activity based on costeffectiveness including
poverty and gender
benefits.
Monitoring
effectiveness &
efficiency of
expenditure.
 Enhance Coordination NationalSubNational
 Issuance of fiscal policies, and
mechanisms for financing
prioritized and effective pro-poor
and climate change activities
Pro Poor Priorities:
•
•
•
Social assistance
Basic services
Develop social liveihood
CC Priorities:
•
•
•
•
•
•
Forestry, Peat-land & Marine Resources
protection
Agriculture and Irrigation system
rehabilitation
Energy and Industry
Public Transport, Urban & Regional
Infrastructure
Education and Health
Disaster Management
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SDF approach and tools
• Climate Public Expenditure and Institutional Review (CPEIR), CPEIR at
national level combine with cost benefit analysis  MFF Mitigation
Fiscal Framework.
CPEIR Subnational : Bangka Belitung and NTT
• Climate Public Expenditure Review (CPER), CPER Subnational : Jambi,
DI Yogyakarta, Central Java
• Institutional Context Analysis (ICA), in Bangka Belitung
• Gender Poverty Analysis (GPA), in Bangka Belitung
• Vulnerability Assessment (VA), in Bangka Belitung
• Climate budget tagging at national level : 6 line ministries (Min.
Environment and Forestry, Min. Agriculture, Min. Industry, Min.Energy
Minreal Resources, Min.Public Work, Min.Transportation)
2014 Budget Tagging Aplication System embeded to State
Financial System
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BUDGET TRACKING REGULATION
Ministry of Finance Regulation No. 136/2014 regulates line ministries to tag
activities/ output spending related with climate change through the budget system.
2015 Budget Tagging Integrated to Performance Based Budgeting
System through ADIK Aplication
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MDGs Achievement
14 off track
I. Goal 1
a. Poverty
b. Caloric intake
II. Goal 4
a. infant mortality rate
b. Children mortality rate
III. Goal 5
a. Maternal mortality rate
IV. Goal 6
a. HIV and AIDS
V. Goal 7
a. CO2 Emission
b. Drinking water
c. Sanitation in rural area
VI. Goal 8
a. Export import ration to GDP
36 on track
Mapping
to SDG
indicator
13 achieved
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
Goal 1 (Poverty)
Goal 2 (Starving
Goal 3 (Health)
Goal 3 (Health)
Goal 3 (Health)
Goal 3 (Health)
Goal 7 (Energy)
Goal 6 (Water and Sanitation)
Goal 6 (Water and Sanitation)
Goal 17 (Means of
Implementation)
 Some of indicator has already stated in Mid Term Development Planning
 Improvement on budget tagging can improve the information related to indicator
achievement
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D. Challenges and The Way Forward
The Challenges of Implementation both at National and SubNational level
• Inter-ministerial coordination among the key Ministries (MoF,
Bappenas, MoHA, MoEF)
• Improving capacity and compliance of line ministries
• M & E of the implementation of budget tagging
• The critical step for performance-based budgeting systems is to
improve indicators which reflect long term economic results as an
implications of climate change and environmental degradation
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Ministry of Finance
Republic of Indonesia
Thank you