South Asia tsunami information   |   Information on Aceh

Goverment should keep aid for Aceh, not for
state budget: Analyst

10 January 2005

The government must prioritize the use of grants and debt relief from donor countries for the rebuilding of tsunami-stricken Aceh and North Sumatra provinces, instead of using them to help bolster the state budget.

To ensure this, economist Faisal Basri reiterated a recent call from non-governmental organizations that the government immediately set up an independent body to monitor the management of aid funds.

"The government should not take advantage of the disaster in Aceh for the benefit of the state budget," he told The Jakarta Post on Sunday.

Faisal also warned the government not to be lax in maintaining the 2005 state budget at a balance -- such as by slackening its tax revenue target through tax amnesties -- just because it would receive fiscal incentives from the aid pouring into Aceh.

Calling it "inappropriate", he said such a scenario was possible as the government could gain more from the monetary aid for Aceh than for its expenditure.

"The debt relief offers themselves can be greater than the cost of rebuilding Aceh," he said.

At last week's international tsunami summit, donor countries pledged a total of US$4 billion for relief and reconstruction for the affected countries. The detailed scheme on the debt relief will be discussed further at the Paris Club meeting on Jan. 12.

The debt relief would help reduce the allocation of some US$3 billion in the country's state budget for foreign debt payments.

Vice President Jusuf Kalla recently said the government would seek debt relief of up to Rp 30 trillion (about US$3.33 billion) from creditor countries.

Meanwhile, the finance ministry's Director General for State Treasury Mulia Nasution said the estimated cost to rebuild Aceh stood at Rp 20 trillion.

Mulia also said that the 2005 state budget spending for Aceh and North Sumatra would be less than Rp 100 billion from the government's original allocation of Rp 300 billion. The reduced amount was due to the monetary donations from the public and from foreign countries.

"It should not be like that," Faisal said. "Any financial reserves, which have been designated for Aceh, should still be used for the rehabilitation of the province."

Faisal, who is also the national coordinator of the Humanitarian Emergency Commission for Aceh, cited the urgency of establishing an independent body tasked to transparently maintain a record of donations for Aceh and their disbursement, as well as to ensure that the funds reach the targeted recipients.

"Such a body is needed because the public still doubts the government's credibility, as it is still plagued with corruption" he said. "Therefore, the independent body should be led by someone who is publicly accepted as clean."

Faisal explained that the body should comprise of representatives from selected institutions and have the full authority to assess the flow of the funds.

He pointed to the urgency of the body following statements from finance ministry officials saying that none of the pledged aid from donor countries for Aceh had actually gone to state coffers.

"But how can the public verify that, if there is no transparent access to the funds?" he said.

Urip Hudiono

Information on Aceh   |   Peace Movement Aotearoa