Various Objectives of Preparing the State Budget – Protecting the entire Indonesian nation and all of Indonesia’s bloodshed, promoting public welfare, educating the nation’s life, and participating in carrying out world order are the goals of the Indonesian state which are stated in the opening of the 1945 Constitution, 4th paragraph. These four goals require a budget that is not small to make it happen.
The government often encounters obstacles in realizing state goals, namely not having enough resources to finance activities related to state goals. The government certainly has an important role in managing, regulating, stabilizing, and developing community economic activities.
In order to carry out its duties and functions, the government requires enormous funds. For this reason, the government needs to explore sources of funds and determine the use of the funds obtained.
Sources of funds and their use are studied in state finances contained in the APBN. Before going any further, what comes to Sinaumed’s’ mind when he hears the word “APBN”? Does Sinaumed’s know what it stands for?
What is APBN?
The State Revenue and Expenditure Budget or often abbreviated APBN is the state government’s annual financial plan that has been approved by the DPR. This article will discuss more about the APBN and the purpose of its preparation.
As previously stated, the state budget has an important role in realizing state goals. Through the APBN, the government continues to strive to realize the goals of the state up to the specified limits year after year.
The purpose of preparing the APBN is not far from its meaning, namely to regulate state finances, the economy, and all related aspects. Article 23 of the 1945 Constitution, namely to be responsible as much as possible for the welfare and prosperity of the people.
The point is that the APBN focuses on state revenue or income and expenditure or spending. State revenue or revenue comes from exports, taxes and other revenues.
Meanwhile, state spending or spending comes from subsidies, purchases of equipment, interest costs on debt payments, infrastructure spending, imports, and so on. It can be concluded that the APBN is a description of state finances from the point of view of the central government.
Important elements that can provide the best possible benefits for society must be included in the preparation of a state budget. What are the important elements that can provide benefits to society? This important element consists of three parts, namely fiscal discipline, allocation of priority scale resources, and implementation of activities that support budget allocations.
The APBN can also be interpreted as a list of state revenues and expenditures within a one year period stipulated by law and serves as a guide for the country’s economy to be used as much as possible for the prosperity of the people.
The APBN is designed and implemented for one year from January 1 to December 31 of the same year since the reform era in 2000. Changes that occur in the political environment and the various interests that must be allocated affect the budget policy formulation process.
Illustration of APBN Compilation Mechanism (source: ardra.biz)
Before the APBN is approved by the DPR, which is a representative body , the budget is called the Draft State Revenue and Expenditure Budget or often abbreviated as the RAPBN. The draft is faced with various uncertainties, especially related to world economic fluctuations.
This uncertainty has forced the government to determine the basic assumptions for preparing the RAPBN. The RAPBN assumptions are determined by a special team, including the Ministry of Finance, representatives from Bank Indonesia, the National Development Planning Agency (Bappenas), the Central Bureau of Statistics, and the Office of the Coordinating Minister for the Economy.
The special team holds regular meetings to discuss and determine the number of assumptions that will be proposed to the legislature or the DPR. After that, the RAPBN will be submitted by the President to the DPR in a plenary session.
When the draft is approved by the DPR, it will then be determined to become the APBN through law. If the DPR does not approve the draft budget, the central government can spend as much as the APBN figure in the previous year.
The state financial budget becomes a tool for accountability, management, and economic policy. In order to realize economic growth and stability as well as equal distribution of income, the state budget implements its instrument as a budgetary economic policy. The APBN that has been stipulated in its implementation has several important functions, namely the supervisory function, planning function, authorization, distribution, allocation, and stabilization.
In the oversight function, the APBN is used as a government budget that can guide the suitability of government administration activities. Then in the planning function, the APBN functions as the government budget which guides management in planning activities for the current year.
The state budget which is used as the basis for the implementation of revenues and expenditures in the current year is the APBN authorization function. As the name suggests, the APBN distribution function will improve income distribution.
Then the APBN allocation function will carry out its function as the provision of public goods or public good provision. Finally, the APBN carries out a stabilization function which will help maintain and strive for a balance of economic fundamentals.
Then the preparation of the annual development program contained in the APBN is carried out on the basis of independence, thrift and sharpening. The independence in question is that the preparation of annual programs is based on the capacity of the state and is expected to increase sources of state revenue.
Then the principle of savings is intended to increase efficiency and productivity. Meanwhile, the sharpening principle is carried out to give priority or prioritize development in sectors that are more beneficial.
In its preparation, the APBN has a basic structure consisting of three main elements, namely the revenue side, the expenditure side, and the financing side. The first basic structure is state revenue.
In this structure, state revenues and grants consist of domestic revenues and foreign revenues. Domestic revenues, including oil and gas, taxes and non-tax. While foreign receipts or foreign aid, includes program and project assistance.
From the state expenditure side, the basic structure of preparing the APBN consists of routine expenditures, including personnel expenditures, goods expenditures, autonomous regional subsidies, and development expenditures for implementing government projects. Then the state financing side in the basic structure of preparing the APBN consists of domestic financing and foreign financing.
Purpose of APBN Preparation
After discussing what the APBN is, now is the time for Sinaumed’s to know the purpose of preparing the APBN. The main purpose of preparing the APBN is to be responsible for the welfare and prosperity of the people.
More than that, there is a goal of preparing the APBN to regulate expenditure, income, investment, and employment issues. Collecting state revenue and meeting the needs of governance in the framework of realizing an economy based on democracy is the goal of the APBN.
The presence of the APBN also helps the government have a clear picture of what expenses must be made in one year and what income will be received for one year. The following are several other points that are the goal of preparing the APBN.
- Increase the country’s economic growth.
- As a guideline for state revenues and expenditures to increase economic growth in the framework of carrying out state duties.
- Can improve coordination between departments within the government environment.
- To increase the transparency of government accountability to the legislature or DPR and the wider community.
- The preparation of the APBN also increases production and employment opportunities so that people’s welfare is fulfilled.
- Participate in assisting the government in achieving its fiscal goal of overcoming inflation.
- Bringing about efficiency and fairness in the provision of public goods and services through a more priority process.
- Enabling the government to fulfill its task of spending priorities.
- Can save state expenditure and increase revenue.
- As a means of maintaining state financial stability by regulating the amount of money in circulation.
- Help develop various domestic industries.
- Can help increase employment through development and investment in a country.
The APBN is expected to reduce the risk of errors, waste and fraud that can harm the state. In addition, the preparation of the State Budget according to the regulations is expected to be able to increase employment opportunities, economic development and national prosperity. That is a review of the APBN and the purpose of its preparation. Hopefully this article can be useful and add to Sinaumed’s’ knowledge.
Book Recommendations That Make You More Understanding about APBN & Macroeconomics
1. Introduction to Micro and Macroeconomics Revised Edition
2. Introduction to Macroeconomic Theory
3. Easy to Understand and Implement Macroeconomics Accompanied
5. Indonesian Financial Literacy and Inclusion Book
Also read:
- Definition of APBD
- Basic Concepts of Economics
- Definition of National Income
- Differences in Economic Development and Economic Growth
- Open Economy System
- Economic Principles
- Definition of Scarcity
- Microeconomics
- Economic Recession
- Economic Globalization
- People’s Economy
- Economic agents
- Economic Problems in Indonesia
- Economics
- Types of Economic Systems
- People’s Economy