Writer : William Bahari Siregar I Editor : Muhammad Fahrezi Syahputra
Within the first 100 days of President Prabowo’s administration, a budget efficiency policy was implemented, leading to changes in budget allocations across various sectors. This policy has sparked diverse responses. The government views budget efficiency as a solution to address Indonesia’s future economic challenges. While some consider this policy beneficial, others argue it is misdirected. In the context of corruption eradication, efficiency is also seen as a means of mitigating corrupt practices and preventing state losses. However, how can budget efficiency effectively contribute to corruption prevention in Indonesia?
In the book Economics (17th edition) by Paul A. Samuelson and William D. Nordhaus, published by McGraw-Hill in 2001, efficiency is described as the optimal use of limited resources to meet societal needs and desires, a concept known as “Pareto Efficiency” in welfare economics. However, in Indonesia, the practice of budget mark-ups—where budget allocations are artificially inflated beyond their actual value—remains prevalent. This form of corruption often occurs in project budgets, where funds are exaggerated or fictitious expenses (split budgeting) are included.
A budget serves as a planning instrument that outlines projected revenues and expenditures. Typically, budgets are systematically prepared to encompass all organizational activities, expressed in monetary terms, and applicable for a specific future period. Beyond planning, budgets also function as a control mechanism for revenue and expenditure flows. In this context, Glenn A. Welsch defines budgeting as:
“Profit planning and control may be broadly defined as a systematic and formalized approach for accomplishing the planning, coordinating, and control responsibilities of management.”
Efforts to prevent corruption can be undertaken through various preventive measures, including mitigating opportunities for corruption in both budget preparation and resource management. In other words, strategies and mitigation steps are required to prevent corrupt activities from both expenditure and revenue aspects. Corruption prevention can be optimized by adhering to principles of good governance.
One widely recognized measure of good governance is the Worldwide Governance Indicators (WGI) developed by the World Bank, which assesses:
- Control of corruption
- Government effectiveness
- Political stability and absence of violence
- Regulatory quality
- Rule of law
- Voice and accountability
From an anti-corruption perspective, transparency and corruption control are particularly relevant in achieving efficiency in government spending.
- Transparency and Accountability
To implement budget efficiency effectively, a thorough study of previous years’ budget absorption is necessary. This allows for comparative data to serve as a basis for analyzing future budget efficiency. Budget-related corruption typically results from fraud, which, in Indonesian law, encompasses various criminal acts such as:
- Theft (Article 362 of the Indonesian Criminal Code – KUHP)
- Extortion and threats (Article 368 KUHP)
- Embezzlement (Article 372 KUHP)
- Fraudulent acts (Article 378 KUHP)
According to Webster’s New World Dictionary, fraud is defined as an act of deception intended for personal gain. Meanwhile, Black’s Law Dictionary describes fraud as a deliberate strategy to mislead or conceal the truth to gain an advantage. Wells (2007) further defines fraud as:
“Criminal deception intended to financially benefit the deceiver.”
To ensure transparency and accountability, investigative audits of past budgets are essential. Such audits can uncover findings that form the basis for improving budget allocations and strengthening institutional financial management to prevent future budget leaks and repeated fraud.
- Corruption Control
Corruption eradication is not solely about law enforcement but must also focus on prevention (Government Regulation No. 5/2012: 23-24). According to the Association of Certified Fraud Examiners (ACFE) (Kassem & Higson, 2012), corruption prevention is rooted in Fraud Diamond Theory, which identifies four factors leading to corrupt behavior:
- Financial pressure on employees to misuse institutional funds or assets.
- Opportunities that allow employees to commit corruption.
- Ethical mindset that rationalizes corrupt actions.
- Capacity to execute corruption undetected.
Greyclar & Prenzler (2013) suggest five strategies to combat corruption:
- Making corruption more difficult to execute
- Reducing enabling conditions for corruption
- Increasing the risk of detection
- Reducing incentives for corruption
- Minimizing provocation for corruption
Furthermore, Piga (2011) highlights that political corruption in procurement often hinges on bureaucratic capacity to manipulate administrative processes.
For budget efficiency to be effective, it must align with a comprehensive anti-corruption framework. Governments must establish regulations and systems that anticipate corruption risks while adhering to key governance indicators. This creates a safety net that ensures efficiency measures are properly executed and accountable.
Conclusion
From the two indicators discussed—transparency & accountability and corruption control—it is evident that the government’s budget efficiency policy must be based on strong standards to address transparency issues and corruption risks. Efficiency is a necessary and beneficial effort, particularly in Indonesia, where budget inflation and financial mismanagement remain widespread.
By strengthening preventive mechanisms and enhancing governance structures, budget efficiency policies can become powerful tools in the fight against corruption, ultimately ensuring that public funds are utilized effectively and responsibly.
References:
- Glenn A. Welsch, Budgeting Profit Planning and Control, 4th Edition, Prentice Hall of India, 1981.
- Rika Susilawaty, Triono Eddy & Alpi Sahari (2020), Juridical Analysis of Mark-up Actions by the Procurement Committee for Goods and Services in Government Projects, Universitas Muhammadiyah Sumatera.
- Hardiwinoto (2018), Analysis of Corruption Mitigation in Budget Procurement in Central Java, STIE Pelita Nusantara Semarang.
- Ida Bagus Putu Purbadharmaja (2007), The Role of Budgeting in Regional Economic Development, Buletin Studi Ekonomi, Vol. 12 No. 3.
- Webster’s New World Dictionary, 5th Edition, HarperCollins.
- Paul A. Samuelson & William D. Nordhaus (2005), Economics, McGraw-Hill
