Special Autonomy Fund (SAF)

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MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL Public Disclosure AuthorizedPublic Disclosure Authorized AUTONOMY REGION Public Disclosure AuthorizedPublic Disclosure Authorized Public Disclosure AuthorizedPublic Disclosure Authorized

ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 Public Disclosure AuthorizedPublic Disclosure Authorized

APEA THE WORLD BANK OFFICE JAKARTA Indonesia Stock Exchange Building Tower II/12th Fl. Jl. Jend. Sudirman Kav. 52-53 Jakarta 12910 Tel: (6221) 5299-3000 Fax: (6221) 5299-3111 Website: www.worldbank.org/id

THE WORLD BANK 1818 H Street N.W. Washington, D.C. 20433, U.S.A. Tel: (202) 458-1876 Fax: (202) 522-1557/1560 Email: [email protected] Website: www.worldbank.org

Printed in November 2008.

The Aceh Public Expenditure Analysis Update 2008 is a product of staff of The World Bank. The fi ndings, interpretations and conclusions expressed herein do not necessarily refl ect the views of the Board of Executive Directors of the World Bank or the governments they represent.

The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement of acceptance of such boundaries.

For any questions regarding this report, please contact Ahya Ihsan ([email protected]). MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION

APEA

ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Foreword

In a collaborative eff ort between the Government of Aceh, Syiah Kuala University and the World Bank, this APEA Update 2008, Managing Resources for Better Outcomes in a Special Autonomy Region, brings the Aceh Public Expenditure Analysis 2006 (APEA), Spending for Reconstruction and Poverty Reduction, up to date. The APEA Update 2008 highlights the progress made in completing the transition in public spending in Aceh from a reconstruction phase towards a longer-term development phase. This APEA Update 2008 has two main objectives. First, it aims to take stock of the recent progress in public expenditure and fi nancial management in Aceh. Second, it is a continuation of the support for provincial and district governments in Aceh to improve capacity in making informed policy decisions by providing strategic analysis into the use of public fi nancial resources and the eff ectiveness of budget processes in Aceh, in particular with regard to the implementation of the Special Autonomy Fund (SAF).

Starting 2008, Aceh will receive SAF totaling Rp 3.59 trillion, which is equivalent to about 2 percent of the total national General Allocation Fund (DAU). This provides a signifi cant increase in overall revenue and public spending in Aceh and creates a major opportunity to improve public infrastructure and service delivery, as well as to enhance economic development across the province. In the past two years, Aceh has made good progress in improving budget allocations and spending, and achieving better social outcomes. Provincial and district government budget allocations to key sectors such as infrastructure, health, and agriculture have all increased. Selected social outcomes also indicate improvements in public service delivery across the province. However, tremendous challenges remain. Despite higher per capita allocations on education, health, and infrastructure compared with other provinces, progress in social outcomes still lags national averages on many fronts, making improvements in spending eff ectiveness even more crucial. Furthermore, the provincial and many district governments are still struggling to approve their budgets in accordance with the regulations, or to spend their full budget allocations within the fi scal year. In addition, key issues regarding the implementation arrangements of SAF still have to be defi ned. The signifi cant increase in total revenue as a result of SAF from this year onwards, compounded with disappointing progress in speeding up the budget approval process in Aceh, raises considerable concern that the province may not be able to make full use of the new opportunities that are available to it.

To this end, this APEA Update 2008 identifi es the challenges and constraints being encountered by the provincial and district governments in budget allocation and fi nancial management in Aceh. It also off ers recommendations for overcoming these diffi culties, with a particular focus on the management of SAF and improvements in the budget approval process.

We hope that this report will make a useful contribution towards the ways in which the provincial and district governments in Aceh manage and allocate resources in order to achieve the province’s development goals and objectives.

Husni Bahri TOB, S.H., M.M., M.Hum Prof. Dr. Darni M. Daud, M.A T. Safriza Sofyan Provincial Secretary Rector Deputy Coordinator Government of Aceh Syiah Kuala University Aceh-Nias Recovery Program World Bank

2 FOREWORD MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Acknowledgments

This update is prepared jointly by a team from the World Bank and Syiah Kuala University, in close collaboration with Government of Aceh, led by Ahya Ihsan (World Bank) and Islahuddin (Syiah Kuala University). The core team comprised Harry Masyrafah, Nova Idea, Sukmawah Yuningsih, and Sylvia Njotomihardjo (World Bank) and Tauﬁ q C. Dawood (Syiah Kuala University), Inggit Maulidina, and Rika Nurlela.

Enrique Blanco Armas and Wolfgang Fengler from the World Bank, and Bapak T.M. Lizam (Provincial Finance and Asset Management Dinas) and Bapak Faizal Adriansyah (Bappeda Aceh) from Government of Aceh, provided guidance and oversaw the overall process.

The team is very grateful for the assistance and cooperation of Bapak Muhammad Nasir and his team for their support in collecting APBD data and information.

The team would also like to express its appreciation to Said Fauzan Baabud and Bapak Ali Amin (World Bank), Bapak Karyanto and Bapak Fahruddin (Provincial Finance and Asset Management Dinas), Bapak Muhammad Junaidi (Bappeda), Ibu Aﬀ a Salwa (Finance and Asset Management Dinas Kota Banda Aceh), and all the technical agencies (Dinas) involved in data collection and analysis.

The report beneﬁ ted from valuable inputs from peer reviewer Cut Dian Agustina.

Special thanks go to Peter Milne for editing and Arsianti for assisting with formatting and production.

The team would also like to express its gratitude to the team from the Government of Aceh that provided comments and inputs in the review discussions of earlier drafts. This team comprised Bapak T. Harmawan (Chair of Ad-Hoc Team of Coordinating Team of Special Autonomy Fund and Additional Revenue Sharing from Oil and Gas), Bapak Bastian and Bapak Syafri (Bappeda Aceh), Bapak Izhar (Development Bureau) , Bapak Muhammad, Ibu Maryami (PFAM), and Bapak Surya Dharma from Aceh Provincial Parliament, Bapak Siad Muhammad (Economic Faculty – Syiah Kuala University), Bernhard May (ALGAP – GTZ) and all of those who participated in the seminar discussions in Aceh.

ACKNOWLEDGMENTS 3 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Glossary of Terms

APBA Aceh Provincial Government Budget (Anggaran Pendapatan dan Belanja Aceh) APBD District/City Government Budget (Anggaran Pendapatan dan Belanja Daerah)

BA Basic Allocation Bappeda Regional Development Planning Agency (Badan Perencanaan Pembangunan Daerah)

CCI Construction Cost Index

DAK Special Allocation Fund (Dana Alokasi Khusus) DAU General Allocation Fund (Dana Alokasi Umum)

FA Formula Allocation FC Fiscal Capacity FN Fiscal Needs

GoA Government of Aceh

HDI Human Development Index

Inpres Presidential Instruction (Instruksi Presiden)

Kepmendagri Ministry of Home Aﬀ airs Decree (Keputusan Menteri Dalam Negeri) KUA General Budget Policy (Kebijakan Umum Anggaran)

LoGA Law on Governing Aceh No. 11/2006 (Undang-Undang No 11/2006 Tentang Pemerintahan Aceh)

Makuda Financial Administration Manual for District/City Governments (Manual Keuangan Daerah) MoF Ministry of Finance (Departemen Keuangan) MoHA Ministry of Home Aﬀ airs (Departemen Dalam Negeri) MoNE Ministry of National Education (Departemen Pendidikan National)

Otsus Special Autonomy (Otonomi Khusus)

PAD Own-Source Revenue (Pendapatan Asli Daerah) Permendagri Ministry of Home Aﬀ air Regulation (Peraturan Menteri Dalam Negeri) PPAS Preliminary Budget Ceiling (Prioritas dan Plafon Anggaran Sementara)

RAPBA Draft Budget (Rancangan Anggaran Pendapatan Belanja Negara) RKA Annual Work Plan and Budget (Rencana Kerja dan Anggaran) RPJP Long-Term Development Plan (Rencana Pembangunan Jangka Panjang) RPJM Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah)

SAF Special Autonomy Fund SiLPA Unspent Budget Balance (Sisa Lebih Pembiayaan Anggaran) SMA Senior Secondary School (Sekolah Menengah Atas) STR Student-To-Teacher Ratio (Rasio Siswa Terhadap Guru)

4 GLOSSARY OF TERMS MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table of Contents

Foreword 2 Acknowledgments 3 Glossary of Terms 4 Table of Contents 5 Main Findings 8

Chapter 1 Revenue 9 Overall revenue picture 10 Composition of provincial and district/city government revenue in Aceh 11 Per capita revenue 13 Special Autonomy Fund and additional revenue sharing from oil and gas 14 Budget approval processes in Aceh 16 Recommendations 19

Chapter 2 Expenditure 21 Overview of overall expenditure 22 Indirect and direct expenditures 22 Sectoral expenditure 24 Per capita spending on health, education and infrastructure 25 Recommendations 28

Appendices 29 Appendix A: Figures and Tables 30 Appendix B: Methodological Note 36 Appendix C: Statistical Appendix 38

References 51

TABLE OF CONTENTS 5 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figures

Figure 1.1 SAF signifi cantly boosted Aceh’s provincial and district/city government revenues in 2008 10 Figure 1.2 Composition of provincial revenue 11 Figure 1.3 Composition of district/city government revenue 11 Figure 1.4 DAU allocations to provincial and district/city governments in Aceh 12 Figure 1.5 DAK allocations to provincial and district/city governments in Aceh 12 Figure 1.6 Non-tax revenue-sharing of provincial and district/city governments in Aceh 12 Figure 1.7 Tax revenue-sharing of provincial and district/city governments in Aceh 12 Figure 1.8 The composition of provincial own-source revenue (PAD) 13 Figure 1.9 The composition of district/city government own-source revenue (PAD) 13 Figure 1.10 Per capita revenues among district/city governments in Aceh, 2007 14 Figure 1.11 Date of approved budget of provincial and district/city governments in Aceh, 2005-08 17 Figure 2.1 Overall public spending in Aceh has risen signifi cantly after 2005 22 Figure 2.2 Provincial expenditure by economic classifi cation 23 Figure 2.3 Share of Aceh’s provincial expenditure 23 Figure 2.4 Share of district/city government expenditure by direct and indirect expenditure 24 Figure 2.5 District/city government expenditure by economic classifi cation 24 Figure 2.6 Provincial sectoral spending in Aceh 24 Figure 2.7 Provincial spending by selected sectors and economic classifi cation, 2007 24 Figure 2.8 Sectoral spending of district/city governments in Aceh 25 Figure 2.9 District/city government spending by selected sectors and economic classifi cation, 2007 25 Figure 2.10 Per capita spending on health of districts/cities in Aceh 26 Figure 2.11 Per capita spending on education by district/city in Aceh 27 Figure 2.12 Per capita spending on infrastructure by district/city in Aceh 28 Figure A.1 DAU allocation per capita, 2008 30 Figure A.2 DAK allocation per capita, 2008 30 Figure A.3 Allocation mechanism of SAF to district/city governments in Aceh 32 Figure A.4 Allocation mechanism of Additional Revenue Sharing from Oil and Gas to district/city governments in Aceh 33

Tables

Table A.1. Mapping of district/city government budget format based on diﬀ erent regulations 31 Table A.2. Key distinctions between Law No. 18/2001 and Law No. 11/2006 regarding source of revenue for SAF and allocation and implementation arrangements 32 Table A.3. Key milestones of budget approval process in Aceh 33 Table A.4. Date of approved budget of provincial and district/city governments in Aceh 34 Table A.5. Selected social outcomes in Aceh 35 Table C.1. Composition of provincial revenue 38 Table C.2. Composition of district/city government revenue 38 Table C.3. Composition of revenue of provincial and district/city government in Aceh, 2007 39 Table C.4. Allocation of special autonomy fund and additional revenue sharing of oil and gas 40 Table C.5. Expenditures of provincial and district/city governments in Aceh by economic classiﬁ cation, 2007 41 Table C.6. Sectoral composition of provincial expenditures 42 Table C.7. Sectoral composition of district/city government expenditures 42

6 TABLE OF CONTENTS MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table C.8. Per capita spending on health, education, infrastructure of district/city governments in Aceh, 2004, 2006, 2007 43 Table C.9. Composition of provincial and district/city government’s expenditures in Aceh by sector and type of expenditure, 2004 44 Table C.10. Composition of provincial and district/city government expenditures in Aceh by sector and type of expenditure, 2006 45 Table C.11. Composition of provincial and district/city government’s expenditures in Aceh by sector and type of expenditure, 2007 46 Table C.12. Poverty headcount (%) by district/city in Aceh 47 Table C.13. Student-teacher ratio (STR) by district in Aceh 47 Table C.14. Percentage of secondary senior (SMA) student who passed national ﬁ nal exam (UAN), 2007/2008 48 Table C.15. Selected health indicators by district/city in Aceh, 2007 49 Table C.16. Percentage of district/city roads in bad condition 50

Boxes

Box 1. The management, allocation and implementation arrangements of the Special Autonomy Fund 16 Box 2. The budget process in Aceh 18

TABLE OF CONTENTS 7 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Main Findings

Revenue • Total sub-national revenue in Aceh has increased substantially this year and is expected to continue rising in the years to come due to a revenue windfall from the special autonomy fund (SAF). • The current allocation and implementation arrangements for SAF (in the form of joint programs between provisional and district/city governments) are complex and some issues regarding planning and implementation have still to be deﬁ ned. • The low capacity of provincial and district/city governments in passing their budgets on time raises concern regarding the implementation of overall development programs, as well as SAF joint programs.

Expenditure • Overall public spending in Aceh has risen this year following the signiﬁ cant increase on the revenue side. • Inter-sectoral allocation has improved recently both for provincial and district/city governments. Infrastructure, health and agriculture received signiﬁ cant increases in allocations in 2007. Spending on government general administration has decreased as a share of total spending (although it has increased slightly in real terms) and spending on education has risen in real terms (although it declined as a share of total spending). • In general, district/city governments’ per capita spending on health, education and infrastructure has increased compared with 2004 levels, but the size of increase varies across district/city governments.

Social outputs/outcomes Selected social outcomes indicate some improvement in public service delivery in the province, but progress still lags the national average. Improved inter-sectoral allocation of public spending and the ongoing reconstruction eﬀ ort may have contributed to these improvements. Revenue 1 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Overall revenue picture Total sub-national revenue in Aceh has increased substantially this year and is expected to continue rising in the years to come due to a revenue windfall from the special autonomy fund (SAF).1 This year, the value of SAF is Rp 3.59 trillion, signiﬁ cantly boosting total sub-national revenue to almost Rp 16 trillion compared with only Rp 11.6 trillion in 2007 (Figure 1.1). This sharp increase more than compensates for the (partial) decline of revenue- sharing from oil and gas due to the depletion of oil and gas reserves. However, the additional SAF transfers will be phased out after 20 years. Therefore, it is important for provincial and district/city governments in Aceh to develop a strategy to manage and allocate this additional revenue eﬃ ciently in order to improve public infrastructure and service delivery, as well as to enhance economic development in the region.

Figure 1.1 SAF signiﬁ cantly boosted Aceh’s provincial and district/city government revenues in 2008

16,000 Lain -lain Dana Otonomi Khusus INPRES/DAK SDO/DAU 14,000 Dana Bagi Hasil Non-Pajak- Dana Bagi Hasil Pajak Pendapatan Aslli Daerah 12,000

10,000 o i l l i

b 8,000 pn R

6,000

4,000

2,000

- 1999 2001 2002 2003 2004 2005 2006 2007 2008

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Note: The bar chart is based on constant 2006 prices, while the total revenue line graph is based on current prices per year.

With the exception of non-tax revenue-sharing and “other” sources of revenue,2 all types of revenue have been growing. The general allocation fund (Dana Alokasi Umum, or DAU) transfers to Aceh increased by 31 percent in 2006, in line with a nationwide increase, and continued to grow moderately in 2007 and 2008. The special allocation fund (Dana Alokasi Khusus, or DAK) more than doubled in 2006 and continued to increase in 2007 and 2008. Revenue from tax revenue-sharing and own-source revenue (PAD) have also experienced notable increases since 2005. PAD more than doubled in 2006 and continued to grow in 2007 and 2008. However, non-tax revenue- sharing and “other” revenue categories decreased in 2007 and 2008.

DAU remains the most important source of revenue for sub-national governments in Aceh, while SAF is compensating for the decline in non-tax revenue-sharing. On average, DAU represented 44 percent of total sub-national revenue between 2001 and 2008. The composition of revenue has changed slightly this year. The share of non-tax revenue-sharing has declined sharply since 2007, but this has been balanced by SAF transfers in 2008. The share of non-tax revenue-sharing to total revenue dropped from 43 percent in 2002 to only 20 percent in 2008. Tax revenue-sharing and PAD gained in importance after 2005, with their average contributions increasing to 6 percent and 7 percent (2006-08), compared with 5 percent and 4 percent (2001- 05), respectively (Figure 1.1).

1 Law No. 11/2006 on Aceh Special Autonomy granted Aceh a new special autonomy fund — an additional transfer from central government to the province equivalent to 2 percent of national DAU for 15 years and 1 percent for the remaining fi ve years — starting in 2008. This is in addition of 70 percent of the oil and gas revenue-sharing that Aceh has been receiving since 2002. Law No. 11/2006 has changed the defi nition of the SAF. The SAF is now referred to only for funds received from the 2 percent allocation of the national DAU funds. The name of the former “special autonomy fund” from additional revenue-sharing oil and gas has changed to “additional revenue-sharing oil and gas”. 2 Other sources of revenue include grants, emergency funds, and other contingency funds from the central government. Tax revenue-sharing from the province in district/city government budgets recorded under the “other” category has been re-classifi ed in the new “revenue- sharing” category.

10 REVENUE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

This year SAF represents more than half of the provincial government’s revenue (54 percent), although most of these resources will be implemented in districts/cities through joint programs.3 The decline of non- tax revenue-sharing has had a profound impact on provincial revenue, since it was the main source of revenue prior to 2008. It halved in real terms from Rp 3 trillion in 2006 to Rp 1.5 trillion in 2008. Without SAF, total provincial revenue would have continued to decline this year. PAD has become the second highest contributor of provincial revenue since 2006, driven by a sharp increase in provincial taxes (vehicle and fuel taxes) and other own-source revenue (Figure 1.2). It has now surpassed the role of DAU in importance.

Figure 1.2 Composition of provincial revenue Figure 1.3 Composition of district/city government revenue

7,000 9,000 Others Special Autonomy Fund Others INPRES/DAK INPRES/DAK SDO/DAU 8,000 SDO/DAU Non -tax Revenue Sharing Tax Revenue Sharing Own Source Revenue 6,000 Non -tax Revenue Sharing Tax Revenue Sharing Own Source Revenue 7,000 5,000 6,000 4,000 n n 5,000 o o i i l l l l i i b b

4,000 p 3,000 p R R 3,000 2,000 2,000 1,000 1,000

- - 1999 2001 2002 2003 2004 2005 2006 2007 2008 1999 2001 2002 2003 2004 2005 2006 2007 2008

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Data are in real terms. Constant 2006 prices. Note: Data are in real terms. Constant 2006 prices.

Overall, district/city government revenue has increased slightly this year. DAU remains the most important source of revenue for district/city governments, accounting for almost 60 percent of total revenue (2001-08). DAK4 has also gained in importance in recent years, with its allocation tripling from 2005 to 2008. This year, DAK has become the second highest contributor of total district/city government revenues, surpassing the role of non-tax revenue-sharing, representing 10 percent of total revenue. Revenue from tax revenue-sharing and PAD has also experienced a substantial increase since 2005. Revenue from the “other”5 revenue category has decreased slightly since 2007. Similar to the provincial level, revenue from non-tax revenue-sharing has declined at the district/city level, representing only 7.2 percent of total revenue this year compared with 22 percent in 2003 (Figure 1.3).

Composition of provincial and district/city government revenue in Aceh DAU6 allocations to sub-national governments in Aceh have been increasing in recent years. A substantial increase occurred in 2006 when DAU rose by 31 percent (in real terms), refl ecting the implementation of an increase of national DAU allocations to 26 percent of domestic net revenue and 100 percent coverage of civil service salaries, as mandated by Law No. 33/2004. This signifi cant increase has benefi ted district/city governments in particular. This year, the total DAU allocation to provincial and district/city governments in Aceh reached Rp 6.35 trillion (Figure 1.4). In per capita terms, Aceh received Rp 1.56 million (ranking 12th), slightly above the national average of Rp 1.5 million. (Figure A.1). 3 According to Qanun No. 2/2008, 60 percent of SAF will be allocated to fi nance district/city government development programs (e.g., education, health, and infrastructure) through a joint program between the province and district/city government, and the remaining 40 percent will be used to fi nance provincial programs (also through a joint program), which could potentially be implemented in district/city governments as well. 4 Dana Alokasi Khusus (DAK), or the special allocation fund, is conditional transfer from the central government to sub-national governments to achieve certain central government objectives. In 2001 and 2002, DAK only comprised reforestation funds. Since 2003, DAK has been expanded and earmarked for education, health and infrastructures, agriculture, sea and fi sheries, government facilities, and environment. 5 Revenue from the “other” revenue category consists of grants, emergency funds, adjustment funds from the central government, and other fi nancial assistance from higher levels of government. 6 Dana Alokasi Umum (DAU), or the general allocation fund, is a discretionary block grant transferred from the central government to all sub- national governments to achieve fi scal equality.

REVENUE 11 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure 1.4 DAU allocations to provincial and Figure 1.5 DAK allocations to provincial and district/city governments in Aceh district/city governments in Aceh

7,000 100 1,200 20

DAU (nominal) (LHS) 90 DAK (nominal) 6,000 (LHS) 80 1,000 15 5,000 70 800 DAU (constant 60 4,000 2006=100) (LHS) 50 600 DAK (constant 10 (%) 2006=100) (%) 3,000 Rp billion Rp billion 40 (LHS) 400 Share of DAU to total 2,000 30 revenue (%) (RHS) 5 Share of DAK to total 20 200 1,000 revenue (%) (RHS) 10

0 0 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations.

DAK allocations have also increased signifi cantly since 2006. DAK allocations have increased more than fi vefold in real terms since the fi rst sectoral allocations were introduced in 2003, from Rp 174.9 billion to Rp 979.4 billion in 2008 (Figure 1.5). In 2007, DAK funds were earmarked for three main sectors: education (28 percent), health (20 percent) and infrastructures (30 percent). Unlike previous years, the provincial government has also received DAK of Rp 35.4 billion this year, earmarked for road and irrigation projects. Aceh has received a per capita DAK allocation of Rp 247,000, slightly above the national average (ranking 12th) of Rp 218,000 (Figure A.2 in the Appendix).

Non-tax revenue-sharing7 has declined in recent years, both in terms of volume and as a share of total revenue. Despite its declining trend, non-tax revenue-sharing still dominates overall revenue-sharing, on average representing 84 percent of total revenue-sharing (2001-08). It is dominated by oil and gas revenue-sharing (96 percent), with the remainder accruing from the forestry, mining and ﬁ sheries sectors. Revenue from non-tax revenue- sharing has declined sharply since 2006, from Rp 4.1 trillion (35 percent of total revenue) to only Rp 2.1 trillion this year (13 percent of total revenue) (Figure 1.6).

Figure 1.6 Non-tax revenue-sharing of provincial Figure 1.7 Tax revenue-sharing of provincial and and district/city governments in Aceh district/city governments in Aceh

4,500 100% 900 20% Income Tax (PPh) 4,000 90% 800 Real Estate Transfer Tax (BPHTB) Land and Building Tax (PBB) 80% 3,500 Nominal 700 e

15% u

70% n 600 e

3,000 v e r

60% l

2,500 500 a o t i l

Constant o 50% l 10% i t

b (2006=100) f 2,000 400 o

Rp billion 40% Rn g n

1,500 300 i 30% r a

5% h

1,000 s

20% % of total revenue 200

Share to total x a

revenue (%) t 500 10% 100 f o

0 0% 0 0% % 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2006 2007 2008

7 Non-tax (natural resources) revenue-sharing includes oil and gas revenue from SAF based on Law No. 18/2001 in 2002-07 and additional revenue-sharing from oil and gas based on Law No. 11/2006 in 2008.

12 REVENUE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Provincial and district/city government revenue from tax revenue-sharing has risen consistently, although its share to total revenue is relatively small (5 percent on average over 2001-08)). Revenue from tax revenue-sharing has increased almost threefold, from Rp 304 billion in 2002 to Rp 824 this year (Figure 1.7). Its contribution to total revenue has increased from 3.5 percent in 2002 to 6 percent this year. This increase has been primarily driven by an almost threefold increase in land and building tax between 2002 and 2008, which stems from an expansion of the tax base as a result of increased land utilization and new houses built during the reconstruction. Land and building tax accounts for 83 percent of total tax revenue-sharing, followed by income tax (10 percent) and real estate and transfer tax (7 percent).

Own-source revenue (PAD) of provincial and district/city governments has increased signiﬁ cantly since 2006. Provincial PAD has increased more than fourfold since 2005. This increase mainly stems from a signiﬁ cant increase in provincial taxes and “other” PAD, accounting on average for 58 percent and 34 percent of provincial PAD, respectively, in 2006-08 (Figure 1.8). District/city governments’ PAD has more than doubled in real terms, dominated by “other” PAD and district/city taxes and retributions, representing 50 percent and 43 percent of total PAD, respectively (Figure 1.9). The increase in revenue from district/city taxes and retributions is most likely driven by the positive impact of reconstruction activities after the tsunami, in particular with the expansion of hotel and restaurant businesses, as well as a sharp increase in the number of cars and motorcycles. The revenue from other eligible PAD8 is mainly derived from interest on deposits and giro services generated from an accumulation of unspent budget balances.9

Figure 1.8 The composition of provincial own- Figure 1.9 The composition of district/city source revenue (PAD) government own-source revenue (PAD)

800 400 Others 700 Others 350 Retributions 600 300 Retributions Local Taxes Local Taxes

o 500 250 i l l i o i l b

400 i 200 p b

Rn p

300 Rn 150

200 100

100 50

0 0 1999 2001 2002 2003 2004 2005 2006 2007 2008 1999 2001 2002 2003 2004 2005 2006 2007 2008

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Revenues based on constant 2006 prices. Note: Revenues based on constant 2006 prices.

Per capita revenue Signifi cant fi scal disparities between district/city governments still persist. For example, Kota Sabang remains the richest in terms of per capita district/city revenue, while Pidie is the poorest. Kota Sabang received per capita revenue of Rp 9.2 million in 2007, seven times higher than that of Kab. Pidie, at Rp 1.3 million (Figure 1.10). The average fi scal revenue per capita among district/city government is Rp 2.8 million. In 2004, Kota Sabang received nearly six times the per capita revenue of the lowest district (Kab. Bireuen). Kab. Pidie had the second-lowest per capita revenue in 2004. District/city governments that have large per capita revenues are mostly those with smaller populations, such as Kota Sabang, Aceh Jaya, Gayo Lues and Simeulue. In 2006, Aceh’s per capita revenue was around Rp 1.5 million, ranking 8th compared with other provinces.

8 The provincial and a few district/city governments have recorded zakat (religious donations/obligations) in their budgets. However, this represents very small share of PAD and is not consistently recorded across district/city governments. Thus, it has been reclassiﬁ ed as “other” PAD. 9 In 2007, the unspent balance (SiLPA) represented 47.3 percent of the provincial budget and 23 percent of district/city government budgets. This lack of absorptive capacity is mainly caused by delays in the budget approval process.

REVENUE 13 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure 1.10 Per capita revenues among district/city governments in Aceh, 2007

Kota Sabang Kab. Aceh Jaya Kab. Gayo Lues Kab. Simeuleu Kab. Nagan Raya Kab. Aceh Barat Daya Kab. Bener Meriah Average Average Kab. Aceh Barat Kota Banda Aceh Kab. Aceh Tengah OSR (PAD) Kab. Aceh Tenggara Tax Revenue Sharing Kota Lhokseumawe Kota Langsa Non-Tax Revenue Sharing Kab. Aceh Singkil DAU Kab. Aceh Selatan DAK Kab. Aceh Tamiang Others Kab. Aceh Timur Kab. Aceh Besar Kab. Bireuen Kab. Aceh Utara Kab. Pidie

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Rupiah

Source: GoA and World Bank staﬀ calculations.

Special Autonomy Fund and additional revenue sharing from oil and gas Law on Governing Aceh No. 11/2006 (LoGA) provides signifi cant opportunities for Aceh to improve service delivery and enhance economic development in the region. On the fi scal side, starting this year, Aceh will receive SAF for the next 20 years — an additional transfer from the central government to the provincial government equivalent to 2 percent of national DAU allocations for 15 years and 1 percent for the remaining fi ve years.10 In addition, the new law re-endorses the additional share of revenue-sharing from oil and gas (55 percent and 40 percent, respectively), on top of regular national oil and gas revenue-sharing for producing regions of 15 percent (oil) and 30 percent (gas), respectively.11 This year, Aceh has received additional revenue of Rp 3.59 trillion from the SAF allocation and Rp 1.3 trillion from additional oil and gas revenue-sharing. LoGA replaces the previous Law on Special Autonomy Status for Aceh (Law No. 18/2001), which was eff ective from 2002 to 2007.12

SAF is transferred from the central government to the provincial government and is earmarked for development programs that are decided jointly between provincial and district/city governments. The distribution arrangements from the provincial to district/city governments are governed by Qanun No. 2/2008. The management of SAF is centralized at the provincial level. The provincial government is responsible for administration, allocation, implementation, and monitoring of programs funded from SAF. The provincial government has discretionary authority over 40 percent of SAF, while the remaining 60 percent is allocated by weighted ﬁ scal needs

10 According to LoGA, the Special Autonomy Fund is intended to fund the development and maintenance of infrastructure, people economic empowerment, poverty eradication, and fi nance the education, social, and health sectors. Further the explanation of the law also outlines that the Special Autonomy Fund could also be used to increase the capacity of government offi cials and teachers, scholarships, and other educational activities based on identifi ed priorities. 11 In total Aceh receives 70 percent of revenue sharing from oil and gas. 12 See Table A.2 for more information on key distinctions on defi nition of Special Autonomy Fund and allocation schemes between Law No.18/2001 and Law No.11/2006

14 REVENUE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

formula at the discretion of the 23 district/city governments13 (Figure A.3). All programs funded with these resources, regardless of whether they are at the discretion of the provincial government or the district/city governments, are to be decided jointly by the provincial and district/city governments.

The sharing arrangements for additional revenue-sharing from oil and gas (between the provincial and district/city governments and among district/city governments) diff er from those of SAF. Revenue-sharing from oil and gas is also transferred from the central government to the provincial government. A minimum of 30 percent of this fund is set aside for education prior to any further allocations to other sectors.14 The remaining 70 percent will be allocated to fi nance joint development programs managed by provincial and district/city governments: 40 percent will be used for provincial programs, and 60 percent will be used to fi nance district/city government programs. The allocation among district/city governments is determined based on oil producing and non-producing formula allocation15 (Figure A.4). However, as with SAF, all programs to be fi nanced by this fund will be administered and implemented by the provincial government.

13 The fund is allocated to district/city governments in the form of a joint program. The formula provides budget ceiling for each district/city government, which is the maximum amount of budget each district/city government is eligible to propose for “a joint program” to the province. 14 Law No. 11/2006 speciﬁ es that the source of revenue-sharing earmarked for education is only from additional revenue-sharing from oil and gas, while Law No. 18/2001requires that 30 percent of all revenue-sharing including tax and non-tax be allocated to education. 15 It is important to note that this arrangement is only applied for additional revenue sharing from oil and gas (55 percent and 40 percent respectively). While the regular national sharing of oil (15 percent) and gas (30 percent) is transferred directly from central government to the province and respective district/city governments.

REVENUE 15 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Box 1. The management, allocation and implementation arrangements of the Special Autonomy Fund

In order to manage and administer SAF, the provincial government has established a Coordinating Team of Additional Oil and Gas Revenue and Special Autonomy Fund, as mandated by Law No. 11/2006. The team is tasked with advising the Governor on the implementation policy, designing and improving the allocation formula, setting up criteria for the selection of programs/projects, evaluating programs and projects funded by SAF, and providing technical assistance for district/city governments to propose programs/projects. The establishment of this team is regulated by Governor Regulation No. 24/ 2008. The team is led by the Provincial Secretary (Sekretaris Daerah) consists of nine members from the provincial government, two experts, and two representatives from district/city governments.

The current allocation and implementation arrangements for SAF and additional revenue-sharing from oil and gas are complex, and some issues regarding planning and implementation have still to be defi ned. Funds from SAF are allocated to district/city governments through joint programs that are then administered and implemented by the provincial government. District/city governments have to propose projects/programs to the provincial government within budget limits determined by a weighted fi scal needs formula. The lack of guidance in this planning process has complicated an already lengthy planning process. For 2008 fund allocations, provincial and district/city governments have to attend a series of additional planning sessions to discuss and agree on joint programs, although the criteria for programs/projects to be funded have not been clearly defi ned. The centralized implementation arrangements by the province (including functions that have been largely decentralized such as health and education) could potentially discourage ownership by district/city governments of projects/programs and undermine the role of district/city governments in their decentralized functions. In addition, the centralized implementation arrangements create an extra burden on the already stretched capacity of the provincial government.

Aceh can benefi t considerably from SAF, although some improvements regarding planning and implementation arrangements are needed to guide to eff ective implementation. First, provincial and district/city governments need to defi ne a strategy (master plan) to guide and direct the implementation of SAF. This strategy has to incorporate both the provincial and district/city governments’ planning and, among others, set clear objectives, defi ne sectoral priority and criteria for programs and projects to be funded, outline management, planning and implementation, and monitoring and evaluation arrangements. Second, to simplify the planning and implementation process, the provincial government may need to fi nd alternative options in channeling funds directly to district/city governments. One potential option is through a conditional transfer (such as DAK) in the form of cash instead of in the form of “joint programs”. Third, there should be clear guidance and diff erentiation in the roles of the provincial and district/city governments. The provincial government should provide overall guidance and general planning, management, and implementation and focus on large-scale programs that have benefi ts across district/city governments (such as national and provincial road networks, electricity, irrigation), and monitoring the overall implementation. District/city governments may have comparative advantages on planning and implementing decentralized functions and district/city issues, such as building schools and health facilities. Fourth, the provincial government needs to provide good leadership and guidance to district/city governments, for example through improvement of budget processes and absorption capacity. Fifth, there is great concern over the low absorption capacity of provincial and district/city governments. While provincial and district/city governments should all strive to improve this area, there is a suggestion from policy-makers to set up fl exible arrangements, such as creating endowment/reserve funds for education from SAF. This would allow for better planning and ensure the eff ectiveness of SAF funding, while preparing and improving government institutions and allowing for longer-term use of SAF for future generations.

Budget approval processes in Aceh The budget processes of provincial and district/city governments in Aceh still do not follow the timeline set by laws and regulations.16 Although district/city governments have made considerable progress, they still lag to widely varying degrees.17 In contrast, the provincial government’s performance has grown worse (Figure 1.12). The

16 Several legislations that govern sub-national budget processes and accountability are: Law No. 17/2003, Law No. 15/2004, Law No. 32/2004, Law No. 33/2004, and Ministry of Home Aﬀ air Regulation No. 13/2006 17 On average, the budget approval processes of district/city governments have improved substantially from mid-May in 2005 to end-Mar in 2008. Some district/city governments approved their budget by second week of January in 2008, but some district/city governments are still lagging approving their budget as late as late April in 2008.

16 REVENUE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

provincial government has been the last to approve its budget compared with district/city governments over the past two years (2007 and 2008). This year, the provincial government was only able to pass its budget at the end of June 2008. The MoF sent warning letters to the provincial and district/city governments threatening to postpone the transfer of DAU (25 percent of monthly transfers) for delays in submitting their budgets to the MoF.18 Compared with last year progress, this sanction has been eﬀ ective in providing incentives for the provincial and district/city governments to improve their budget approval processes in 2008.

Delays in budget approval at the provincial level have an adverse impact on budget approval at the district/ city government level, since they delay transfers from the provincial government to district/city governments, in particular oil and gas revenue-sharing funds. In practise, most district/city governments approve their budgets before the approval of the provincial budget. This may indicate a lack of budget coordination between provincial and district/city governments. According to the regulations, regional governments and parliaments should agree on their proposed budgets (APBA/APBD) at least one month before the start of the ﬁ scal year through the passage of a regional regulation.

Figure 1.11 Date of approved budget of provincial and district/city governments in Aceh, 2005-08 14 ) e c

n 13 i v o

r 12 p

c 11 n i (

t 10 n e

m 9 n r

e 8 v o g 7 s e i t i 6 c / s t

c 5 i r t s

i 4 d

f o

3 r e

b 2 m u 1 N 0 2005 2006 2007 2008

January March April May and later

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Note: Data include provincial government. 2005 data are based on 17 out of 21 district/city governments, 2006 data are based on 20 out of 21 district/city governments

Lack of discipline in budget approval processes has an adverse eﬀ ect on the implementation of development programs, which undermines the provision of service delivery and could prevent the region from achieving its development objectives and targets. Prior to budget approval, provincial and district/city governments can only spend on routine items such as salary payments and administrative activities through small advance payments and are not allowed to implement programs/projects. Implementation of programs/projects such as the building of schools, health facilities and road networks requires thorough procurement processes, which normally take 45 18 Based on Government Regulation (PP) No. 56/2005 and MoF Decree No. 46/2006 regarding Regional Financial Information System, the provincial and district/city governments have to submit their budgets to the MoF by January 31 at the latest. The MoF will send a warning letter if a budget has not been submitted one month after the deadline. If two months after the issuance of warning letter, the provincial or district/city government has not submitted a budget to the MoF, then the MoF in coordination with MoHA can apply a sanction by postponing the transfer of DAU (25 percent of monthly transfer) until the budget is submitted.

REVENUE 17 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

days and can only start after budgets have been passed. The delays in budget approval leave limited time for project implementation and are detrimental to the quality of the project being undertaken. As a consequence, the provincial and some district/city governments are accumulating unspent balances at the end of each ﬁ scal year.

The signiﬁ cant increase in revenue from SAF, coupled with the poor performance of the budget approval process in Aceh, raises considerable concern. The administration and allocation of SAF are centered at the provincial level, making it critical that the provincial government ﬁ nishes its budget approval process on time. A long delay in this year’s budget approval process, together with a doubling in revenues, poses a major challenge for the province. This is because it leaves only six months for implementation and unavoidably compromises the quality of project implementation. In view of the current arrangements covering SAF, it is even more critical for the provincial government to approve its budget on time in order to be able to guide and inform district/city governments in allocating their own budgets.

Box 2. The budget process in Aceh

Both external and structural challenges have resulted in slow budget processes: the tsunami, the political transition in the province, and the changing of regulations at the national level are the three main external factors. In recent years, Aceh has faced some challenges that have contributed to delays in budget approval: i) the catastrophic tsunami on December 2004 had a profound impact on provincial and some district/city governments, ii) the signing of the peace accord in August 2005, followed by the preparation of Law No. 11/2006 and a set of regional regulations (Qanun); iii) the fi rst direct election conducted in Aceh on December 11, 2006 and the inauguration of the new elected governor and heads of district/city governments in February 2007. At the same time it was the fi rst year (2007) of the implementation of the new budget format according to Permendagri No. 13/2006; and iv) this year is the fi rst year of the implementation of LoGA, especially related to the allocation of SAF. Regional regulations (Qanun) on Financial Management (No. 1/2008) and the Law on the Allocation of SAF and Additional Revenue from Oil and Gas Sharing (No. 2/2008) were passed in January 2008. In addition, a reorganization of the heads of technical agencies (through a competitive selection process) early this year may have led to Dinas heads being distracted from focusing fully on budget preparation.

Structural constraints also have a signiﬁ cant impact on budget processes. These constraints include: i) lack of discipline from district/city leaders and parliaments, ii) lack of human resources (quality and quantity) in planning and budgeting within Bappeda (planning agency) and technical agencies, iii) lengthy consultation processes between executive and legislative branches (budget deliberation tends to focus on line items and discussion on details as opposed to overall allocation), iv) political interest, v) strong power of parliaments over ex-ante deliberation and approval (a similar challenge is also being encountered at the national level), and vi) unclear work division between Bappeda and Finance Department of the Governor’s Oﬃ ce over the planning and budgeting function.

Provincial and district/city governments and parliaments should strive to improve budget processes if development targets and objectives are to be met. Some key points towards improving budget processes are: i) Political will from all parties (in particular executive and legislative branches) is critical; ii) The role and authority of parliaments in budget processes need to be clarifi ed and should focus on broader development objectives instead of line budget costing. The lengthy budget process needs to be reviewed and shortened where possible (recent experience in Papua shows that this is possible and has been eff ective), iv) Executive and legislative branches should work hand in hand to complete regional regulations (Qanun) regarding budget processes and fi nancial management, v) The division of work between Bappeda and the Finance Department regarding the planning (RPJP, RPJMD, RKA) and budgeting (preparation of KUA and APBD) functions should be clarifi ed; and vi) Capacity of the executive and legislative branches in planning and budgeting needs to be strengthened (through training of current staff or recruiting experienced and specialized staff in the future). Parliaments may also need to be supported by professional consultants in analyzing regional government budgets.

Source: Summary of World Bank Seminar Series, Making Aceh’s Budget Works: Challenges and Opportunities, Banda Aceh, June 26, 2008.

18 REVENUE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Recommendations 1. Aceh’s ﬁ scal position will remain strong in the years to come due to a revenue windfall from SAF. Provincial and district/city governments need to develop a strategy to manage and allocate these additional resources eﬃ ciently and also invest in strategic programs that can enhance economic growth, so that the current high revenue level can be sustained after SAF is phased out. This is to avoid the recent experience of declining revenues from oil and gas. Provincial and district/city governments also need to enhance their capacity in resource management.

2. The current allocation and implementation arrangements of SAF are complex and some issues regarding planning and implementation have still not been deﬁ ned. It is critical that provincial and district/city governments develop a strategy to guide and direct the implementation of SAF, which sets clear objectives, deﬁ nes sectoral priorities and criteria for programs and projects to be funded, outlines their management, planning and implementation, and also lays down monitoring and evaluation arrangements.

3. Provincial and district/city governments and parliaments should strive to improve their budget processes if development targets and objectives are to be achieved. Lack of discipline in budget approval processes has an adverse impact on the implementation of development programs, which undermines the provision of service delivery and could prevent the region from achieving its development objectives and targets.

REVENUE 19 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

20 REVENUE Expenditure 2 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Overview of overall expenditure19 Following a substantial increase in revenues, overall public spending in Aceh has also risen and is expected to remain high in the years to come. After a slight decline in 2005, provincial and district/city government spending started to increase signifi cantly in 2006. In real terms, total sub-regional spending in Aceh is projected to almost double this year compared with 2005 spending levels. Central government spending in Aceh through deconcentrated funds is relatively stable, declining slightly from Rp 1.3 trillion in 2005 to Rp 1.2 trillion (Figure 2.1). In addition, Aceh also has received signifi cant allocations from the central government for reconstruction and rehabilitation of Rp 21 trillion (2005-09) after the devastating tsunami in December 2004, together with Rp 1.5 trillion (2005-07) to strengthen the peace process and assist confl ict-aff ected communities.

Figure 2.1 Overall public spending in Aceh has risen signiﬁ cantly after 200520

Deconcentrated Fund (APBN) 20,000 Province Kab/Kota Current Prices 15,000 n o i l l i b

p 10,000 R

5,000

0 1999 2002 2003 2004 2005 2006 2007 2008

Source: GoA, BRR, World Bank. Data are in constant 2006 prices. District/city government budgets for 2008 are projected using MoF data. Note: The bar chart is based on constant 2006 prices, while the total revenue line graph is based on current prices per year.

Although total spending has increased, the absorptive capacity of the province and district/city governments remains weak. An increase in provincial and district/city government spending in 2007 was ﬁ nanced by unspent balances (carryovers) from 2006 budgets. Both provincial and district/city government spending increased in 2007 despite a slight drop in revenues in 2007. Unspent balances from 2006 budgets represent a signiﬁ cant share of 2007 provincial and district/city government budgets (47 percent and 23 percent, respectively). Provincial spending almost doubled in 2007 compared with 2005, while district/city government spending increased by 67 percent from 2005 to 2007.

Indirect and direct expenditures21 Provincial and district/city governments in Aceh have started implementing a new budget format since 2007, following Permendagri No. 13/2006 (MoHA Regulation). The new budget format is classiﬁ ed into two broad categories: indirect expenditure and direct expenditure. Permendagri No. 13/2006 introduces new performance- based budgeting standards, replacing the format of government apparatus and public expenditures according to Kepmendagri No. 29/2002 (MoHA Decree).22

19 Due to data constraints, the analysis uses a mix of planned (9) and realized (11) APBD (district/city government budgets) for 2006 and planned APBD for 2007. 20 Transfers from the province to district/city governments are excluded in oder to avoid double counting. These transfers normally represent a large portion of provincial spending. For instance, these transfers reached Rp 1.1 trillion in 2007. 21 Indirect expenditure is spending that does not directly link to the implementation of programs and activities, includes staff expense (civil servant salary), interest payments, subsidy, grants, social assistances, revenue-sharing, fi nancial assistances and unforeseen expenditures. Direct expenditure is spending that directly links to the implementation of programs and activities, constitutes staff expenses (mainly incentives to support project implementation), goods and services expenditures (including goods and services, operation and maintenance, and travel expenses), and capital expenditure. In the past, staff and capital spending in this category was referred to as “development expenditure”. 22 The time series analysis was conducted by mapping the two previous budget formats, MAKUDA (Financial Administration Manual for District/City Governments) 1981 and MoHA Decree No. 29/2002, to the new budget format following MoHA Regulation No. 13/2006 (Annex Table 2.1).

22 EXPENDITURE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

The change in budget format has had a signiﬁ cant impact on the expenditure side, creating challenges in closely monitoring sub-national spending. The main challenge is that the economic classiﬁ cations of goods and services, operational and maintenance, and travel expenses have now been merged into one single category, namely “goods and services expenses”. A previous study (World Bank, 2006) highlighted that allocations for operational and maintenance spending was extremely low in Aceh (at only 2.3 percent of the total budget in 2005), while spending on travel and goods and services expenses had increased. Combining these three sub-categories prevents the depth of analysis that could be achieved in the past. Consequently, in this report analysis has only been conducted at an aggregate level. However, it is critical for provincial and district/city governments in Aceh to closely monitor their operational and maintenance spending, since assets built during reconstruction will soon be handed over to, and require maintenance by, provincial and district/city governments.

In 2007, provincial spending on capital and social assistance increased substantially while spending on salaries and goods and services (including operational and maintenance, and travel expenses) was relatively stable.23 Provincial development spending increased substantially in 2002, but has been in decline since then, both in terms of volume and share (from 80 percent in 2002 to 62 percent in 2007) (Figure 2.2). Spending on goods and services expenses (including operational and maintenance and travel expenses) rose sharply in 2006 and 2007. The huge increase in “other” expenses from Rp 17 billion in 2006 to Rp 436 billion in 2007 was driven primarily by an increase in social assistance to tsunami and conﬂ ict-aﬀ ected communities. Capital spending is expected to increase this year, since a share of SAF is mandated as an allocation for capital spending. Overall, based on the new budget format, provincial spending is now dominated by direct expenditure (Figure 2.3).

Figure 2.2 Provincial expenditure by economic Figure 2.3 Share of Aceh’s provincial expenditure classiﬁ cation

3,000 Goods and services exp. (inc. ops&maint., travel) 100 Others (social assistance, grant, unexpected exp., interest payment, subsidy) 90 Indirect Expenditure 2,500 Direct Expenditure Capital 80

2,000 Direct 70 Expenditure expenses 60 Indirect

Rp billion 1,500 50

Expenditure (%) 40 1,000 30 20 500 10

0 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1999 2001 2002 2003 2004 2005 2006 2007

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Constant 2006 prices.

District/city government capital spending grew rapidly in 2007. This increase was both in real terms (42 percent) and as share of total expenditure (from 27 percent of total in 2006 to 32 percent of total in 2007) (Figure 2.4). Spending on salaries rose only slightly despite the recent large increases in overall spending. Spending on goods and services has also experienced a notable increase since 2005. However, further analysis (disaggregating goods and services, operational and maintenance, and travel expenses) is required to understand the main drivers of these increases. Capital and staﬀ (project-related) spending saw a slight decline in 2006, but rose again in 2007. On average, using the new budget format classiﬁ cation, district/city governments spend more on direct spending (54 percent) than on indirect spending (Figure 2.5).

23 Prior to 2006, the budget classifi cation was categorized by routine and development (including capital and staff project related expenses). Further disaggregation by capital and staff project related expenses was unavailable.

EXPENDITURE 23 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure 2.4 District/city government expenditure Figure 2.5 Share of district/city government by economic classiﬁ cation expenditure by direct and indirect expenditure

10,000 100 Goods and services exp. (inc. ops&maint., travel) 9,000 Others (social assistance, grant, unexpected exp., interest payment, subsidy) expenses 90 Indirect Expenditure 8,000 80 Direct Expenditure Capital 7,000 Direct Expenditure 70 6,000 Indirect Expenditure 60 5,000 50 (%) Rp billion 4,000 40

3,000 30

2,000 20

1,000 10

0 0

1999 2001 2002 2003 2004 2005 2006 2007 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Constant 2006 prices.

Sectoral expenditure Intersectoral allocations of provincial spending improved in 2007. Spending on “others” (mainly social assistance) and infrastructure grew in importance (becoming the second and third priorities). General administration spending24 remained the main priority, although its share of total spending declined sharply from 49 percent in 2006 to 28 percent in 2007. Nonetheless, in real terms general administration spending rose slightly between 2006 and 2007 (Figure 2.6). In 2007, almost 40 percent of provincial expenditure went towards capital spending, of which the larger shares were allocated towards infrastructure and general administration, while staﬀ expenses (including project-related staﬀ costs) consumed 22 percent of provincial total spending (Figure 2.7).

Most sectors experienced substantial increases in spending in 2007 due to the larger overall budget allocation. The three sectors receiving the highest increases were: others; housing, labor and social aﬀ airs; and agriculture and forestry. Of particular interest, spending on public works (infrastructure) and health more than doubled. On the other hand, the general administration and education sectors increased only moderately in real terms in 2007, while experiencing a sharp decline as a share of total spending between 2006 and 2007 (from 50 percent to 28 percent and from 20 percent to 10 percent, respectively). This declining trend in education spending is linked to the steady decrease in oil and gas revenue-sharing.25

Figure 2.6 Provincial sectoral spending in Aceh Figure 2.7 Provincial spending by selected sectors and economic classiﬁ cation, 2007

22% 23% 39% 16% 3,000 Others (Social Assistance, Grants, Unexpected Exp) Total

2,500 Industry, Trade, Energy and Mining Others Agriculture, Forestry, State Crops, 2,000 Livestock, and Fishery n Infrastructure o i l l

i Goods and services (inc. b

p maintenance & travel) R 1,500 Health Education and Culture Capital

1,000 Public Health and Welfare Education Others

Public Works and Trasnportation General Administration 500

Government General Administration 0 500 1,000 1,500 2,000 2,500 3,000 0 2001 2002 2003 2004 2005 2006 2007 Rp billion

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Constant 2006 prices.

24 The general government administration sector includes all technical agencies’ spending under general government services, such as governor oﬃ ces (Sekda), parliaments (DPRA), Bappeda and communication and information. 25 Law No. 18/2001 mandated that 30 percent of revenue from oil and gas revenue-sharing should be allocated for education.

24 EXPENDITURE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Similar to the provincial government, inter-sectoral allocations of district/city government spending have also improved. Although sectoral priorities have not changed (government general administration, education and public works), improvements have been seen in spending patterns towards general administration, public works (infrastructure) and the health sector (Figure 2.8). Spending on public works and health increased both in real terms and as a share of total spending between 2005 and 2007 (13.1 percent to 17.8 percent and 6.4 percent to 8.5 percent, respectively). The allocation for general administration decreased slightly as a share of total spending, from 36.4 in 2005 to 32.3 percent in 2007, but increased slightly in real terms. The allocation for education rose by 40 percent in real terms from 2005 to 2007. However, it declined as a share of total spending from 27 percent in 2005 to 25 percent in 2007. In 2007, 43 percent of the budget was allocated towards staﬀ expenses.

Figure 2.8 Sectoral spending of district/city Figure 2.9 District/city government spending governments in Aceh by selected sectors and economic classiﬁ cation, 2007

43% 17% 32% 8% 10,000 Others (Social Assistance, Grants, Total Unexpected Exp) 9,000 Industry, Trade, Energy and Mining Others 8,000 Agriculture, Forestry, State Crops, 7,000 Livestock, and Fishery Infrastructure 6,000 Goods and services (inc.

o maintenance & travel) i l l i Capital

b 5,000 Health p Education and Culture Rn 4,000 Others

3,000 Public Health and Welfare Education

2,000 Public Works and Trasnportation General Administration 1,000 Government General Administration 0 0 2,000 4,000 6,000 8,000 10,000 12,000 2001 2002 2003 2004 2005 2006 2007 Rp billion

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. calculations. Note: Constant 2006 prices.

Selected social outcomes (BPS, 2008) indicate some improvements in service delivery, but Aceh’s progress lags the national average. The poverty headcount in Aceh has declined from 28.69 percent in 2005 to 23.53 percent this year, but this is still high compared with the national average of 15.42 percent. The human development index (HDI) improved from 68.7 in 2004 to 69.4.in 2006 but remains below the national average of 70.1. Life expectancy improved from 68.0 years in 2005 to 68.3 years in 2006, but once again this is still lower than the national average of 68.5 years. Access to education is less of an issue in Aceh; the province has a higher school enrollment rate than the national average. However, Aceh is still lagging in the quality of education. Data from the Ministry of National Education (MoNE) indicate that Aceh’s completion rate is lower than the average national rate, especially for secondary schools, and Aceh’s drop-out rate is higher for primary and junior secondary schools than the national average. The ongoing reconstruction eﬀ ort may have contributed to these improvements, together with the higher budget allocations for key sectors by provincial and district/city governments.

Per capita spending on health, education and infrastructure In general, district/city government per capita spending on health, education and infrastructure has increased on 2004 levels, but varies across district/city governments. Most district/city governments consistently allocated higher per capita spending towards these three sectors, such as Aceh Barat Daya, Aceh Barat, Aceh Utara, Aceh Tamiang, and Kota Banda Aceh. Relatively few district/city governments saw their per capita spending on these three sectors remain low (or unchanged), although this was the case in Pidie (health), Simeulue (education), and Aceh Timur (infrastructure). Some district/city governments actually allocated lower per capita spending to these three sectors, such as Kota Langsa, Nagan Raya, and Aceh Timur (health); Gayo Lues, Nagan Raya, Aceh Selatan, Aceh Tenggara (education); Aceh Timur, Kota Sabang, Simeulue, Bireuen (infrastructure).

EXPENDITURE 25 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Average per capita spending on health among district/city governments has increased. The average per capita spending on health increased both in real terms and as a percentage of total spending, from Rp 84,766 (6.3 percent) in 2004 to Rp 275,184 (8.1 percent) in 2007. Kota Sabang achieved the highest level with per capita health spending of about Rp 1.6 million, while Pidie was lowest with only Rp 114,758 (Figure 2.10). However, since higher allocations to health seem to have failed to translate into better health outcomes, district/city governments with higher per capita allocations will need to look into improving spending eﬃ ciency. In 2007, Kota Sabang suﬀ ered a 1.6 percent infant mortality rate compared with 0.76 percent in Pidie, while births assisted by a professional health worker were lower in Sabang (79 percent) than Pidie (94 percent) (Dinas Kesehatan Aceh, 2008).

Figure 2.10 Per capita spending on health by district/city in Aceh

Kota Sabang Kab. Aceh Jaya Kab. Aceh Barat Kab. Aceh Barat Daya Kab. Aceh Tengah Kota Langsa Kab. Nagan Raya Kab. Bener Meriah Kab. Aceh Tamiang Kab. Simeuleu Kab. Aceh Singkil Kota Banda Aceh Kab. Aceh Besar Kab. Aceh Selatan Kab. Bireuen 2007 2006 Kab. Aceh Tenggara 2004 Kab. Aceh Utara Kota Lhokseumawe Kab. Gayo Lues Kab. Aceh Timur Kab. Pidie

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000

Rupiah

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Note: Constant 2006 prices.

Since 2004, average per capita spending by district/city governments on education has almost doubled. Average per capita spending of Rp 405,767 in 2004 rose to Rp 708,407 in 2007. However, the share of education in total spending declined from 34.5 percent in 2004 to only 24 percent in 2007 due to the increase in the size of the total budget. Kota Sabang has consistently made the highest per capita allocations to education (Rp 2.2 million in 2007), while Simeulue has regularly posted low per capita allocations (second lowest in 2004) (Figure 2.11). However, higher budget allocations have yet to translate into improved education outcomes. The student-to-teacher ratio (STR) is lower (better) in Pidie than the average for Aceh and the number of students (SMA) who passed the national exam in 2008 is higher in Pidie than in Kota Sabang. However, Kota Sabang has the lowest STR for primary and junior secondary schools, and among the lowest for senior secondary schools (BPS and Dinas Pendidikan Aceh).

26 EXPENDITURE MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure 2.11 Per capita spending on education by district/city in Aceh

Kota Sabang Kab. Aceh Jaya Kota Banda Aceh Kab. Nagan Raya Kab. Aceh Barat Daya Kab. Aceh Barat Kota Lhokseumawe

Kab. Aceh Tengah Kab. Bener Meriah Kab. Aceh Tamiang Kab. Aceh Besar Kota Langsa Kab. Gayo Lues Kab. Aceh Selatan 2007 Kab. Bireuen 2006 Kab. Pidie 2004 Kab. Aceh Utara Kab. Aceh Tenggara Kab. Aceh Singkil Kab. Aceh Timur Kab. Simeuleu

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Rupiah

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Note: Constant 2006 prices.

In 2004-07, average district/city government per capita spending on infrastructure increased threefold. The average share of spending on infrastructure from total expenditure also increased from 11.1 percent in 2004 to 16.4 percent in 2007. Aceh Jaya allocated the highest per capita spending to infrastructure between 2006 and 2007, mainly to rebuild road networks and other basic infrastructure that had been devastated by the tsunami. In 2007, Aceh Jaya’s per capita allocation reached Rp 2,678,425, more than 20 times that of the lowest ranking district in the province, Aceh Timur (Rp 120,195). Aceh Utara ranked second, although it had the highest share of infrastructure spending (39 percent of budget). Aceh Selatan, Pidie and Aceh Timur allocated low per capita spending on infrastructure in 2006-07. Several district/city governments allocated lower per capita spending for infrastructure in 2007 than in 2006, namely Kota Sabang, Simeulue, Bireuen, and Aceh Timur (Figure 2.12).

EXPENDITURE 27 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure 2.12 Per capita spending on infrastructure by district/city in Aceh

Kab. Aceh Jaya Kab. Aceh Utara Kota Sabang Kab. Nagan Raya Kab. Aceh Barat Kab. Aceh Barat Daya Kab. Gayo Lues Kab. Aceh Tamiang Kota Lhokseumawe Kab. Bener Meriah Kab. Aceh Tengah Kota Banda Aceh Kab. Aceh Tenggara Kab. Simeuleu 2007 Kab. Bireuen 2006 Kota Langsa 2004 Kab. Aceh Singkil Kab. Aceh Besar Kab. Aceh Selatan Kab. Pidie Kab. Aceh Timur

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Rupiah

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Note: Constant 2006 prices.

Recommendations 1. Improve absorptive capacity and eﬃ ciency in the pattern of overall spending and ensure that higher budget allocations on key sectors are being spent eﬃ ciently and having a positive impact on service delivery quality. Although there is likely to be a time lag between increased investment/spending and positive outcomes, social outcomes in Aceh continue to lag behind the rest of Indonesia despite improvements in overall inter-sectoral allocations and higher per capita allocations in key sectors.

2. Provincial and district/city governments should focus on improving access to secondary education and raising the quality of education generally. Aceh has been allocating a larger share of its budget to education since 2002, but outcomes have changed little. While access to primary education is less of an issue in Aceh, here too the quality of education requires attention.

3. It is critical for provincial and district/city governments to closely monitor allocations for operational and maintenance spending for public facilities, especially regarding the transfer of assets built during reconstruction from BRR to district/city governments. The new budget format has made it diﬃ cult to conduct thorough analysis at the aggregate level.

4. Provincial and district/city governments should anticipate the trend of declining allocations to education, mainly driven by declining of oil and gas revenue-sharing. The special autonomy fund (SAF) could serve as an alternative source of funding for education.

28 EXPENDITURE Appendices MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Appendix A: Figures and Tables

Figure A.1 DAU allocation per capita, 2008

Prop. Papua Barat Prop. Papua Prop. Kalimantan Tengah Prop. Maluku Utara Prop. Maluku Prop. Kepulauan Bangka Belitung Prop. Sulawesi Tenggara Prop. Bengkulu Prop. Gorontalo Prop. Sulawesi Tengah Prop. Sulawesi Barat Prop. Sulawesi Utara Prop. Nanggroe Aceh Darussalam Average Prop. Sumatera Barat Prop. Kalimantan Barat Prop. Nusa Tenggara Timur Prop. Jambi Prop. Kalimantan Selatan Prop. Sulawesi Selatan Prop. Bali Prop. Nusa Tenggara Barat Prop. Kalimantan Timur Prop. D I Yogyakarta Prop. Kepulauan Riau Prop. Sumatera Utara Prop. Sumatera Selatan Prop. Lampung Prop. Jawa Tengah Prop. Jawa Timur Prop. Riau Prop. Jawa Barat Prop. Banten 0123456 Rp million

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations. Figure A.2 DAK allocation per capita, 2008

Prop. Papua Barat Prop. Papua Prop. Maluku Utara Prop. Maluku Prop. Kalimantan Tengah Prop. Sulawesi Tenggara Prop. Bengkulu Prop. Kepulauan Bangka Belitung Prop. Sulawesi Utara Prop. Gorontalo Prop. Sulawesi Barat Prop. Nanggroe Aceh Darussalam Prop. Sulawesi Tengah Prop. Nusa Tenggara Timur Average Prop. Sumatera Barat Prop. Kalimantan Barat Prop. Kalimantan Selatan Prop. Sulawesi Selatan Prop. Jambi Prop. Bali Prop. Nusa Tenggara Barat Prop. Kepulauan Riau Prop. Sumatera Utara Prop. Kalimantan Timur Prop. Sumatera Selatan Prop. Lampung Prop. D I Yogyakarta Prop. Jawa Tengah Prop. Jawa Timur Prop. Riau Prop. Banten Prop. Jawa Barat 0 100 200 300 400 500 600 700 800 Rp ‘000

Source: GoA, MoF, Syiah Kuala University, and World Bank staﬀ calculations.

30 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table A.1 Mapping of district/city government budget format based on diﬀ erent regulations

Permendagri No. 13/2006 Kepmendagri No. 29/2002 MAKUDA 1981 Indirect Staff expense Apparatus - General Staff expense Routine Staff expense Expenditure Adm. Public - General Staff expense Adm Interest payment Routine Debt and interest payment Subsidy Routine Expenses that are not included in others Grant Social asissitance Routine Pension and assistance Revenue sharing to local government/ village Revenue sharing Subsidy/fi nancial and Financial Routine assistance to lower Financial assistance Assistance level of government to local government/ village Unexpected expense Unexpected Routine Unexpected expense expense Direct Goods and services Apparatus - Ops. & Staff expense Routine Goods and Services Expenditure expense maint. - Routine Public - Ops. & Staff expense Operatinal & maint. maintenance - Routine Offi cial travel expense - Routine Staff expense Apparatus - Ops. & Goods and maint. services Offi cial travel expense Operational and maint. Others

Public - Ops & maint. Goods and Development Development services Expenditure Expenditure Oﬃ cial travel expense Operational and maint. Others

Capital expense Apparatus Capital expense Public Capital expense Source: Makuda 1981, Kepmendagri No. 29/2002, Permendagri No. 13/2006.

APPENDICES 31 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table A.2 Key distinctions between Law No. 18/2001 and Law No. 11/2006 regarding source of revenue for SAF and allocation and implementation arrangements

Law No. 18/2001 Law No. 11/2006 Source of revenue for Special Additional revenue-sharing from oil 2 percent of national DAU allocation for 15 Autonomy Fund and gas (55 percent and 40 percent, years, and 1 percent of national DAU allocation respectively), on top of regular national for the remaining 5 years revenue-sharing of 15 percent and 30 percent, respectively. Additional Revenue-Sharing - 55 percent for oil and 40 percent for gas from Oil and Gas Allocation scheme SAF is transferred in the form of cash SAF is allocated in form of joint programs (not based on producing and non-producing cash). The formula only determines the budget formula base allocation ceiling (maximum sum that the provincial and district/city government can propose for development programs)

Implementation Provincial and respective district/city Provincial government governments Source: Law No. 18/2001 and Law No. 11/2006.

Figure A.3 Allocation mechanism of SAF to district/city governments in Aceh

Special Autonomy Fund (Equivalent to 2% of national block grant allocation/DAU) (100%)

Fund allocations Province Local Government (23) (40%) (60%)

Basic Allocation Formula Allocation (30%) (70%)

Fiscal needs indicators and their weighting Population (30%) Area (30%) HDI (30%) CCI (10%)

Source: Qanun No. 4/2007. Note: HDI (Human Development Index), CCI (Construction Cost Index).

32 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Figure A.4 Allocation mechanism of Additional Revenue Sharing from Oil and Gas to district/city governments in Aceh

Additional Revenue Sharing from Oil and Gas (55% of oil and 4 0% of gas ) (100%)

Education fund (30%)

Fund allocations Fund to be allocated (70%)

Province Producing LGs Non-producing LGs (40%) (25%) (35%)

Basic Allocation Formula Allocation (50%) (50%)

Fiscal needs indicators and Population (50%) Area (50%) their weighting

Source: Qanun No. 4/2007.

Table A.3 Key milestones of budget approval process in Aceh

Key milestones 2005 2006 2007 2008 Submission of draft of general budget policy Nov 1, 2004 Nov 19, 2005 Feb 16, 2007 Nov 28, 2007 (KUA) and preliminary budget ceiling (PPAS) to parliament Discussion of draft KUA and PPAS between Nov 4 – Dec 14, Nov 20 – Jan 27, Nov 29 – Dec 2, executive and legislative budget committee 2004 2006 2007 Signing of memorandum of agreement on Dec 16, 2004 Jan 28, 2006 Dec 8, 2007 KUA and PPAS between Governor and head of parliament Submission of draft budget (RAPBA) with Feb 26 – Mar 19, Apr 9-28, 2007 Mar 24 – May 16, Budget Memorandum (Nota Keuangan) to 2006 2008 Parliament and discussion with Working Group Plenary discussion (paripurna) of RAPBA Apr 1 – 25, 2006 Mar 16 – Apr 25, May 2-18, 2007 May 21 – 30, 2006 2008 Approval of APBA draft (becoming APBA) Apr 26, 2006 Mar 27, 2006 May 18, 2007 Jun 24, 2008 Submission of APBA to MoHA for evaluation Jun 1, 2008 Source: T. Surya Dharma, 2008.

APPENDICES 33 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table A.4 Date of approved budget of provincial and district/city governments in Aceh No 2005 2006 2007 2008 0 Provinsi NAD 25-Apr-05 5-May-06 20-Jun-07 24-Jun-08 1 Kab. Aceh Barat 10-Aug-05 30-Jun-06 9-Apr-07 28-Apr-08 2 Kab. Aceh Besar 13-Jun-05 1-May-06 12-Apr-07 4-Apr-08 3 Kab. Aceh Selatan 31-May-05 29-Mar-06 6-Jan-07 28-Mar-08 4 Kab. Aceh Singkil 1-Jun-05 17-Jul-06 29-Mar-07 11-Apr-08 5 Kab. Aceh Tengah 15-Mar-05 13-Mar-06 30-Mar-07 11-Jan-08 6 Kab. Aceh Tenggara 31-Mar-05 21-Apr-06 22-Mar-07 31-Mar-08 7 Kab. Aceh Timur 19-Jan-05 14-Mar-06 11-Apr-07 17-Apr-08 8 Kab. Aceh Utara 27-Jun-05 15-May-06 12-Mar-07 7-Apr-08 9 Kab. Bireuen 12-Jun-06 19-Apr-07 16-Apr-08 10 Kab. Pidie 23-May-05 28-Mar-06 13-Jun-07 28-Apr-08 11 Kab. Simeuleu 22-Nov-05 25-Mar-06 17-Jan-07 14-Jan-08 12 Kota Banda Aceh 22-Mar-06 20-Apr-07 24-Mar-08 13 Kota Sabang 26-Apr-06 8-May-07 26-Mar-08 14 Kota Langsa 24-Apr-07 4-Apr-08 15 Kota Lhokseumawe 19-Jul-05 14-Jul-06 1-May-07 1-Apr-08 16 Kab. Aceh Jaya 3-Jun-05 7-Jul-06 27-Mar-07 14-May-08 17 Kab. Nagan Raya 21-May-05 24-May-06 28-Mar-07 19-Mar-08 18 Kab. Aceh Barat Daya 20-Jul-05 19-Jun-06 5-May-07 1-Apr-08 19 Kab. Gayo Lues 28-Dec-04 10-May-06 12-Apr-07 28-Apr-08 20 Kab. Aceh Tamiang 25-Apr-05 7-Jul-06 30-May-07 24-Mar-08 21 Kab. Bener Meriah 30-Apr-05 25-Mar-06 1/25/2007 14-Jan-08 22 Kab. Pidie Jaya 17-Apr-08 23 Kota Subulussalam 10-Apr-08 Source: GoA & Syiah Kuala University.

34 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table A.5 Selected social outcomes in Aceh Poverty headcount (%) Human development index (HDI) 2004 2005 2006 2007 2008 2004 2005 2006 Aceh 28.5 28.69 28.28 26.65 23.53 68.7 69 69.4 National 16.7 16.69 17.75 16.58 15.42 68.7 69.6 70.1 Source: BPS, 2008.

School enrollment ratio by school age, 2006 (%) Adult literacy rate (2006) 7-12 13-15 16-18 19-24 Male Female Aceh 98.88 93.83 72.43 20.95 96.26 92.38 National 97.39 84.08 53.92 11.38 94.56 88.39 Source: BPS, 2008.

Infant mortality rate Live expectancy (years) (IMR)(%) 2000 2005 2000 2005 Aceh 68 68.3 40 39 National 68.1 68.5 41 32 Source: BPS, 2008.

Completion rate (%) by level of education Drop out rate (%) by level of education 2003-2004 2004-2005 2005-2006 2006-2007 2003-2004 2004-2005 2005-2006 2006-2007 Primary Aceh 89.72 96.12 98.50 96.60 11.86 6.22 5.59 4.01 National 97.41 95.05 97.40 96.81 2.97 2.99 3.17 2.37 Junior secondary Aceh 92.26 93.90 92.91 95.46 3.09 2.17 2.25 3.46 National 93.32 94.24 93.79 97.56 3.54 2.83 1.97 2.88 Senior secondary Aceh 98.76 96.56 95.99 92.73 4.16 3.4 2.03 2.58 National 97.76 96.50 96.66 96.26 2.84 3.14 3.08 3.33 Source: MoNE.

APPENDICES 35 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Appendix B: Methodological Note

B.1. Allocation Formula of Special Autonomy Fund to District/city Governments in Aceh The allocation formula of SAF to district/city governments consists of two components: i) the basic allocation (BA), which is an equal amount received by all district/city governments, and ii) the formula allocation (FA), which is determined by a weighted ﬁ scal needs index of district/city governments relative to their peers. The formula can be written as follows:

OtsusT(i) = BAi + FAi

Note:

OtsusT = total special autonomy fund to be allocated for district/city governments (60 percent of total) i represents district/city governments

I. Basic Allocation (BA) The amount to be allocated by basic allocation accounts for 30 percent of total allocation. This allocation ideally should refl ect the average minimum allocation need by district/city governments to fi nance the gap between its fi scal capacity and the cost to provide minimum service standard. However, due to lack of data this component is determined jointly between the provincial, district/city governments and parliaments based on some simulations. The formula is as follow:

n = number of district/city governments

II. Formula Allocation (FA) Formula allocation employs a weighted fi scal needs approach, where the fi scal needs of a district/city government are weighted by its fi scal capacity to balance between the available resources and the residual fi nancing needs to provide service delivery relative to other district/city governments. This approach is used by considering SAF as an additional resource to regular transfers from the central government. Weighted fi scal needs of each region are weighted relative to other district/city governments.

WFN = Weighted ﬁ scal needs

1. Weighted fi scal needs A weighted fi scal need is derived from an index of fi scal need weighted by its fi scal capacity multiplied by fi scal needs of district/city governments.

2. Fiscal needs (FN) Fiscal needs are derived from a needs index of district/city governments multiplied by the average total expenditure of district/city governments in the previous year’s budget

36 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

EXP Tt-1 = Total expenditure of previous year

3. Needs index Needs index is a composite index derived from population (pop), area, human development index (HDI), and cost construction index (CCI) indices.

⎛ ⎞ ⎜ ⎟ ⎜ Pop Area HDI CCI ⎟ Needs Index = i ⋅ 0.3 + i ⋅ 0.3 + i ⋅ 0.3 + i ⋅ 0.1 i ⎜ Pop Area HDI CCI ⎟ ⎜ ∑ i ∑ i ∑ i ∑ i ⎟ ⎜ ⎟ ⎝ n n n n ⎠

4. Fiscal capacity Fiscal capacity of district/city government revenue consists of revenue-sharing (tax and non-tax), DAU, and DAK. Own-source revenue is excluded from ﬁ scal capacity equation to avoid a disincentive eﬀ ect on district/city governments to increasing own-source revenue.

FC = Tax revenue sharing + Non-tax revenue-sharing + DAU + DAK

III. Allocation Adjustment to new (split) district/city governments The new district/city governments received equal amounts of basic allocation. The formula allocation is derived from the allocation received by old district/city governments by using average share of population and area of the mother and new district/city governments of total population and area before they are separated.

i = old district/city government j = new district/city government

B.2 Formula Allocation of Additional Revenue Sharing from Oil and Gas to District/city Governments in Aceh The allocation approach of additional revenue-sharing from oil and gas is based on producing and non-producing district/city governments. There are three oil and gas producing district/city governments in Aceh — Aceh Utara, Aceh Tamiang, and Aceh Timur — but the bulk of oil and gas revenue (97 percent) comes from Aceh Utara. The technical calculation is carried out separately for each oil and gas producing district/city government, thus providing an opportunity for producing district/city governments to receive non-producing allocation when they are treated as non-producing district/city governments. For instance, the revenue of oil and gas generated from Aceh Utara will be allocated accordingly as described in Figure A.4. In this case, Aceh Tamiang and Aceh Timur are treated as non- producing district/city governments and will receive the non-producing allocation. In contrast, in calculating the allocation of oil and gas revenue generated from Aceh Tamiang, both Aceh Utara and Aceh Timur will be treated as non-producing district/city governments and will also receive the non-producing allocation.

APPENDICES 37 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 calculations. calculations. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3,119 54.0 8 0.4 1,129 20.5 1,335 21.9 1,573 22.4 1,222 17.6 873 15.3 1,147 14.6 826 10.7 587 7.2 78 13.1 18 95 3.0 9.9 324 160 33.7 6.1 2,078 79.5 168 10.9 1,045 67.5 305 2,808 8.8 80.9 163 2,808 83.2 4.8 3,009 74.0 477 11.7 1,794 61.6 518 17.8 1,283 22.2 691 12.0 Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Own Revenue Source Sharing Revenue Tax 107 Non-tax Revenue Sharing 5.8 203 11.1 98 327 1.8 5.9 146 260 2.4 4.3 180 318 2.6 4.5 196 484 2.8 7.0 168 343 2.9 6.0 275 454 3.5 5.8 296 523 3.8 6.7 346 666 4.2 8.2 SDO/DAUINPRES/DAKOthersTotal 779 732 42.6 40.0 3,740 67.8 65 - 1,829 100.0 0.0 3,583 1.2 58.7 5,515 100.0 155 122 3,244 2.8 46.2 2.0 6,098 100.0 3,774 653 279 54.3 7,019 100.0 10.7 4.0 3,489 6,956 1,425 61.2 100.0 262 20.3 4,560 5,705 3.8 100.0 58.2 1,018 14.6 7,838 4,767 268 100.0 61.5 564 4.7 7,752 5,031 100.0 9.9 61.8 605 8,137 100.0 798 7.7 10.2 733 607 9.5 7.8 820 688 10.1 8.5 Own Source Revenue Tax Revenue Sharing Revenue Tax Non-tax Revenue Sharing 49 SDO/DAU 8.2INPRES/DAK Special Autonomy Fund 77 8.0 98 353 16.5 59.3 72 2.8 319 13 33.2 1.4 81 5.2 260 9.9 0 77 0.0 124 2.2 8.0 6 56 117 0.4 1.7 3.4 120 336 - 3.0 0.0 10.0 152 461 1 5.2 11.3 0.0 449 158 15.4 2.7 - 484 0.0 8.4 - 0.0 31 0.5 OthersTotal - 596 0.0 100.0 133 961 100.0 13.8 2,615 100.0 44 1,548 1.7 100.0 3,473 124 100.0 8.0 3,376 100.0 166 4,067 4.8 12 2,914 0.3 5,772 - 100.0 0.0 - 0.0 6 0.1 Revenue 1999 2001 2002 2003Revenue 2004 1999 2005 2001 2006 2002 2007 2008 2003 2004 2005 2006 2007 2008 Appendix C: Statistical Revenue C.1 Table 2006 prices) (constant revenue of provincial Composition C.2 Table 2006 prices) (constant revenue of district/city Composition government Source: Source: Source:

38 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 Rp bn (Rp) Per Capita Per % (Rp) Per Capita Per Rp Rp bn % Per Per (Rp) Capita Rp Rp bn % (Rp) Per Capita Per Rp Rp bn % Per Per (Rp) Capita % Rp bn Revenue SharingRevenue DAU DAK Others Total calculations. calculations. Per Per (Rp) Capita Tax SharingTax Sharing Non-Tax Rp Rp bn % Per Per (Rp) Capita Revenue Revenue Own Source 2.6 25,992 1.0 4.8 28,063 1.6 9.1 73,039 3.0 171.9 409,010 28.0 25.7 94,829 6.5 0.8 4,140 0.2 1,308,053 266.2 7.5 49,172 2.39.1 9.3 52,9538.0 61,121 2.3 25,992 2.9 15.0 1.6 87,668 16.3 96.7 313,694 3.9 106,556 19.5 5.0 69.4 206.92.6 34.8 405,282 1,356,230 33,237 112,882 17.9 63.4 252.5 1.0 40.8 7.0 1,473,9058.2 285.7 7.9 267,792 283,653 65.2 12.5 926,579 99,315 36.0 3.1 45.3 57.6 15.0 2.9 209,930 49.7 519,634 297,299 9.3 13.9 24.4 161,1208.5 5.6 2,138,171 10.0 138,741 5.2 306,594 20.9 326.1 33.1 2.8 9.0 1,149,110 30,319 18.7 184.7 12.4 67,818 1.3 307,041 2,322,333 171.9 2,260,056 4.24.7 68.5 5,962,814 6.1 1,608,085 387.1 44.0 64,132 64.6 40.8 495.8 31.2 552,631 1.6 1,082,975 16.3 669,438 11.7 9.1 13.3 6.1 124,546 191.9 6.8 3,144,859 3.1 76,824 234,985 62.7 2.3 32.4 38.7 2.5 3,390,933 9,233,170 530,394 530,188 269.7 10.6 266.2 13.2 200.6 13.8 2,748,271 225,415 68.6 4.5 26.7 5,015,682 365,451 306.0 9.1 12.7 173,359 4.3 4,006,153 292.5 15.3 90,562 3.572.5 27.1 283,653 155,551 10.0 101.6 6.3 519,634 19.5 41.9 298,623 142.4 1,149,110 10.4 246.6 19.5 431.9 1,759,170 5,962,814 62.9 70.8 37.9 50.1 285,485 1,082,975 16.3 9.9 160.9 31.4 429,681 167,968 22.1 9,233,170 7.0 2,757,359 728.5 400.2 21.1 139,42015.9 5.3 52,854 14.310.3 3.4 94,418 53,225 8.5 3.6 2.612.4 18.1 28,063 37.5 75,921 93,453 1.8 247,857 3.1 4.6 43.3 9.4 14.8 267.2 143,685 50.4 90,567 1,765,57972.5 260,817 9.1 145,474 66.7 3.7 335.4 10.0 12.715.1 40.2 101.6 277.7 1,113,998 15.2 42,642 203,915 265,351 1,436,88913.2 70.8 10.0 14.0 2.9 70.1 44.0 92,730 27,660 20.3 30.4 39.0 142.4 146,106 2.1 3.8 85,943 274.2 133,818 201,792 285,67031.5 9.3 29.1 1,675,257 176,761 19.5 9.8 5.1 5.8 26.9 60,894 203.9 68.7 2,646,444 6.7 0.8 4.7 42.5 43.5 11.9 89,454 409,010 400.5 15.2 259,880 122,857 109,975 28.0 5.7 66,488 34.9 10.7 4,140 47.320.4 1,574,160 5.0 8.2 2.5 130,380 40.0 0.2 345.9 73,039 21.2 474.0 94,829 2,050,315 5.9 153,086 244,397 18.2 5.6 976,688 6.5 46.3 396.2 10.0 431.911.3 160.9 7.0 102,143 65.4 296,734 2,438,753 91,502 46.5 904,946 13.4 322,747 3.910.2 399.1 16.1 308.8 3.0 69.2 131,341 22.1 87,500 115,948 27.9 1,731,354 50.1 1,461,647 19.4 8.8 3.1 156,370 65.5 178,501 104,861 5.3 728.5 47.319.2 13.3 193.6 34.1 5.2 8.0 8.1 113,782 133,475 80,945 1,396,593 211.3 191,154 65.2 63.4 4.0 8.9 69.0 5.0 1,353,441 7.2 28.3 136,654 1,492,946 62.9 61.2 556,946 66.6 10.4 55.9 265,389 204,332 25.7 528.7 18.5 1,308,053 373,431 221.8 16.3 478,912 9.3 164,628 14.1 624.3 1,790,412 17.0 30.7 7.4 2,641,331 200.7 58.6 59.5 1,719,999 13.6 221,445 471.2 37.7 247,373 10.1 61.0 15.2 303,967 87,426 2,201,379 213.4 34.0 10.1 4.0 305.1 291,661 13.4 900,305 10.3 2,211,110 55.4 108,328 15.1 345.2 29.1 3.6 129,052 122,808 3,007,525 4.6 7.6 372.6 2,820,906 1.7 329.2 7,268 0.4 1,624,087 385.0 Rp Rp bn GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Local government Local Minimum Kab/Kota Maximum Kab/Kota Kab. Aceh Barat Kab. Aceh Kab/KotaAverage Kab. Aceh Besar Kab. Aceh Selatan Kab. Aceh SingkilKab. Aceh Tengah Kab. Aceh Tenggara Kab. Aceh Timur Kab. Aceh UtaraKab. Aceh Kab. Bireuen Kab. Pidie Kab. Simeuleu Kota Banda Aceh Kota Sabang Kota Langsa Kota Lhokseumawe Jaya Kab. Aceh Kab. Nagan Raya Barat Daya Kab. Aceh Lues Gayo Kab. Tamiang Kab. Aceh 1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 Kab. Bener Meriah 4.3 39,660 1.4 4.8 44,451 1.6 9.1 84,346 3.0 198.4 1,833,102 66.1 37.1 342,390 12.3 46.5 429,681 15.5 2,773,631 300.1 No Province/

Provinsi NAD Provinsi 563.0 138,234 17.8 165.0 40,507 5.2 1,299.2 318,994 41.0 487.9 119,805 15.4 0.0 0 0.0 650.0 159,597 20.5 777,136 3,165.1 Table C.3 Table 2007 in Aceh, and district/city of provincial government of revenue Composition Source:

APPENDICES 39 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table C.4 Allocation of special autonomy fund and additional revenue sharing of oil and gas Additional Revenue from Special Special Autonomy Fund No Province/Local government Autonomy Fund (Rp bn) (Rp bn) Education fund 395.1 Province 1,412.0 368.8 1 Kab. Aceh Barat 93.6 15.1 2 Kab. Aceh Besar 98.3 18.5 3 Kab. Aceh Selatan 115.9 17.4 4 Kab. Aceh Singkil 89.4 12.8 5 Kab. Aceh Tengah 114.2 17.4 6 Kab. Aceh Tenggara 102.2 17.4 7 Kab. Aceh Timur 157.5 24.9 8 Kab. Aceh Utara 100.7 224.1 9 Kab. Bireuen 91.8 18.1 10 Kab. Pidie 93.3 18.6 11 Kab. Simeulue 89.9 12.2 12 Kota Banda Aceh 52.1 11.4 13 Kota Sabang 45.7 8.2 14 Kota Langsa 62.3 10.8 15 Kota Lhokseumawe 61.9 11.1 16 Kab. Nagan Raya 118.9 16.0 17 Kab. Aceh Jaya 110.1 14.4 18 Kab. Aceh Barat Daya 78.3 12.2 19 Kab. Gayo Lues 151.3 17.5 20 Kab. Aceh Tamiang 94.3 20.4 21 Kab. Bener Meriah 77.4 11.9 22 Kab. Pidie Jaya 55.1 11.9 23 Kota Subulussalam 63.8 10.6 Total Province 1,412.0 368.8 Total Local government 2,118.0 553.2 Grand Total 3,530.0 1,317.1 Average local government 92.1 24.1 Minimum local government 45.7 8.2 Maximum local government 157.5 224.1 Source: GoA, World Bank staﬀ calculations.

40 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Expenditure

Table C.5 Expenditures of provincial and district/city governments in Aceh by economic classiﬁ cation, 2007

Province Province* Kabupaten/Kota Total* Expenditure Rp bn % Rp bn % Rp bn % Rp bn % Indirect Expenditure 1,979 48.9 856 29.3 4,194 41.6 5,050 38.8 Staff Expense 382 9.4 382 13.1 3,372 33.4 3,753 28.8 Interest payment 0 0.0 0 0.0 7 0.1 7 0.1 Subsidy expense 0 0.0 0 0.0 23 0.2 23 0.2 Grant 130 3.2 130 4.4 101 1.0 230 1.8 Social asisstance 281 6.9 281 9.6 362 3.6 643 4.9 Revenue sharing to lower leve governent (LGs and Village) 1,123 27.8 0 0.0 15 0.2 15 0.1 Financial assistance to LGs & Village 13 0.3 13 0.5 237 2.4 251 1.9 Unexpected expense 50 1.2 50 1.7 78 0.8 128 1.0 Direct Expenditure 2,068 51.1 2,068 70.7 5,895 58.4 7,963 61.2 Staff Expense 257 6.4 257 8.8 974 9.7 1,232 9.5 Goods and Services Expense (inc. maintenance & operation, travel exp) 666 16.5 666 22.8 1,696 16.8 2,362 18.2 Capital Expense 1,145 28.3 1,145 39.2 3,224 32.0 4,369 33.6 Total 4,047 100.0 2,924 100.0 10,089 100.0 13,013 100.0 * w/o revenue sharing to Local Government Source: GoA, MoF, Syiah Kuala University, and World Bank staff calculations.

APPENDICES 41 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 calculations. calculations. calculations. 2001 2002 2003 2004 2005 2006 2007 32.1 3.8 44.3 1.9 4.2 0.3 2.8 0.2 12.4 0.9 17.3 1.3 436.4 16.2 156.9 18.5 134.7 5.8 143.0 9.0 129.6 8.0 78.7 5.8 78.8 5.8 248.6 9.2 2001 2002 2003 2004 2005 2006 2007 Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % 282.8 5.4 266.7138.2 4.4 2.7 263.5 228.6 3.8 4.1 261.1 589.0 3.9 9.2 647.9 287.4 9.6 4.7 412.3 574.0 5.4 9.4 644.6 510.1 8.5 5.5 757.1 8.2 Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % Rp bn % airs 466.3 9.0 567.4 9.3 219.7 3.4 417.7 6.2 111.6 1.8 260.6 3.4 157.9 1.7 airs 81.8 9.6 271.5 11.7 181.4 11.4 39.1 2.4 184.7 13.6 24.5 1.8 265.6 9.9 GoA, MoF, Syiah Kuala University, and World Bank staff World and Syiah Kuala University, GoA, MoF, Bank staff World and Syiah Kuala University, GoA, MoF, Sector Sectors Agriculture, Forestry, State Crops, Crops, State Forestry, Agriculture, Livestock, and Fishery Government General Administration Government General Administration Works Trasnportationand Public 2,186.2Welfare Health and Public 42.1 Education and Culture 1,789.6 Labor and Social Aff Housing, 749.3 29.4 14.4 1,794.5 28.1 777.0 and Mining Energy Trade, Industry, 249.1 2,272.7 12.8 Others Grants, (Social Assistance, 33.8 4.8Unexpected Exp) 920.3 754.4 196.7 2,217.9Total 316.5 17.7 11.8 36.4 3.8 1,931.5 5.2 2,507.0 476.5 31.8 200.2 33.0 394.2 2,297.9 7.1 2,998.3 3.3 36.0 6.2 798.9 32.3 2,182.2 68.1 409.9 13.1 32.4 1,045.3 6.1 1.1 1,644.8 13.8 27.0 387.3 57.9 1,651.8 1,989.3 17.8 6.4 5,188.9 0.9 26.2 100.0 2,311.2 6,077.6 630.7 100.0 69.4 24.9 6,381.2 8.3 100.0 1.1 6,725.9 100.0 785.2 6,091.3 99.8 100.0 8.5 7,589.5 1.3 100.0 9,287.7 116.1 100.0 1.3 Government General Administration Government General Administration Works Trasnportationand Public Welfare Health and Public 191.6 Education and Culture 22.6 Labor and Social Aff Housing, 840.8 92.4 36.2 10.9 504.7 193.9 93.0 31.7 8.4 10.9 630.3 155.8 126.0 125.6 38.7 18.4 7.9 5.4 451.0 610.1 33.2 272.4 26.3 129.3 16.7 659.0 472.5 8.1 48.6 160.5 29.6 106.8 11.8 417.8 759.8 6.6 155.2 25.6 28.2 11.5 88.4 356.3 26.2 384.4 6.5 267.6 14.3 119.8 19.7 8.8 281.2 258.8 10.4 9.6 Agriculture, Forestry, State Crops, Crops, State Forestry, Agriculture, Livestock, and Fishery Industry, Trade, Energy and Mining Energy Trade, Industry, Others Grants, (Social Assistance, Unexpected Exp) Total 45.6 5.4 101.1 4.4 33.2 2.1 31.2 1.9 849.1 100.0 26.2 2,321.9 100.0 1,594.3 1.9 100.0 1,630.1 100.0 32.8 1,358.2 100.0 1,354.9 2.4 100.0 2,691.7 57.0 100.0 2.1 Table C.6 Table expenditures of provincial Sectoral composition Source: C.7 Table expenditures of district/city Sectoral composition government Source:

42 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of exp total total % Rp Per Rp Per Capita of calculations. calculations. exp total total % Health Education Infrastructure Rp Per Rp Per Capita of exp total total % n.a n.a 185,960 8.0 219,462 7.3 n.a n.a 540,634 23.3 770,901 25.5 n.a n.a 490,111 21.1 721,815 23.9 n.a n.a 193,554 4.3 384,006 5.5 n.a n.a 863,621 19.1 877,291 12.6 n.a n.a 1,369,266 30.3 2,465,754 35.5 2004 2006 2007 2004 2006 2007 2004 2006 2007 11,624 0.9 85,471 4.3 105,646 3.9 237,536 11.0 257,552 9.812.0 321,194 47,950 4.9 115,919 8.6 110,652 8.3 70,520 8.0 152,119 8.9 209,223 8.5 306,160 34.6 482,529 28.1 607,961 24.812.9 114,457 386,503 22.5 557,642 22.7 83,068 3.4 153,339 4.3 141,478 3.9 809,806 33.2 612,869 17.0 565,819 15.513.4 325,995 419,398 11.6 589,206 16.2 78,775 5.5 217,015 9.3 253,314 8.6 474,966 33.1 583,863 24.9 714,991 24.210.0 143,946 409,115 17.5 605,355 20.5 434,112 11.7 852,253 11.9 1,489,110 14.1 957,534 50.4 1,230,107 37.3 2,044,743 36.0 556,217 18.1 1,369,266 30.3 2,465,754 39.1 105,110 6.3 181,315 7.3 253,334 8.1 503,151 34.5 555,353 25.4 652,159 24.0 186,178 11.1 400,661 15.9 518,590 16.4 Rp Per Rp Per Capita GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Maximum Kab/Kota Average Kab/KotaAverage Minimum Kab/Kota Kab. Aceh Tamiang Kab. Aceh Kab. Lues Gayo Kab. Aceh Barat Daya Kab. Aceh Kab. Nagan Raya Kab. Aceh Jaya Kab. Aceh 1 Barat Kab. Aceh 2 Besar Kab. Aceh 3 Selatan Kab. Aceh 131,793 4 Singkil Kab. Aceh 8.75 76,919 192,533 Tengah Kab. Aceh 79,543 7.06 7.3Tenggara Kab. Aceh 5.6 110,249 105,830 7 281,931 79,255 7.7Timur Kab. Aceh n.a 7.48 87,083 9.5 6.1 168,654 Utara Kab. Aceh 480,116 n.a 166,441 165,882 6.59 10.5 31.9 Kab. Bireuen 109,017 491,403 121,996 8.1 8.4 11.7 44.9 580,136 5.8 539,383 n.a 223,678 84,715 93,506 21.9 38.1 512,779 146,148 n.a 8.7 4.5 6.1 35.7 698,456 447,017 616,240 7.1 182,926 124,615 23.6 31.1 496,926 59,519 113,748 47.1 576,767 191,653 6.9 8.5 37.0 36.0 512,246 6.2 520,613 12.7 8.5 170,506 110,889 142,529 237,536 25.9 454,229 25.3 15.6 596,688 109,967 n.a 7.9 22.8 24.1 5.5 640,241 22.5 139,600 427,425 7.8 159,893 348,517 n.a 430,817 24.9 605,864 22.9 178,016 9.7 123,292 11.0 22.7 21.0 20.5 480,529 13.6 174,914 441,354 172,405 343,923 8.6 13.0 50.4 24.5 284,759 n.a 10.8 25.8 171,415 167,651 484,478 13.8 463,859 60,309 n.a 34.5 8.7 17.9 351,236 8.9 5.8 420,656 338,354 512,031 13.7 319,213 18.1 19.6 300,709 35.2 15.6 19.6 103,678 451,447 10.9 25.0 n.a 110,652 1,013,438 290,996 n.a 8.3 39.1 20.7 237,760 16.4 n.a n.a 211,234 9.8 21 Kab. Bener Meriah n.a n.a 141,547 6.2 210,398 8.2 n.a n.a 507,889 22.4 614,626 23.8 n.a n.a 381,971 16.9 384,086 14.9 20 19 18 17 10 Kab. Pidie10 Kab. 11 Kab. Simeuleu12 Kota Banda AcehSabang13 Kota 67,902 6.9Langsa14 153,080 Kota 85,471 7.3Lhokseumawe 62,142 15 6.7 105,646 Kota 163,758 434,112 7.7 5.611.5 104,823 6.216 852,253 106,729 1,489,110 106,277 6.2 7.7 6.2 433,239 5.0 14.1 142,132 11,624 189,887 957,534 0.9 44.3 169,481 255,206 11.9 17.0 5.4 7.1 438,881 547,836 1,230,107 254,297 6.0 220,494 37.3 544,752 32.4 16.6 11.0 10.4 2,044,743 48.7 455,425 465,665 520,490 257,552 19.4 36.8 33.7 746,776 30.1 556,217 9.8 9.8 47,950 4.9 1,139,253 35.1 532,730 682,384 15.4 321,194 24.9 115,919 856,758 25.9 12.0 147,954 8.7 983,563 30.3 574,001 9.8 283,806 177,532 27.0 89,926 12.3 9.3 115,855 127,379 10.3 10.3 8.0 342,121 8.4 222,890 460,200 13.0 203,997 10.4 17.4 245,299 9.6 236,475 9.2 11.1 331,914 11.7 No District

Prov. Aceh Prov. 6.6 21,063 19,794 5.9 39,941 6.0 77,996 24.3 61,182 18.4 61,261 9.316.9 54,398 40,910 12.3 142,534 21.6 Source: Source: Table C.8 Table 2004, 2006, 2007 in Aceh, of district/city infrastructure capita spending on health, education, governments Per

APPENDICES 43 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

3 209 ,519 Total Total Expenditure 1,054,351 ure, 2004 ure, 11.1 1,340,635 of Total Exp of Total Infrastructure 562 18.1 4,554,868 562 18.1 Total Total Infrastructur Routine Development

Exp of Total of Total Education Total Total Education Routine Development Exp Health of Total of Total calculations. calculations. Total Total Health Health Education Infrastructure Routine Development Rp % Rp % Rp % Rp % Rp % Rp % Rp % Rp % Rp % Rp GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Minimum (districts) 8,047 24.8 1,328 14.2 9,374 0.9 34,862 17.0 10,195 5.3 191,561 11.0 6,706 4.6 26,597 65.1 38,670 4.9 713,950 1 Aceh Prov. 2 Barat Kab. Aceh 71,697 10,170 67.5 59.9 34,588 6,817 32.5 40.1 106,285 16,987 8.7 283,151 6.6 73.1 104,039 26.9 5,428 8.6 387,190 57,472 91.4 31.9 62,900 23,370 15.1 131,188 24.3 84.9 6,207 14.1 154,559 37,662 85.9 12.7 43,870 1,215,23 16.9 259,176 3 Besar Kab. Aceh 4 Selatan Kab. Aceh 5 Singkil Kab. Aceh 42,601 6 44,289 68.7 Tengah Kab. Aceh 69.07 19,430Tenggara Kab. Aceh 19,858 31.38 39,460 n.a 31.0Timur Kab. Aceh 61.7 62,032 48,038 9 64,148 n.a 68.4 24,456 Utara Kab. Aceh 38.3 22,190 7.0 63,916 72,370 31.6 5.6 n.a 310,680 73.6 78.4 296,196 70,228 49,494 68.1 n.a 26,014 85,613 72.4 6.1 138,790 21.6 26.4 31.9 315,708 18,825 63.5 6.5 181,259 98,384 396,293 n.a 27.6 434,986 36.5 264,814 66.1 68,318 135,933 496,968 11.7 33.9 44.9 n.a 181,367 38.1 94.7 10,051 400,747 13,023 4.5 10,195 47.1 14.7 7.3 243,153 n.a 70.5 5.3 127,454 7,405 75,659 101,544 92.7 n.a 29.5 37.0 85.3 5.2 191,561 136,156 14,721 10.4 94.8 344,697 137,505 n.a 126,338 88,683 22.8 89.6 n.a 143,561 14,182 22.9 29.2 12,422 141,060 34,454 15.6 4.6 n.a 70.8 260,444 7.8 13.6 95.4 883,406 13.0 1,140,352 48,636 n.a 272,866 1,084, n.a n.a 5.8 18.1 n.a 1,505,286 839,419 n.a n.a n.a n.a 18 Kab. Lues Gayo 19Tamiang Kab. Aceh 20 Kab. Nagan Raya 31,236 29,018 21 Jaya Kab. Aceh 46.6 51.022 35,754 27,853 Kab. Bener Meriah 53.4 49.0 n.a 66,990 56,871 n.a n.a n.a 3.4 8.0 n.a n.a n.a 509,706 178,886 78.0 72.5 143,364 n.a 68,017 22.0 n.a 27.5 n.a 653,070 n.a n.a n.a 246,903 n.a 33.2 n.a n.a 34.6 19,976 6,706 7.6 n.a n.a 7.3 242,923 n.a 92.4 n.a 85,598 92.7 n.a n.a 262,900 n.a n.a n.a n.a 92,304 n.a n.a n.a n.a 13.4 n.a 12.9 1,965,363 n.a n.a n.a 713,950 n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a n.a 10 Kab. Bireuen11 Kab. Pidie12 Kab. Simeuleu13 Kota Banda Aceh 35,097 14 73.1 Kota Sabang 12,90215 30,563 46,044 35,583 Kota Langsa 26.9 24.8 84.116 71.0 Kota Lhokseumawe 47,999 92,889 14,532 8,71617 229,206 75.2 Barat Daya Kab. Aceh 29.0 15.9 123,452 65.5 47,975 6.2 120,884 50,115 56.8 54,760 28,089 316,896 8,047 34.5 44.2 81.8 36,560 85.8 6.7 350,091 35,440 43.2 70,627 5.6 6.9 18.2 34,862 55.8 1,328 381,722 84,535 285,773 17.0 86.9 81.8 170,216 7.7 14.2 63,529 387,523 83.0 57,593 522,064 63,613 13.1 67.6 18.2 9,374 6.2 250,141 205,078 402,383 32.4 5.5 50.4 439,316 349,387 91.1 253,807 11,262 66.3 0.9 39,420 772,205 13.5 129,230 11.0 283,222 8.9 33.7 77.1 48.7 11,853 44.3 72,349 86.5 25,294 12,072 84,056 5.2 441,803 383,037 17.0 34.9 22.9 31.2 217,023 94,367 94.8 21.0 47,227 26,597 367,278 65.1 354,195 68.8 83,611 32.4 33.1 79.0 21,521 228,876 9,382 18.0 36.8 8.1 72,521 38,670 97,797 16,887 448,562 106,703 16.4 82.0 10.9 91.9 85,838 12.3 83.6 119,318 116,085 769,365 8.0 4.9 9.8 1,856,155 102,725 4,554,868 902,611 788,963 8.7 10.0 10.3 1,364,300 1,155 997,439 No District Maximum (districts) 229,206 85.8 120,884 75.2 350,091 11.7 522,064 94.7 250,141 83.0 772,205 50.4 94,367 34.9 354,195 95.4 448, 354,195 34.9 772,205 94,367 83.0 50.4 250,141 94.7 522,064 350,091 11.7 75.2 120,884 (districts)85.8 229,206 Maximum Average (districts) 52,283 63.8 32,483 36.2 84,766 6.3 297,905 72.6 107,862 27.4 405,767 34.5 19,088 14.7 131,055 85.3 150,144 131,055 14.7 405,767 19,088 27.4 34.5 107,862 72.6 297,905 84,766 (districts)36.2 6.3 32,483 Average 63.8 52,283 Table C.9 Table sector by and type of expendit in Aceh expenditures and district/city of provincial government composition Capita Per Source:

44 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 1 3.4 Total Total expenditure Per capita Per Total Total Infrastructure of total exp of total Capital Infrastructure and services Per capitaPer Personnel Goods Total Total education exp of total of total education Capital and services Per capitaPer Personnel Goods Total Total health calculations. calculations. exp of total of total Health Education Infrastructure Total Capital health and services

6123,646,099 2,195 11,168,247 1,385 8,054,130 8,944 Personnel Goods % % % % bn Rp Rp % % % % bn Rp Rp % % % % bn Rp Rp bn Rp GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Prov/district/city

Rata-rata Kab/KotaMinimum Kab/KotaMaximum Kab/Kota 46.2 13.6 21.7 Kab/Kota + Total 59.0Provinsi 8.8 31.9 31.5 14.4 58.6 7.3 26.6 4.3 11.9 181,315 11.2 62.1 85,471 852,253 69.7 44.0 17.4 81.4 12.4 29.9 2.1 41.6 25.4 0.7 37.3 97.3 9.8 555,353 220.0 1,230,107 20.5 12.9 257,552 56.4 22.6 52.2 1.5 70.3 97.3 1.2 15.9 30.5 30.3 60.9 8.6 225.0 400,661 1,369,266 23.8 361 899 115,919 209 1 Barat Kab. Aceh 2 Besar Kab. Aceh 3 Selatan Kab. Aceh 4 Singkil Kab. Aceh 52.25Tengah 59.0 Kab. Aceh 20.2 6 54.1Tenggara Kab. Aceh 16.4 27.6 7Timur 31.5 n.a Kab. Aceh 24.6 47.38 14.4 Utara Kab. Aceh 58.5 7.3 9 n.a 27.1 Kab. Bireuen 29.1 7.7 7.4 8.8 54.4 25.6 192,533 33.2 n.a 20.5 32.7 71.7 110,249 58.5 20.1 105,830 8.1 80.9 n.a 19.9 25.5 80.4 26.1 5.8 27.2 49.3 14.6 n.a 18.7 166,441 15.4 8.3 7.7 6.1 29.2 109,017 78.8 4.5 28.8 11.9 6.9 n.a 21.5 77.6 21.9 9.4 62.1 93,506 35.7 11.8 31.1 7.9 124,615 70.6 11.8 87.8 n.a 10.5 39.3 154.4 70.7 580,136 15.1 86.4 110,889 25.3 n.a 512,779 18.8 6.5 24.1 14.3 81.0 447,017 20.1 n.a 10.4 85.2 24.9 5.6 14.8 22.7 77.8 31.3 520,613 88.6 24.5 43.1 454,229 57.2 4.2 n.a 107.5 6.0 45.6 25.4 220.0 348,517 34.5 2.5 22.5 n.a 34.6 441,354 6.1 9.7 92.0 171.6 52.1 4.9 8.6 3.7 484,478 n.a 12.7 90.3 90.7 42.0 5.7 13.8 83.2 596,688 8.9 23.8 139,600 n.a 17.8 123,292 19.6 77.8 400.7 n.a 46.6 25.0 28.7 432.2 284,759 n.a 278.2 167,651 20.7 92.7 225.0 300,709 337.4 451,447 322.6 n.a 103.0 290,996 473.5 899.4 n.a 496.8 n.a 267.6 10 Kab. Pidie11 Kab. Simeuleu12 Kota Banda Aceh13 Kota Sabang14 Kota Langsa 58.2 13.615 50.7 Kota Lhokseumawe16 21.6 27.8 Jaya Kab. Aceh 20.1 17 31.6 20.1 58.6 Kab. Nagan Raya 43.5 29.2 18 53.2 Barat Daya Kab. Aceh 23.3 7.3 6.2 30.8 5.0 45.1 27.6 40.7 40.8 13.0 25.7 19.0 44.6 29.3 16.7 163,758 11.5 85,471 106,729 11.8 44.0 6.2 22.6 20.7 24.6 70.4 78.3 11.9 47.4 16.6 32.8 50.1 852,253 14.4 35.4 19.2 18.9 106,277 64.0 4.3 255,206 41.6 10.4 8.0 9.3 57.5 2.7 11.8 74.2 27.1 23.0 25.3 193,554 28.6 37.3 9.8 17.1 185,960 217,015 35.1 8.9 57.7 4.1 81.4 57.5 8.3 209.5 20.5 133.2 2.1 16.6 17.9 29.9 438,881 30.1 257,552 746,776 24.9 40.2 12.6 22.0 0.7 35.5 2.0 56.4 81.3 1,230,107 19.1 43.1 73.8 16.8 24.9 52.2 23.3 23.7 520,490 46.7 532,730 81.5 30.5 52.7 8.1 36.4 68.1 16.5 67.0 863,621 51.4 10.8 583,863 33.9 540,634 9.8 1.5 13.0 82.5 9.6 5.3 7.2 56.8 1.2 30.9 15.4 17.3 55.3 27.2 97.3 65.7 10.3 36.4 77.2 10.4 115,919 342,121 203,997 32.8 1,139,253 30.3 17.5 27.7 21.1 30.9 562.2 209.1 379.5 177,532 222,890 213.1 83.5 47.7 60.7 1,369,266 269.7 409,115 296.3 490,111 275.3 27 287.2 19 Kab. Lues Gayo 20Tamiang Kab. Aceh 21 Kab. Bener Meriah 43.3 42.1 40.6 13.6 20.6 43.1 37.3 14.2 45.2 4.3 8.9 11.2 36.1 6.2 153,339 152,119 15.3 61.3 64.4 141,547 28.1 70.7 22.7 10.4 12.8 9.4 19.9 17.0 28.1 22.4 114.4 44.7 482,529 612,869 55.0 4.0 6.4 507,889 30.5 9.9 4.6 66.8 84.6 17.9 78.5 22.5 11.6 16.9 91.6 30.6 386,503 419,398 41.3 381,971 407. 263.3 245.1

No. NAD Provinsi 59.7 36.8 3.5 5.9 80.6 19,794 29.8 40.2 30.0 18.4 249.2 61,182 31.3 21.0 60.1 12.3 166.6 40,910 1,354.9 Total Kab/Kota Total 531 3,626,305 1,946 11,107,066 1,218 8,013,220 7,590 Table C.10 Table 2006 sector by and type of expenditure, in Aceh expenditures and district/city of provincial government Composition Source:

APPENDICES 45 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008 Per Capita Per Total Total Infra. Infra. / Total / Total Capital & Goods Services

Exp. Staﬀ Per Capita Per Total Total Educ

Total Total Educ/ Capital & Goods Services

Exp. Staﬀ Per Per Capita Total Total calculations. calculations.

Total Total Health/ Health Education Infrastructure Total Capital & Goods Services

Exp. Staﬀ GoA, MoF, Syiah Kuala University, and World Bank staﬀ World and Syiah Kuala University, GoA, MoF, Province/ Districts/ Province/ City % % % % bn Rp Rp % % % % bn Rp Rp % % % % bn Rp Rp bn Rp No NAD Provinsi 1 2 Barat Kab. Aceh 3 Besar Kab. Aceh 4 Selatan Kab. Aceh 44.15 Singkil Kab. Aceh 57.6 29.0 Tengah6 Kab. Aceh 58.9Tenggara7 51.7 Kab. Aceh 14.3 27.0 Timur8 Kab. Aceh 10.5 39.5 28.1 15.1 6.0 48.79 Utara Kab. Aceh 30.6 45.8 33.2 11.9 9.5 10 Kab. Bireuen 177 16.6 10.5 Kab. Pidie 48.6 11 18.7 42.8 8.4 46 43,385 34.7 Kab. Simeuleu12 35.4 55 48.3 54.3 8.5 Kota Banda Aceh 306,247 18.6 13 35 8.7 15.6 183,201 71.8 Kota Sabang 7.1 14 17.5 38.6 84.5 30 180,189 66.1 36.1 Kota Langsa 5.6 80.9 15 40 28.2 6.4 198,704 27 15.2 Kota Lhokseumawe 65.6 8.5 47.3 15.4 16 22.6 73.1 242,970 3.1 9.3 Jaya Kab. Aceh 158,753 81.1 5.5 17 9.1 18.4 25.6 11.9 45.6 10.7 38 3.2 271 15.9 23.6 Kab. Nagan Raya18 47.4 5.1 62.6 59.3 29.0 11.0 22.5 36.0 77 42.0 123,558 Barat Daya Kab. Aceh 115 23.8 66,54419 25.9 58.9 66.4 13.7 20.4 189 Kab. Lues Gayo 25.4 12.2 154,822 758,69820 7.1 62 108 7.7 19.6 8.8 6.0 18.0 76.6 40.2Tamiang Kab. Aceh 18.3 32.3 626,513Kab/Kota 46.3 24.9 25.2 21 46.2 8.0 21.0 556,427 173,684 13.6 9.8 15.7 70 16 Kab. Bener Meriah 18.2 Kab/Kota 55 22.7 33 Rata-rata 79.8 114 14.1 11.5 9.8 16.5 4.5 31.8 80 5.4 456,937Kab/Kota 206,264 Minimum 81.3 114,758 3.2 9.7 25.8 184,099 695,462 10.4 37.4 9.9 41.2 50.0 4.8 10.9 48.8 37.2 467,975 84.0 11.2 Kab/Kota 21.9 47 84.8 87.5 Maximum 115 21.6 24 15.2 7.9 78.6 17.9 1,617,546 50.2 10.3 9.8 20.8 33 10.4 83.7 9.8 Total 6.0 5.7 20.5 5.2 16.2 5.5 72.4 8.6 66.1 373,587 7.3 154,391 251 10.8 3.2 24.7 35.2 41.9 239,512 631 48.4 67.4 14.1 79.2 9.8 16.0 10.0 10.0 35.0 83.2 6.7 8.7 503,866 77.1 31.8 25 32 100 30 Kab/Kota + Provinsi 14.4 Total 197 88.9 154,827 35.7 65.4 18.4 12.0 5.5 8.5 33.7 3.9 20.9 30.3 56 2.8 417,127 9.8 8.3 658,120 275,162 59.3 8.1 238,391 556,194 2,924 18.2 13.7 15.6 36 58.9 71.8 241 76.3 8.2 166 78.5 13.2 187,274 28 19.4 3.9 54 14.6 11 8.1 14.1 37.9 487 11.2 186,199 25.9 17.1 505,829 7.2 930,653 348,897 35 84.0 227,269 15.9 8.3 153,681 62 25 524 11.2 64 27.0 275,184 59 11.5 77.2 116 18.1 17.0 57.7 58.3 33.8 229,453 2,221,102 2.1 415 6.6 69.5 39.1 381,531 1,617,546 228,545 114,758 346,745 76.0 741,240 24.5 86 3.8 795 16.9 24.2 9.1 24.2 79.2 84.8 10.9 12.6 5.4 37 10.7 25.5 356 5,778,873 16.4 623,509 4.5 456 17.8 549 24.8 382 4.8 84.7 29.0 72.8 4.0 120,195 91 19.8 104 3.1 92.5 58 1,100,847 14.8 6.2 24.8 79.2 15.5 776,659 11.7 70.9 16.8 837,391 8.4 952,957 91 1,405 446 4.2 24.0 9.2 6.6 157 89.3 4.3 45 5.2 117.4 258,267 1.7 23.8 36.0 9.3 81.0 660,397 64 12.0 17.4 251.1 60 16.3 614,6212,466 708,407 6.4 972 0.8 21 72 2,221,102 559 11.1 360,541 6.0 27.8 5,822,259 125,847 31 7.8 9.5 78.6 266,456 89.3 24.2 667,638 97.4 30.7 1,068,395 78 348,897 547 6.1 23.9 716 30.7 20.5 9.2 6.4 36 35.5 231 499,892 1.7 63.2 331 19.3 86.1 256,871 97.4 81.2 22.7 447 97 0.8 163 77 74.2 16.2 39.1 2,678,425 16.4 320 784,072 657,567 63.2 144 14.9 548.7 461 89.9 47 407 605,739 2,678,425 375 8.31,889 563,318 640,026 45 1,405 632 21.2 417,214 480 289 2,737 120,195 303 10,089 231 2,519 13,013 Table C.11 Table 2007 sector by and type of expenditure, in Aceh expenditures and district/city of provincial government Composition Source:

46 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Social Outcomes Table C.12 Poverty headcount (%) by district/city in Aceh

No Districts/City 2004 2005 2006 1 Kab. Simeulue 34.3 34.1 33.8 2 Kab. Aceh Singkil 28.9 29.2 28.4 3 Kab. Aceh Selatan 27.6 27.0 24.6 4 Kab. Aceh Tenggara 23.9 24.6 23.6 5 Kab. Aceh Timur 30.0 30.0 29.9 6 Kab. Aceh Tengah 27.9 27.7 26.7 7 Kab. Aceh Barat 35.7 35.5 34.5 8 Kab. Aceh Besar 29.9 29.4 28.7 9 Kab. Pidie 35.2 36.0 35.3 10 Kab. Bireuen 29.3 29.7 29.1 11 Kab. Aceh Utara 34.2 35.9 35.0 12 Kab. Aceh Barat Daya 28.0 28.3 28.3 13 Kab. Gayo Lues 32.4 34.0 33.5 14 Kab. Aceh Tamiang 25.2 24.5 23.9 15 Kab. Nagan Raya 35.9 36.2 35.3 16 Kab. Aceh Jaya 31.6 31.3 30.4 17 Kab. Bener Meriah 28.8 28.0 18 Kota Banda Aceh 8.9 8.4 8.3 19 Kota Sabang 31.5 29.8 28.6 20 Kota Langsa 15.3 15.0 14.0 21 Kota Lhokseumawe 15.0 15.9 14.3 Prov. NAD 28.5 28.7 28.3 Source: BPS.

Table C.13 Student-teacher ratio (STR) by district in Aceh

Primary (%) Junior Secondary (%) Senior Secondary (%) 2004/2005 2005/2006 2004/2005 2005/2006 2004/2005 2005/2006 Simeulue 18.4 17.2 15.1 12.4 43.3 31.7 Aceh Singkil 31.5 30.3 21.3 24.4 18.1 30.0 Aceh Selatan 26.3 22.3 27.2 21.6 22.6 30.7 Aceh Tenggara 12.4 21.5 4.7 20.9 25.1 28.3 Aceh Timur 103.0 25.3 67.5 16.3 82.0 24.1 Aceh Tengah 13.4 16.8 16.8 15.5 17.7 21.6 Aceh Barat 24.0 19.7 27.9 23.6 36.4 12.6 Aceh Besar 16.4 13.6 52.1 8.5 3.9 12.6 Pidie 16.7 19.3 19.7 16.2 21.3 17.7 Bireuen 20.6 26.9 16.5 15.2 16.7 19.0 Aceh Utara 24.4 26.9 30.7 17.0 32.7 19.0 Aceh Barat Daya 28.5 24.1 15.5 24.5 31.7 31.2 Gayo Lues 24.4 29.8 42.7 27.2 24.0 18.7 Aceh Tamiang 18.2 19.9 6.0 n.a 151.9 25.0 Nagan Raya 18.2 20.8 20.5 21.5 46.2 26.2 Aceh Jaya 11.4 19.8 23.0 22.7 23.4 18.5 Bener Meriah 10.2 23.7 n.a n.a 24.4 9.8 Banda Aceh 7.7 10.7 4.2 33.2 17.5 29.9

REFERENCES 47 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Primary (%) Junior Secondary (%) Senior Secondary (%) 2004/2005 2005/2006 2004/2005 2005/2006 2004/2005 2005/2006 Kota Sabang 14.5 9.9 10.7 5.3 18.2 11.1 Kota Langsa 19.7 19.4 36.3 19.1 13.6 23.4 Kota Lhokseumawe 25.2 17.2 25.8 22.1 18.4 22.2 Average 23.1 20.7 24.2 19.3 32.8 22.1 Minimum 7.7 9.9 4.2 5.3 3.9 9.8 Maximum 103.0 30.3 67.5 33.2 151.9 31.7 Source: BPS, Aceh Dalam Angka.

Table C.14 Percentage of secondary senior (SMA) student who passed national ﬁ nal exam (UAN), 2007/2008

District/City (%) Aceh Tamiang 30.16 Nagan Raya 42.44 Aceh Besar 43.18 Aceh Barat 48.20 Aceh Timur 50.03 Aceh Jaya 64.87 Simeulue 65.32 Langsa 68.00 Sabang 72.04 Aceh Selatan 72.31 Pidie Jaya 74.60 Aceh Utara 78.75 Bener Meriah 80.08 Pidie 80.27 Aceh Barat Daya 81.31 Bireuen 84.16 Aceh Tenggara 85.82 Banda Aceh 89.51 Lhokseumawe 89.71 Aceh Singkil 89.81 Gayo Lues 90.50 Aceh Tengah 92.31 Subulusalam 96.42 Average 72.60 Minimum 30.16 Maximum 96.42 Source: Dinas Pendidikan Aceh.

48 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table C.15 Selected health indicators by district/city in Aceh, 2007

Birth delivery assisted by Coverage of BCG District/City Infant mortality rate (%) professional/medical workers (%) immunization (%) Simeulue 0.09 89.52 91.21 Aceh Singkil 0.24 71.37 76.66 Aceh Selatan 0.58 61.00 69.26 Aceh Tenggara 1.43 84.63 92.96 Aceh Timur 0.16 86.44 78.14 Aceh Tengah 1.63 79.02 97.49 Aceh Barat 0.45 73.57 83.97 Aceh Besar 0.74 86.94 97.97 Pidie 0.76 94.19 89.80 Bireuen 0.33 88.16 102.66 Aceh Utara 0.25 87.09 95.15 Aceh Barat Daya 1.06 61.35 76.17 Gayo Lues 0.38 86.97 49.14 Aceh Tamiang 0.36 76.54 94.81 Nagan Raya 0.20 73.05 55.52 Aceh Jaya 0.41 80.73 59.26 Bener Meriah 1.10 75.47 181.70 Banda Aceh 0.14 89.18 94.15 Sabang 1.59 78.66 96.50 Langsa 0.86 85.17 92.38 Lhokseumawe 0.26 88.65 96.21 Average 0.62 80.84 89.10 Minimum 0.09 61.00 49.14 Maximum 1.63 94.19 181.70 Source: Dinas Kesehatan Aceh.

APPENDICES 49 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

Table C.16 Percentage of district/city roads in bad condition

2004 2005 2006 District/City (%) (%) (%) Simeulue 33.5 59.4 59.7 Aceh Singkil 71.7 54.6 59.1 Aceh selatan 26.1 22.9 23.3 Aceh Tenggara 0.0 30.7 30.7 Aceh Timur 7.4 11.9 11.9 Aceh Tengah 35.9 49.7 49.7 Aceh Barat 49.1 55.2 55.2 Aceh Besar 5.5 10.9 10.9 Pidie 0.1 33.2 33.2 Birueen 34.1 29.4 29.4 Aceh Utara 0.0 21.2 21.2 Aceh Barat Daya 29.6 43.8 43.8 Gayo Lues 41.3 50.8 50.8 Aceh Tamiang 25.5 1.5 1.5 Nagan Raya 27.9 92.7 92.7 Aceh Jaya 1.8 92.6 92.6 Banda Aceh 1.5 16.9 16.9 Sabang 31.3 6.9 32.7 Langsa 0.0 32.7 32.7 Lhoseumawe 0.0 1.1 1.1 Bener Meriah 33.7 33.7 Source: BPS, Aceh Dalam Angka.

50 APPENDICES MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

References

Badan Pusat Statistik (BPS). Maret 2008. Jakarta, BPS.

Pemerintah Aceh. Qanun No.2 Tahun 2008 tentang Tata Cara Pengalokasian Tambahan Dana bagi Hasil Minyak dan Gas Bumi dan Penggunaan Dana Otonomi Khusus

_____. Peraturan Gubernur No. 24 Tahun 2008 tentang Pembentukan Tim Koordinasi Tambahan Dana Bagi Hasil Minyak dan Gas Bumi dan Dana Otonomi Khusus

Pemerintah Republik Indonesia. 2001. Undang-Undang Nomor 18 tahun 2001 tentang Otonomi Khusus bagi Provinsi Daerah Istimewa Aceh sebagai Provinsi Nanggroe Aceh Darussalam Keputusan Menteri Keuangan No. 556 tahun 2000 tentang Tatacara Penyaluran Dana Alokasi Umum dan Alokasi Khusus.

_____. 2006. Undang-Undang Nomor 11 tahun 2006 tentang Pemerintahan Aceh.

_____. 2008. Peraturan Menteri Keuangan Nomor. 56/PMK.07/2008 tentang Penetapan Alokasi Dana Otonomi Khusus Provinsi Aceh Tahun Anggaran 2008

_____. 2001. Undang-Undang No. 18 tahun 2001 tentang Otonomi Khusus bagi Provinsi Daerah Istimewa Aceh sebagai Provinsi Nanggroe Aceh Darussalam.

_____. 2002. Keputusan Menteri Dalam Negeri No. 29 tahun 2002 tentang Pedoman Pengurusan, Pertanggungjawaban dan Pengawasan Keuangan dan Belanja Daerah, Pelaksanaan Tata Usaha Keuangan Daerah dan Penyusunan Perhitungan Anggaran Pendapatan dan Belanjan Daerah. _____. 2003. Permendagri Nomor 13 Tahun 2003 tentang Pedoman Pengelolaan Keuangan Daerah _____. 2003. Undang-Undang Republik Indonesia No. 17 tahun 2003 tentang Keuangan Negara.

_____. 2004. Undang-Undang Republik Indonesia No. 15 tahun 2004 tentang Pemeriksaan Pengelolaan dan Tanggung Jawab Keuangan Negara. _____. 2004. Undang-Undang No. 32 tahun 2004 tentang Pemerintahan Daerah.

_____. 2004. Undang-Undang No. 33 tahun 2004 tentang Perimbangan Keuangan antara Pemerintah Pusat dan Pemerintahan Daerah.

_____. 2005. Peraturan Pemerintah Republik Indonesia No. 58 tahun 2005 tentang Pengelolaan Keuangan Daerah.

World Bank. 2006. Aceh Public Expenditure Analysis: Spending for Reconstruction and Poverty Reduction. Jakarta

_____. 2007. Indonesia Public Expenditure Review: Making the Most of Indonesia’s New Opportunities.

REFERENCES 51 MANAGING RESOURCES FOR BETTER OUTCOMES IN A SPECIAL AUTONOMY REGION

ACEH PUBLIC EXPENDITURE ANALYSIS UPDATE 2008

APEA