Understanding APBD and APBN – Mechanisms, Functions, Structures, and Objectives
Understanding APBD and APBN – Mechanisms, Functions, Structures, and Objectives

Understanding APBD and APBN – Mechanisms, Functions, Structures, and Objectives

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Understanding APBD and APBN – National Budget – This is the annual financial plan of the Government of Indonesia, which is approved by the House of Representatives.

The national budget contains the Government Revenue and Expenditure List, which is a regional annual financial plan, determined on the basis of regional provisions relating to regional revenue and expenditure budgets.

This time, Kabarkan.com will present a lesson in understanding APBD and APBN. This lesson will be explained clearly, based on mechanisms, functions, structures and objectives

Understanding APBD and APBN

Definition of APBN

What is meant by APBN is an acronym that, if clearly interpreted, is the State Revenue and Expenditure Budget.

Understanding APBD and APBN

Meaning of APBN This is the annual financial plan of the Government of Indonesia, which was approved by the House of Representatives. The national budget contains a planned and systematic list of government revenues and expenditures for the fiscal year. Changes to the APBN and APBN accountability are determined each year by law.

Understanding APBD

The meaning of APBD is a regional annual financial plan, which is determined on the basis of regional provisions relating to regional revenue and expenditure budgets. Like the APBN, the APBD is submitted annually by the regional government to the DPRD for discussion, and then approved as a regional regulation.

Thus, APBD is a tool or also a means of information, which allows taking into account various public interests, which are realized through various events and programs where the benefits are felt by society at certain times.

APBD and APBN Mechanism

The mechanism of preparing the state budget

Before starting the preparations, it is necessary to consider several important aspects, such as macroeconomic assumptions. These assumptions then become perspectives for analysis in an APBN setting. These opinions are:

  • Availability of daily necessities in large and equal quantities at stable and reasonable prices for many people.
  • Certainty of a fair, proportionate, rational, transparent, participatory and accountable regional financial system.
  • The global economy is expected to grow better than before.
  • It is hoped that the economic recovery process will be supported by a favorable political, social and security situation so that it can grow better than the previous year.
  • The price of oil on the international market is estimated to be lower than the price of oil approved in the previous year.
  • The targeting and extraction of tax revenue sources must be improved.

For the 2018 state budget, the Ministry of Finance of the Republic of Indonesia sets basic macroeconomic assumptions as the basis for preparing the following content:

  • Economic growth is estimated at 5.4 percent
  • Inflation can be controlled within 3.5 percent
  • The exchange rate of the rupee against the US dollar is 13,400 rupees
  • The interest rate in the Ministry of National Finance is 5.2 percent
  • The average price of crude oil in Indonesia is $48 a barrel.
  • The volume of oil and gas production in 2018 is estimated at 800,000 barrels per day and 1,200 thousand barrels of oil equivalent per day, respectively.

The magnitude of the above-mentioned macroeconomic value is strongly influenced by both external (global) and internal factors. The influence of global factors includes commodity prices, international trade issues and the geopolitical situation.

The influence of internal factors includes the level of public confidence and purchasing power, confidence in business, credit and direct investment, improvement of the balance of payments, strengthening of foreign exchange reserves.

The state budget preparation process consists of:

  • The government will submit the draft state budget to the House of People’s Representatives for further discussion on whether or not the draft state budget can be approved.
  • The preparation of the RAPBN (National Revenue and Expenditure Budget Plan) by relevant institutions is based on macroeconomic analyzes and opinions.
  • If the DPR approves the RAPBN, the DRC certifies it on the APBN. If the People’s Assembly rejects the draft state budget, the government must use the previous state budget.

APBD preparation mechanism

The same macroeconomic assumptions of the state budget. These assumptions then become perspectives for analysis in the setting of APBD. Here is the flow of preparation of APBD:

  • The government will submit the draft state budget to the House of People’s Representatives for further discussion on whether or not the draft state budget can be approved.
  • The preparation of the RAPBN (National Revenue and Expenditure Budget Plan) by relevant institutions is based on macroeconomic analyzes and opinions.
  • If the DPR approves the RAPBN, the DRC certifies it on the APBN. If the People’s Assembly rejects the draft state budget, the government must use the previous state budget.

regional income

Territorial income is obtained from:

  • domestic income
  • Local taxes (UN, excise tax, income tax, etc.)
  • Regional Studies
  • Selected outcomes for regional wealth management
  • Other regional primary income
  • budget fund
  • Tax Income Distribution Fund/Tax Income
  • special distribution fund

Regional purchase details:

  • Indirect purchase
  • Shopping Officer
  • Florist
  • Support fee
  • shopping bonus
  • Shop for social assistance
  • Expenditure on financial assistance to provinces/enterprises/municipalities, rural governments and political parties
  • direct shopping
  • Shopping Officer
  • Goods and Services Store
  • capital cost

APBD and APBN Functions

The APBN is then used as a source of financing to implement the development triad, which includes: growth, equity, and economic stability. The development triad itself is an implementation of the theory of three financial functions, namely:

distribution function

It is the function of the state budget to improve income distribution. The most important tools used to stimulate income distribution are taxes and subsidies.

These taxes and consumption have direct effects that can influence or direct the desire to work and social consumption.

stabilization function

The stabilization function is closely related to budget policy, depending on the current economic situation. In case of recession (weak economic growth), the government should adopt budget deficit policy to stimulate demand.

With the improvement of the economic situation (recovery), the government should use the surplus of the political budget to reduce inflation. In addition to these two options, there is another option, the Balanced Budget, which can be used during a recession or recovery.

economic function

As a tool to stimulate economic growth and promote economic growth and budget stability according to the current economic situation.

In case of recession (weak economic growth), the government should adopt budget deficit policy to stimulate demand.

budget function

APBD also has features like APBN, which are:

distribution function

The APBD provides guidance on the appropriate allocation of funds to improve the regional economy. The use of APBD funds should be allocated in accordance with the objective of improving the economy.

distribution function

APBD must be distributed fairly and equitably.

stabilization function

APBD should be able to become an instrument of regional economic stability.

power function

APBD is a guiding principle in the implementation of government revenues and expenditures.

scheduling function

The APBD serves as a guide for planning regional financial budgets for specific regions.

control function

The APBD oversees the efforts of local governments to improve the regional economy.

APBD and APBN Structure

The structure of the state budget

Over time, the structure or setting of the Indonesian state budget has undergone a number of changes. The state budget for this year consists of:

a) government revenue
Income tax
non-tax income

b) government spending
Government spending is divided into two parts:

  • Central government expenditures, including:
  • Expenditures (Ministries and Departments)
  • Expenses (debt payments, subsidies, other expenses)
  • Transfers to regional and rural funds, including:
  • Transfer to Regions (Income Distribution, General Distribution Tool)
  • village chest

c) basic balance.

Dr) Government budget surplus/deficit – government spending.

e) Budget financing.

budget structure

regional budget
1) Territorial income is obtained from:

  • regional income
  • Local taxes (UN, excise tax, income tax, etc.)
  • Regional Studies
  • Selected outcomes for regional wealth management
  • Other regional primary income
  • budget fund
  • Tax Income Distribution Fund/Tax Income
  • special distribution fund
  • Other project regional income
  • Scholarship income
  • Indirect purchase :
  • Shopping Officer
  • Florist
  • Support fee
  • shopping bonus
  • Shop for social assistance
  • Expenditure on financial assistance to provinces/enterprises/municipalities, rural governments and political parties
  • Shop directly :
  • Shopping Officer
  • Goods and Services Store
  • capital cost

2) Regional shopping
Regional purchase details:

  • Indirect purchase :
  • Shopping Officer
  • Florist
  • Support fee
  • shopping bonus
  • Shop for social assistance
  • Expenditure on financial assistance to provinces/enterprises/municipalities, rural governments and political parties
  • Shop directly :
  • Shopping Officer
  • Goods and Services Store
  • capital cost

3) Financing
Depends on the state’s general budget deficit or surplus (income – expenditures). If the regional budget is in deficit, the government must cover the deficit. Meanwhile, if there is a surplus, the government will receive more money.

The purpose of the state budget

The goal of the state budget

The state budget is to finance all the interests of the state with the aim of creating a better national economy. From the details of the APBN, the government can see how much government revenue has been received and how much the country must pay in the current fiscal year.

budget goals

The APBD has been prepared as a guide to the income and expenses of state officials in the region in the context of implementing regional autonomy and improving the welfare of the population. With APBD, losses, fraud and errors can be avoided.

Thus, friends, we can move this topic on regarding the definition of APBD and APBN. Hopefully with what we have conveyed in this article, it can provide understanding and be useful to all of you. Trustworthy.

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