This report discusses the future ofIndonesia's public expenditures as it enters the 21stcentury. It contributes to the discussion onIndonesia's spending priorities for the years ahead.These choices will impact the lives of Indonesians, andtheir opportunities to grow richer and receive betterservices. The report will contribute to Indonesia s nextfive-year plan, the RPJM, which will take effect in January2010. Indonesia has been one of the most successfulcountries in reducing its debt-to-GDP ratio. Since 1999,when debt levels reached over 90 percent of GDP, Indonesiahas reduced its debt levels to just above 30 percent of GDPby the end of 2008. Education spending increased from 11percent of total government spending in 2001 to 15 percentin 2008. Chapter 1 discusses public spending from 2001 to2009, including discretionary spending, key sectors,subsidies and decentralization. Chapter 2 analyzesIndonesia's economy in the current (2009) economicdownturn. Indonesia is in a position of relative economicstrength despite the impact of the global financial crisis.This is largely thanks to its broad-based growth that hasavoided over-reliance on exports. The share of output thatIndonesia exports is the smallest of the major SoutheastAsian economies. Chapter 3 presents the future ofIndonesia's fiscal growth to 2015. Notwithstandingnoteworthy achievements over the past decade, Indonesiacontinues to face significant economic and socialchallenges, and major gaps remain in many areas of publicexpenditure. However, sustained fiscal consolidation andgovernance reforms, as well as resilience in the face of theglobal crisis, leave Indonesia well placed to push forwardwith sustained poverty reduction. Strategic use of publicresources and continued growth could see swift improvementin economic and social outcomes over the coming five years.
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