Case Study

Examining Budget Credibility in Indonesia’s Water and Sanitation Sector

Achieving access to adequate and equitable water, sanitation, and hygiene and ending open defecation are critical priorities for Indonesia as it works to achieve the Sustainable Development Goals (SDGs). Mainstreamed into Indonesia’s National Development Plan and stipulated by Presidential Regulation Number 59/2017, the SDGs are integrated into the country’s development agenda, including through its National Medium-Term Development Plan 2020-2024, which is regulated by Presidential Regulation Number 18/2020. Detailed in the Ministry of Public Works and Public Housing (MoPWPH)’s Strategic Plan, these regulations name the MoPWPH; the Ministry of Health (MoH); the Ministry of Home Affairs; local government at the provincial, district, and village levels; State-Owned Enterprises; and communities as responsible for improving access to clean water and sanitation. This brief will explore Indonesia’s budget credibility issues in government spending related to SDG 6, which calls on governments to “ensure availability and sustainable management of water and sanitation for all.” The brief covers the budget period 2016-2021 and focuses on the two MoPWPH sub-directorates responsible for clean drinking water and sanitation services.

At the national level, the MoPWPH is responsible for setting regulations, drafting guidelines, and developing infrastructure to improve access to clean water and sanitation. In particular, these responsibilities fall to two directorates within the ministry – the Directorate of Drinking Water System Development and the Directorate of Settlements, Environment, and Health Development. These directorates reside under the Directorate General of Cipta Karya, a division in MoPWPH.  

Indonesia has made progress toward achieving SDG 6 by increasing access to clean drinking water and improved sanitation services. However, according to a UNICEF study, 17 million people practice open defecation in Indonesia, and less than 10 percent of the total population has access to safely managed sanitation services. In addition, there are disparities in access to sanitation services between urban and rural areas, with access to clean water especially limited in coastal areas. This brief found that these and other problems in Indonesia’s water and sanitation sector are related to the financial, technical, and institutional aspects of water and sanitation sector governance. Financing gaps, inadequate cross-sector policy coordination, and limited capacity of subnational governments are some of the factors that impede progress on SDG 6. For example, local governments at the provincial, district, and village levels are responsible for obtaining funding for the investment, operation, and maintenance of the water, sanitation, and health systems under their purview, but they have limited capacity to develop and manage these systems. 

As this brief will show, despite some progress, chronic budget underspending by these directorates has negatively affected progress toward SDG 6. This credibility analysis relied on approved budget and actual expenditure data from the annual government financial report published by the MoH, the MoPWPH financial audit report, Indonesia’s 2021 Voluntary National Review report, the National Public Treasury Report (known as Laporan Keuangan Bendahara Umum Negara, or LKBUN), official data from the Indonesia Statistical Bureau on clean water and sanitation access, and a review of literature from open web sources, academic journals, and articles. 

This publication is a part of Exploring the Connections between Budget Credibility and SDG Implementation.

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Examining Budget Credibility in Indonesia’s Water and Sanitation Sector

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Authors

Dede Krishnadianty

Program Officer, Indonesia, International Budget Partnership

Holding a Bachelor degree in Architecture and planning, Dede continued her study in trans-disciplinary Environment management master course at University of Melbourne.

She has proven record on working in Sustainable Development areas for 10 years, in a wide range of programmatic themes of Urban design, SDGs, Climate change, renewable energy, Sustainable Tourism, waste management, and public finance. In the last three years with WWF Indonesia She had been working to develop Green Budget Tagging, a specific tool to measure green economy budgeting in Indonesia.

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