Understanding the APBN: Definition, Function and Purpose of the APBN

What is the State Budget (APBN)? In general, the definition of the APBN is the annual financial plan of the government of the Unitary Republic of Indonesia approved by the DPR (House of Representatives).

Another opinion said that the definition of APBN is a list of plans for all revenues and expenditures of the government of the Republic of Indonesia in order to achieve a goal. In general, the National Budget is prepared for one fiscal year.

In this APBN it contains a systematic and detailed list of plans for revenue and also the expenditure of the Indonesian state within 1 Budget year, which starts from 1 January to 31 December (see APBN 2018 ). The making of the APBN, including changes and accountability, is determined annually by law.

The legal basis of the APBN itself is explained in the 1945 Constitution article 23 paragraph 1 which states that “each year the APBN is determined by law. If the DPR does not approve the budget proposed by the government, the government will use last year’s budget.

Also read: Sources of State Finance

APBN Function

After discussing the definition of the APBN as previously explained, what exactly is the function of the State Budget?

The National Budget is an instrument to regulate state expenditure and income in financing the implementation of government activities, development of achieving economic growth , increasing national income, economic stability and determining the direction and priorities of development in general.

So that in practice the APBN has several functions, namely the functions of authorization, planning, supervision, allocation, distribution and stabilization. Every revenue which is the right and expenditure which is the obligation of the state must be included in the APBN. If there is a surplus of state revenue, it can be used to finance the state expenditure in the next fiscal year.

Referring to the explanation above, the following is an explanation of each APBN function:

1. Authorization Function

The authorization function of the APBN means that the state budget is the basis for the implementation of state revenue and expenditure in the year concerned. Thus, the expenditure or income can be accounted for by the people.

2. Planning Function

With this function, it means that the National Budget can be a guideline for countries to plan activities in the year concerned. So if the expenditure budget has been planned, the state can make plans to support these expenditures.

For example, in the written budget, the budget to build a road construction project with a value of Rp 5 billion, the government can take action to prepare the project to run smoothly.

3. Supervision Function

The APBN is also a supervision which means that the formulation of a state budget plan must be a guideline for assessing whether the activities of implementing a state government are in accordance with the stipulated provisions. So that it will be easy for the public to judge whether the government’s actions using state funds can be justified or not.

4. Allocation Function

The APBN is also an allocation function which means that the state budget must be directed at reducing the waste of resources and unemployment and also increasing the efficiency and effectiveness of the economy. In the implementation, the allocation function is carried out by increasing the quality of resources, effectiveness, and economic efficiency. For example, making roads / bridges / dykes, and also repairing roads / bridges / dykes.

5. Distribution Function

In this case the state expenditure budget is also a policy in paying attention to a sense of fairness and propriety. In carrying out the function of distribution in this case carried out by using state money for humanitarian purposes, such as; subsidies, pension funds, and premiums.

6. Stabilization Function

It means that the State Budget is a tool in maintaining and striving to balance the economic fundamentals of the Republic of Indonesia. In its implementation, this stabilization function is carried out by maintaining the flow of money and goods to prevent excessive inflation and deflation.

Also read: Definition of Budget

The purpose of the state budget

Referring to the description of the definition of the APBN and the functions of the State Revenue and Expenditure Budget, in general the objectives of preparing the APBN are as follows:

  1. The draft APBN aims to preserve and maintain economic stability and prevent budget deficits
  2. The APBN aims as a guideline in terms of state revenues and expenditures in the implementation of state activities which are accompanied by the aim of increasing employment opportunities so that it is directed at increasing economic growth and prosperity of the people.

What is the State Budget (APBN)? In general, the definition of the APBN is the annual financial plan of the government of the Unitary Republic of Indonesia approved by the DPR (House of Representatives).

Another opinion said that the definition of APBN is a list of plans for all revenues and expenditures of the government of the Republic of Indonesia in order to achieve a goal. In general, the National Budget is prepared for one fiscal year.

In this APBN it contains a systematic and detailed list of plans for revenue and also the expenditure of the Indonesian state within 1 Budget year, which starts from 1 January to 31 December (see APBN 2018 ). The making of the APBN, including changes and accountability, is determined annually by law.

The legal basis of the APBN itself is explained in the 1945 Constitution article 23 paragraph 1 which states that “each year the APBN is determined by law. If the DPR does not approve the budget proposed by the government, the government will use last year’s budget.

Also read: Sources of State Finance

APBN Function

After discussing the definition of the APBN as previously explained, what exactly is the function of the State Budget?

The National Budget is an instrument to regulate state expenditure and income in financing the implementation of government activities, development of achieving economic growth , increasing national income, economic stability and determining the direction and priorities of development in general.

So that in practice the APBN has several functions, namely the functions of authorization, planning, supervision, allocation, distribution and stabilization. Every revenue which is the right and expenditure which is the obligation of the state must be included in the APBN. If there is a surplus of state revenue, it can be used to finance the state expenditure in the next fiscal year.

Referring to the explanation above, the following is an explanation of each APBN function:

1. Authorization Function

The authorization function of the APBN means that the state budget is the basis for the implementation of state revenue and expenditure in the year concerned. Thus, the expenditure or income can be accounted for by the people.

2. Planning Function

With this function, it means that the National Budget can be a guideline for countries to plan activities in the year concerned. So if the expenditure budget has been planned, the state can make plans to support these expenditures.

For example, in the written budget, the budget to build a road construction project with a value of Rp 5 billion, the government can take action to prepare the project to run smoothly.

3. Supervision Function

The APBN is also a supervision which means that the formulation of a state budget plan must be a guideline for assessing whether the activities of implementing a state government are in accordance with the stipulated provisions. So that it will be easy for the public to judge whether the government’s actions using state funds can be justified or not.

4. Allocation Function

The APBN is also an allocation function which means that the state budget must be directed at reducing the waste of resources and unemployment and also increasing the efficiency and effectiveness of the economy. In the implementation, the allocation function is carried out by increasing the quality of resources, effectiveness, and economic efficiency. For example, making roads / bridges / dykes, and also repairing roads / bridges / dykes.

5. Distribution Function

In this case the state expenditure budget is also a policy in paying attention to a sense of fairness and propriety. In carrying out the function of distribution in this case carried out by using state money for humanitarian purposes, such as; subsidies, pension funds, and premiums.

6. Stabilization Function

It means that the State Budget is a tool in maintaining and striving to balance the economic fundamentals of the Republic of Indonesia. In its implementation, this stabilization function is carried out by maintaining the flow of money and goods to prevent excessive inflation and deflation.

Also read: Definition of Budget

The purpose of the state budget

Referring to the description of the definition of the APBN and the functions of the State Revenue and Expenditure Budget, in general the objectives of preparing the APBN are as follows:

  1. The draft APBN aims to preserve and maintain economic stability and prevent budget deficits
  2. The APBN aims as a guideline in terms of state revenues and expenditures in the implementation of state activities which are accompanied by the aim of increasing employment opportunities so that it is directed at increasing economic growth and prosperity of the people.

 

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