ABSTRACT
This chapter begins with a brief discussion on the history and political backdrop of performance budgeting reform in Indonesia. The Indonesian approach of performance budgeting has three distinct principles, namely “output and outcome-orientation,” “letting the managers manage,” and “money following functions.” Despite the challenging political transition, the new Majelis Permusyawaratan Rakyat was determined to push forward its agenda to reform the governmental system. Since the passage of the State Finances Law and State Planning Law in the early 2000s, the Indonesian government has issued and revised several implementing regulations to guide all line ministries in preparing their respective annual plan document. The chapter presents lessons learned, with the hope that future efforts to carry out similar budgetary system reforms, especially in developing countries comparable to Indonesia, could learn from the Indonesian experience. The State Finances Law describes the general principles for managing the government budget, such as professionalism, transparency, and accountability.
