Nur Yasmin, Jakarta – The Finance Ministry will freeze regional government accounts that have been channeling rural development funds to bogus villages, an official said on Tuesday.
Finance Minister Sri Mulyani Indrawati raised the issue on Thursday, saying state funds had gone to ghost villages with no residents.
Astera Primanto Bhakti, the director general of financial balance at the ministry, said the ministry will suspend the rural development fund until the villages in question complete their administrative requirements.
"The fund is transferred from the central government to regional [government] accounts. We will freeze the regional accounts, and we will ask for their clarification," Astera said during the "Village Fund Polemic" discussion in Jakarta.
Astera said the Home Affairs Ministry is currently verifying if the villages really do exist and will report its findings to the Finance Ministry.
"We hope we can receive the report in December. We will also keep a closer eye on the villages [in our program] so there's no maladministration," he said.
Benny Irwan, the director of finance and government assets at the Home Affairs Ministry, denied the villages were fictitious. But he admitted some of them had administrative problems.
"There are no fictitious villages, but some villages do have issues with their administration. We need to offer them solutions," he said.
According to him, some of these villages had been abandoned during times of natural disaster. The villagers had simply failed to report to the government that they had moved out, Benny said at the discussion.
He opposed the plan to freeze the village fund, saying it would deal a severe blow to economic development in rural areas.
"Without the fund, villages would not be able to move forward. We want villages to be economically independent and the villagers to be entrepreneurs. We should give them guidance instead," Benny said.
Currently, almost 75,000 villages receive the rural fund, which President Joko "Jokowi" Widodo initiated in 2015 to accelerate economic development in rural areas and encourage fairer wealth distribution. According to the program, each village or urban ward was entitled to Rp 1 billion ($71,000) annually.
This year the government allocates Rp 70 trillion for the village fund and will increase it to Rp 72 trillion next year.
From January to October this year, the government has already disbursed almost Rp 52 trillion or 74.23 percent of the rural budget.
Astera said 80 percent of the village fund had been spent on new infrastructure, and the rest for rural empowerment.
The finance minister warned that regional governments should be more cautious in channeling the fund to prevent misappropriation.
"If a region received the village fund but we found out the villages did not exist, we would freeze [their account]. We will get the fund back if it had already been transferred by the regional government," she said.
Village, Disadvantaged Regions and Transmigration Minister Abdul Halim Iskandar also denied these "ghost villages" existed.
"I never said they existed. According to our data, there are no uninhabited villages that have received the rural fund. We monitor all fund disbursement and expenditures very closely," Abdul said at the House of Representatives in Jakarta on Tuesday.
He said he would meet Sri Mulyani in person to discuss her plan to freeze the village fund.