Aditya Suharmoko, Jakarta – Government spending remained low as of April, at about a fifth of its full-year allocation, depriving the country so far of the positive impact of the state budget and stimulus drivers to counter the global economic crisis.

The government disbursed Rp 223.51 trillion (about US$21.1 billion) between January and April, higher than the Rp 189.27 trillion disbursed in the same period last year, but still less than expected to counter the economic slowdown. The Government spent only 21 percent of the full-year budget by April.

"This is a serious problem as I see the government's money in Bank Indonesia (BI) has piled up again. The government should accelerate its budget expenditure, otherwise the much-needed fiscal stimulus to the economy would not be effective," Danareksa Research Institute chief researcher Purbaya Yudhi Sadewa said on Saturday.

"Liquidity in the banking sector may be affected too, as the money resulting from the stimulus is always absorbed. This is not an ideal system for our economic recovery," he said.

Chief economist of Mandiri Sekuritas Destry Damayanti had similar worries. "Government spending has become a concern due to its low realization. As a result, the government's stimulus to the economy will not be optimal said Destry.

Finance Minister Sri Mulyani Indrawati has urged regional development banks (BPDs) to channel funds to productive activities. The Finance Ministry says government spending will be the main driver to the economy this year to stimulate domestic consumption at a time when exports and inward investments have fallen.

The government expects the economy to expand at between 4 percent and 4.5 percent this year, with first-quarter growth performance estimated at 4.6 percent.

To help the economy pick up sooner, the government will try to speed up the disbursement of its spending in the second and third quarters this year, said Mulyani.

Government spending usually accelerates in the fourth quarter. Slow state spending is one of the main reasons growth has not been faster.

The government's economic stimulus package has not yet run as projected. The Rp 12.2 trillion infrastructure stimulus was designed to be up and running by late March.

"There is a structural problem with budget realization that has not been systematically resolved by the government, thus budget realization is always slow and not efficient," said M. Fadhil Hasan, an economist at the Institute for the Development of Economics and Finance (Indef).

"Given this problem, it is feared the government may not achieve its economic growth target (this year)."

The slowing economy has affected state revenue, which dropped to Rp 234.71 trillion in the first four months from Rp 254.78 trillion in the same period of 2008, according to Finance Ministry's data. However, given slow state spending, the government recorded a budget cash surplus of Rp 11.2 trillion as of April 30.