Backlog Settlement for Foreign Loans and Grants

Ministry of Finance Regulation No. 78/PMK.05/2011 on Ineligible Backlog Settlement towards Foreign Loan and Grant through Special Account Mechanism (“Regulation”) has been issued to regulate the backlog and ineligible backlog.

Under Article 1 (1) of the Regulation, backlog is defined as government’s funds which are utilized through a special account mechanism for obtaining foreign loan and grant. Meanwhile, the ineligible backlog, pursuant to Article 1 (2), is the backlog that cannot be reimbursed from the foreign lenders and grantors.

Other paragraphs in Article 1 stated the definitions on the backlog practice terms, such as foreign lenders and grantors (pemberi pinjaman dan atau hibah luar negeri/PPHLN); closing date and closing accounts; state treasury financial report (laporan keuangan bendahara umum negara/LK BUN).

Particularly, Article 1 (8), defined the Special Account as the account that opened by Ministry of Finance in the Bank Indonesia or commercial banks in order to collect foreign loans and grants. The loans and grants are in form of an initial deposit.

There is also another type of special account, pursuant to Article 1 (9), which is a empty special account (rekening khusus kosong/Reksus Kosong). The condition occurred because of the lack of fund in the special account to pay the expense.

Pursuant to Article 2, the ineligible backlog due to by an accounting correction. It will be conducted by Directorate of Treasury Management. Moreover, the correction will be sent to the Directorate of Accounting and Financial Report in order to revise, for example, LK BUN balance. The amount of the backlog will be set by Ministry of Finance.

A backlog could be categorized as ineligible, if it meets the requirements in Article 5, which are: the foreign loans and grants are already in closing date/closing account status; the expense is not matched with the foreign loan and grant agreement.

The Regulation has been in force since 18 April 2011.