In either case the central state budget would bear the burden. The proposed FY 2001 budget contains a Rp 6 trillion contingency fund which is thought to be sufficient to cover roughly half of these personnel transfers. In addition, regions that refuse to accept the transfer of civil servants will have their block grants docked by an equivalent amount. Almost all of this amount comes from development projects that are funded by foreign donors and partly co-financed by the central government. The regulation does not cede control over the disbursement and administration of this money to the regions.
Local governments can borrow from foreign sources only with central government approval.
In addition, Jakarta imposed a one- year moratorium on local borrowing from commercial banks, domestic or foreign. This provision, which does not appear in the regulation, will not prevent local governments from borrowing from Regional Development Banks owned by the provincial governments. The legal structures required for a local government bond market will not be in place for some time, but the government is already taking steps to create it. Local short-term borrowing to cover cash flow is already happening in several regions. Government Regulation No.