TEMPO.CO, Jakarta - The provincial governmet of North Maluku is struggling under debts amounting to Rp200 billion, causing its treasury to always be in deficit. The North Maluku administration is also currently incapable of funding its public operations without borrowing from third parties.

"The debt is caused by late payments of our obligations to creditors throughout the previous operational year," said chief inspectorate of North Maluku province Bambang Hermawan.

According to Bambang, the late payments have caused debts to balloon to Rp200 billion, saying that the estimation is based on North Maluku's current balance of payments. "It is possible that our actual debt is actually bigger," Bambang told Tempo on Wednesday, August 20, 2014.

The debts of the North Maluku provincial government stemmed from the ongoing works at the public works agency, fisheries and maritime agency, and transport agency. Some of the debts are actually obligations from the previous year, which remain unpaid.

"To avoid a larger budget deficit, we need to find an appropriate solution to our obligations to creditors in order to avoid the debts from affecting North Maluku's credit rating in the next financial year," said the former auditor of the Supreme Audit Agency (BPK).

From a macro perspective, Bambang said, the financial position of North Maluku's provincial government still enabled it to function normally and thus had yet to reach a very critical state. He added the inspectorate had asked the government to cut budget deficits and recover assets that had been illegally acquired by 50 of North Maluku's public servants, amouting to some Rp5,7 billion.

"At least we were able to recover some of our assets, as most of the implicated civil administrators have complied with the order," said Bambang.

Hasby Yusuf, a lecturer of economy at Khairun University in Ternate, said that the current financial state of North Maluku mirrored the gross mismanagement within the provincial administration. "We have to pay serious attention at the issue, otherwise the provincial treasury will be drained solely for repaying debts to third arties at the expense of the public," finished Hasby.

BUDHY NURGIANTO