In September 2006, the World Bank Board of Directors approved a one year extension with additional features to the existing Country Assistance Strategy (CAS) for Indonesia. The CAS Progress Report FY2004-2008 has formalized a fourth area of development assistance, disaster risk management, in recognition of the large reconstruction program being administered by the Bank in Aceh, Nias and Yogyakarta.
This is in addition to the three existing goals agreed with the Government for World Bank assistance to Indonesia: providing better services for the poor, strengthening governance at all levels and improving the investment climate. Reviewing progress during the CAS period beginning 2004, the Board acknowledged Indonesia’s steady advancement on several fronts from democracy and decentralization to the economy despite a series of natural disasters. The country has turned the corner on the 1999 economic crisis with poverty and development investment now back to pre-crisis levels. Indonesia will soon graduate from its concessionary International Development Association lending program in keeping with its status as a middle income country. Indeed, through prudent fiscal management, Indonesia has reduced its burden of debt with the ratio to GDP declining from 100 percent in 1999 to 47 percent today, a figure which is set to decline further in the coming years. Results of World Bank Assistance: The CAS Progress Report found almost all projects and programs during the period on track in realizing their stated goals. The World Bank currently lends supports 27 Government projects in all major sectors of the economy. It also administers and partners with other development agencies and donors in a large number of projects supported by over 134 Trust Funds worth US$850 million. In FY06 loan activity amounted to US$685 million while grant activity stood at US$546 million. Some highlights of the results of programs supported by the World Bank in Indonesia: Expansion of the Community Driven Development Programs to 41,000 villages where over 100,000 infrastructure projects have been carried out in the poast six years to improve roads, sanitation, schools, bridges, canals and housing. Over 3 million villagers have been employed through these programs. (The Government is now scaling up the program to cover all 75,000 villages making it a central poverty alleviation mechanism for the country) Some 1.5 million low income communities have access to clean water under the World Bank-supported water supply and sanitation program. A further 6-10 million will benefit from the Third Water and Sanitation Program which provides infrastructure, community hygiene and local capacity building for improved human development outcomes. Over 2 million land titles have been distributed and 2.5 million more are under preparation, including in Aceh, were 3,000 titles have been distributed and over 52,000 mapped. The Bank-administered US$537 million Multi-Donor Trust Fund for Aceh & Nias has committed 70 percent of its funds to projects in the first year. Over 3,370 houses have been built and repaired and 13 rehabilitation projects are underway. After the May 27 earthquake in Java, the Bank reallocated US$20 million for emergency rebuilding of 6,000 houses, these will be completed in December. More shelters will be built by the US$75 million Java Reconstruction Fund which will also provide critical livelihoods support. With four active rural development projects worth US$228 million, the Bank has focused on raising agricultural productivity, local governance reform and a good climate for rural investment. A new water law, river basin management and new water user associations will impact a third of the country’s irrigated land. The Bank is giving a new focus to its support for education – it has supported 26 projects totaling US$1.5 billion over the past 20 years –in addressing the critical need for early childhood development. A 7-year program is providing 740,000 of Indonesia’s poorest children in 50 districts a good start in life has been launched.
Future Assistance Priorities: In keeping with the Government’s strong commitment to democracy, decentralization and poverty reduction, the extended CAS will offer greater support for (i) civil service reform and transparent, nationwide poverty programs (ii) disaster risk management (iii) increase in program financing for poverty alleviation (iv)stronger partnerships to improve the business environment, infrastructure development, and Aceh’s reconstruction. The World Bank will work with the Government and donors through existing Trust Funds like the Decentralization Support Facility, Development Policy Loans and existing programs on strengthening governance through a package of fiduciary and accountability reforms in areas of public participation, transparency, financial management and procurement. Efforts are underway across 21 reform-minded provinces. |
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