Countries and Regions

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p. 5 of 6 BACK | NEXT I. Development Context II. Government Vision and Plan III. Progress with the Adoption of the Poverty Reduction Strategy Framework IV. New Directions V. Portfolio Management VI. 2005 Operational Program

Country Strategy and Program Update 2005: Indonesia

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V. Portfolio Management

27. Portfolio Performance. In February 2004, ADB conducted a comprehensive review of the country’s portfolio. The main objectives were to restructure the portfolio, expedite loan closure, and identify loan surpluses for cancellation. During 2004, 13 loans (11 projects) were closed and 3 loans (3 projects) were made effective, reducing the portfolio to 36 loans (33 projects) from 46 loans (41 projects). The undisbursed loan balance was cut to $1.64 billion from $1.89 billion. The undisbursed loan balance is roughly half the size of the active portfolio in 2000. In 2004, Indonesia’s disbursement ratio of 25.7% was above comparable values for all ADB countries. While the number of projects considered “at risk” has fallen over the past few years, it remains high relative to the active portfolio. At the end of 2004, 12 projects were classified “at risk”, mainly due to delays in implementation and in declaring loans effective. Enhanced quality control mechanisms and stringent readiness criteria for new loans should reduce startup delays.

28. In 2004, ADB’s Southeast Asia Department strengthened portfolio administration at ADB headquarters and the Indonesia Resident Mission (IRM). With the transfer of additional projects, IRM now administers about one third of the portfolio, totaling 13 loans (11 projects). By the end of 2005, IRM is expected to be administering about half of the portfolio, as well as the expected emergency assistance activities. Two experienced staff consultants have been contracted to strengthen IRM’s portfolio management and build capacity.

29. Performance Monitoring and Evaluation. Joint country portfolio performance reviews are conducted with the World Bank and JBIC. Several major issues continue to affect project implementation, particularly (i) corruption in projects; (ii) lack of effective project management, and insufficient implementation oversight under decentralization; (iii) delays in disbursement, (iv) lack of provision for rolling over unspent funds, and (v) insufficient project readiness. The Consultative Group on Indonesia (CGI) Working Group on Aid Effectiveness is expected to become a forum for addressing these issues.

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