Regions and Countries

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p. 18 of 33 BACK | NEXT I. Current Development Trends and Issues II. The Government's Development Strategy III. ADB's Development Experience A. Impact of Past Assistance B. Portfolio Performance and Status C. Lessons Learned D. Conclusions and Lessons for the Country Strategy and Program IV. ADB's Strategy V. ADB's Assistance Program VI. Risks and Performance Monitoring and Evaluation

Country Strategy and Program 2006-2009 (Draft for Consultation): Indonesia : III. ADB's Development Experience

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B. Portfolio Performance and Status

56. Continued efforts by Government and ADB have helped to cleanup the ongoing portfolio, and reduce undisbursed balances (Figure 4). The undisbursed net loan amount decreased from about $4.0 billion at the beginning of 2000 to about $2.0 billion at the beginning of 2005. As a result of further loan disbursements and cancellations during 2005, the undisbursed net loan amount fell below $1.7 billion at the beginning of 2006, 40% of the 2000 level. Commitment fees declined accordingly, from $11-12 million per year during 2000-2003 to below $8 million in 2005. The reduction in the portfolio size was attributable to three factors: (i) high disbursements, (ii) partial loan cancellations, and (iii) the number of loan closings exceeded the number of loan approvals. During 2000-2005, 68 loans were closed, while only 31 new loans were approved (Figure 5). Loan cancellations totaled almost $1.0 billion. At about 5% of the undisbursed net loan amount, the average annual rate of cancellations was in line with prudent project administration, neither marginal nor excessive but designed overall to improve the health of the portfolio.

cont57. Despite the numerous loan closings, the average age of Indonesian loans has been persistently above the ADB-wide average. There has been some improvement over the past two years, but Indonesian projects are still on average 4.2 years old, compared to an ADB average of 3.6.³² There is scope for improving the age structure of the portfolio through expeditious project implementation. Disbursement performance has been relatively strong. Total disbursements reached $1,015 million in 2005 with a disbursement ratio³³ of 42.1% above the ADB-wide average of 20.7%. Disbursements under project loans increased significantly in 2003 and 2004 but declined again in 2005 due to the late release of the Government budget.

58. While portfolio performance has substantially improved over the last few years, project implementation remains hampered by a number of generic issues, including start-up delays and delays in physical implementation. Start-up delays are caused by delayed loan effectiveness, long lead times for the establishment of project management and implementation offices, and delays in the recruitment of consultants. The physical progress of projects is negatively affected by the late release of counterpart funds, procurement delays, weaknesses in the EA, and unfamiliarity with ADB procedures.

59. A substantial number of projects approved before 2006 will continue be implemented during the new CSP period. All projects are currently rated Satisfactory for Implementation Progress, and for achieving Development Objectives. There are no projects at risk³⁴ Considerable efforts continue to be needed to ensure that these projects are completed successfully and contribute to the Government’s objectives. Many were designed just after the introduction of decentralization. This applies especially to the decentralized projects, 11 of which were approved after 2000. As the decentralized projects involve many different districts and are scattered around the country, substantial effort is needed during the CSP period to ensure that development objectives are achieved and the projects are implemented efficiently.

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