Indonesia: Strengthening Indonesia's Economic Early Warning System

Sovereign Project | 42212-012

Summary

The TA aims to strengthen Indonesia's economic early warning system (EWS) (i) through the development of an EWS blueprint based on best international practices; (ii) support activities of threshold development for EWS indicators and their integration into underlying econometric models (macroeconomic model, fiscal policy model, financial sector model, social impact analysis, and other task-related models); (iii) capacity development within Ministry of Finance to independently maintain the EWS database, to analyze ESW signals and to provide policy options containing identified risks; and (iv) support of international knowledge exchange on surveillance systems and better international collaboration

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Project Name Strengthening Indonesia's Economic Early Warning System
Project Number 42212-012
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Public sector management - Economic affairs management
Gender Equity and Mainstreaming No gender elements
Description The TA aims to strengthen Indonesia's economic early warning system (EWS) (i) through the development of an EWS blueprint based on best international practices; (ii) support activities of threshold development for EWS indicators and their integration into underlying econometric models (macroeconomic model, fiscal policy model, financial sector model, social impact analysis, and other task-related models); (iii) capacity development within Ministry of Finance to independently maintain the EWS database, to analyze ESW signals and to provide policy options containing identified risks; and (iv) support of international knowledge exchange on surveillance systems and better international collaboration
Project Rationale and Linkage to Country/Regional Strategy The Indonesia Country Strategy and Program (CSP) 2006-2009 aims to help the Government of Indonesia achieve its medium-term development plan (rencana pembanguan janka menengah, RPJM) 2005-2009 objectives of higher levels of pro-poor sustainable growth and achieving the Millennium Development Goals. The RPJM aims as a strategic goal to support growth through greater resource mobilization and weak risk management was identified as a key constraint. A financial EWS is one of the key parts of every country's economic surveillance system as large amounts of data sets from governmental and non-governmental financial agencies are being analyzed to determine their risks and to provide feedback mechanisms that country's economic policies could remain on track. The EWS alerts the government on various emerging financial vulnerabilities and offers a reasonable lead time for the government to react against emerging financial threats.
Impact Macroeconomic monitoring and policy response system strengthened. The proposed TA aims to strengthen Indonesia's economic monitoring and fiscal policy response system through enhanced EWS. Performance targets include stabilization or improvements of country ratings by international rating organizations (Standard & Poor, Moody's and Fitch) in relation to officially announced government targets.
Project Outcome
Description of Outcome Improved quality of economic vulnerability reporting. It is expected that the Executing Agency, the Ministry of Finance, will obtain improved quality of economic vulnerability reporting which ultimately enhances its fiscal planning, response, and coordination role as well as improves forecasting mechanisms and risk assessment in budget documents.
Progress Toward Outcome Implementation of the TA was succesfully implemented and competed in January-2014. The TA supported the Fiscal policy Office (FPO) to develop the blueprint of EWS+ in Indonesia, and at the same time, integrate Crisis Management Protocol (CMP) into the EWS+ system. The design for inter-agency cooperation was developed and can be used as the basis for a more comprehensive crisis management in Indonesia. The dashboards for the EWS+, which include the CMP, has also been developed, in which it integrates various aspects of the Indonesian economy, such as fiscal and banking sector, stock markets, and government debt. The dashboards can also provide timely information to the decision makers in the current and forecast conditions of the Indonesian economy. Therefore, the dashboards can serve as an important tool in inter-agency cooperation for crisis management in Indonesia. Moreover, the capacity building processes have developed the capacity of FPO MoF staffs in maintaining and developing the EWS+ system.
Implementation Progress
Description of Project Outputs

Blueprint for a strengthened EWS developed

Strengthened and customized EWS

Strengthened regional partnership on early warning systems

Ministry of Finance staff operating the enhanced EWS independently

Status of Implementation Progress (Outputs, Activities, and Issues) The implemation of all components were completed. The scope of Component 2 (Strengthened and customized EWS) was extented to integrate the EWS into the Crisis Management Protocol. The scope of Component 3 was also expanded to include setting up the Economic Assistance Team to bring the results of EWS exercises into key policy making at Fiscal Policy Office.
Geographical Location Indonesia
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations took place with Ministry of Finance and Bank Indonesia in December 2008 and February 2009. A workshop had been organized by Ministry of Finance to outline the needs for the improvement of the EWS
During Project Implementation Fiscal Policy Office, Ministry of Finance, as the EA, are actively engaged in the implementation of the TA.
Business Opportunities
Consulting Services

1. Blueprint development for a strengthened EWS. Consultancy input: One international macroeconomic advisor (5 person months, intermittent).

2. Strengthened and customized EWS.

Consultancy input: Two senior domestic fiscal management specialists (2x12 person months), one junior domestic fiscal management specialist (1 x 12 person months).

3. EWS capacity development for Ministry of Finance.

Consultancy input: One international senior economist and economic policy advisor (1 x 4 person months), one domestic capacity development specialist and trainer (1 x 4 person months).

4. International workshop on enhancing economic surveillance and collaboration.

Consultancy input: One junior domestic fiscal management specialist (1 x 12 person months)

Responsible ADB Officer Edimon Ginting
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
Ministry of FinanceFrans Seda Building
Jln. Dr. Wahidin Raya No. 1
Jakarata 10710, Indonesia
Timetable
Concept Clearance 30 Mar 2009
Fact Finding 26 Feb 2009 to 26 Feb 2009
MRM -
Approval 21 Aug 2009
Last Review Mission -
PDS Creation Date 03 Apr 2009
Last PDS Update 02 Apr 2014

TA 7338-INO

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Aug 2009 29 Oct 2009 29 Oct 2009 31 Jul 2011 31 Jan 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 0.00 50,000.00 0.00 0.00 0.00 50,000.00 21 Aug 2009 481,892.21

Safeguard Documents

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Evaluation Documents

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