FPEMP supports the government's commitment to reduce household income inequality, and represents a medium- to long-term partnership between the Asian Development Bank (ADB) and the government. The government's priority areas to reduce income inequality include (i) aligning medium-term expenditure and programs with its national medium-term development plan (RPJMN) and Sustainable Development Goals (SDGs) targets, (ii) enhancing the national public expenditure systems to improve quality of spending, and (iii) improving fiscal transfers and subnational governments' spending to promote better public service delivery.
| Project Name | Fiscal and Public Expenditure Management Program (Subprogram 1) | ||||||||
| Project Number | 50168-001 | ||||||||
| Country | Indonesia |
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| Project Status | Closed | ||||||||
| Project Type / Modality of Assistance | Loan |
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| Source of Funding / Amount |
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| Strategic Agendas | Inclusive economic growth |
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| Drivers of Change | Governance and capacity development Partnerships |
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| Sector / Subsector | Public sector management - Public expenditure and fiscal management |
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| Gender Equity and Mainstreaming | No gender elements | ||||||||
| Description | FPEMP supports the government's commitment to reduce household income inequality, and represents a medium- to long-term partnership between the Asian Development Bank (ADB) and the government. The government's priority areas to reduce income inequality include (i) aligning medium-term expenditure and programs with its national medium-term development plan (RPJMN) and Sustainable Development Goals (SDGs) targets, (ii) enhancing the national public expenditure systems to improve quality of spending, and (iii) improving fiscal transfers and subnational governments' spending to promote better public service delivery. | ||||||||
| Project Rationale and Linkage to Country/Regional Strategy | Indonesia is facing the twin problems of a prolonged economic slowdown and rapidly rising household income inequality. Economic growth has steadily declined from 6.4% in 2010 to 4.8% in 2015, and is expected to remain only slightly above 5.0% in 2016 and 2017. Growth slowed initially because of falling commodity prices, which then fed back into lower growth in the non-resource sector, while new sources of growth have yet to emerge. The economic slowdown, combined with persistent volatility in the global financial and commodity markets, also translated into lower fiscal revenue collection, which in turn challenges the government's efforts to stimulate the economy. Revenue collection fell by 9.8% from January to April 2016, compared with the same period in 2015, and the government expects a shortfall of $16.7 billion in 2016. Given the constitutional limit on the budget deficit at 3.0% of gross domestic product (GDP), falling budget revenues impose constraints on the government's spending in the social sector and for infrastructure, even though these are necessary to overcome the income inequality problem. ADB analysis shows that expenditure on education and health is most sensitive to declines in revenue and to overall deficit levels, despite the government being legally required to allocate 20% of the budget to education and 5% to health. | ||||||||
| Impact | Reducing household income inequality (National Medium-Term Development Plan, 2015 2019) | ||||||||
| Project Outcome | |
|---|---|
| Description of Outcome | Better targeted social sector and public infrastructure spending |
| Progress Toward Outcome | |
| Implementation Progress | |
| Description of Project Outputs | 1. Medium term spending aligned with RPJMN and SDGs 2. Improved national public expenditure quality 3. Strengthened public expenditure management system at local government level |
| Status of Implementation Progress (Outputs, Activities, and Issues) | |
| Geographical Location | |
| Safeguard Categories | |
|---|---|
| Environment | C |
| Involuntary Resettlement | C |
| Indigenous Peoples | C |
| Summary of Environmental and Social Aspects | |
|---|---|
| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | |
| Responsible ADB Officer | Mohd Ismail, Mohd Sani |
| Responsible ADB Department | Southeast Asia Department |
| Responsible ADB Division | Public Management, Financial Sector and Trade Division, SERD |
| Executing Agencies |
Fiscal Policy Office-Ministry of Finance [email protected] Fiscal Policy Office-Ministry of Finance Gedung RM Notohamiprojo, 8th floor Jl. DR. Wahidin No. 1 Jakarta, Indonesia |
| Timetable | |
|---|---|
| Concept Clearance | 02 Aug 2016 |
| Fact Finding | 14 Apr 2016 to 22 Apr 2016 |
| MRM | 31 Aug 2016 |
| Approval | 10 Nov 2016 |
| Last Review Mission | - |
| Last PDS Update | 14 Nov 2016 |
Loan 3454-INO
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 10 Nov 2016 | 17 Nov 2016 | 06 Dec 2016 | 30 Jun 2017 | - | 03 Mar 2017 |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 724.00 | Cumulative Contract Awards | |||
| ADB | 500.00 | 10 Nov 2016 | 500.00 | 0.00 | 100% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 224.00 | 10 Nov 2016 | 500.00 | 0.00 | 100% |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
| Title | Document Type | Document Date |
|---|---|---|
| Loan Agreement (Ordinary Operations) for Loan 3454-INO: Fiscal and Public Expenditure Management Program (Subprogram 1) | Loan Agreement (Ordinary Resources) | Nov 2016 |
| Fiscal and Public Expenditure Management Program (Subprogram 1): Report and Recommendation of the President | Reports and Recommendations of the President | Oct 2016 |
| Fiscal and Public Expenditure Management Program (Subprogram 1): Concept Paper | Concept Papers | Aug 2016 |
| Program Manajemen Fiskal dan Pengeluaran Pemerintah (Subprogram 1): Lembar Data Proyek | Translated PDS | Aug 2016 |
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
Related Publications
None currently available.
The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
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ADB $500 Million Loan to Improve Public Expenditure Management, Reduce Inequality in Indonesia
ADB has approved a $500 million loan to help Indonesia manage and improve its fiscal and public expenditure management in support of ongoing efforts to reduce poverty and income inequality.