ADB’s loan to back Indonesia’s public expenditure management reforms

Jakarta (VNA) – The Asian Development Bank (ADB) has approved a 500 million USD policy-based loan to support Indonesia’s fiscal and public expenditure management reforms and improve the quality of government spending on health, education, social protection, and infrastructure.

The loan will finance the third sub-programme of the ADB’s Fiscal and Public Expenditure Management Program (FPEMP), which supports the government of Indonesia’s efforts to reduce poverty and income inequality in the country and meet Indonesian Sustainable Development Goals’ (SDGs) commitment.

“The FPEMP has been instrumental in making sure that the government’s efforts to increase quality of spending in important sectors such as health, education, and social protection are sustained, in line with its targets under the SDGs,” said ADB Senior Financial Sector Specialist for Southeast Asia Sani Ismail.

“The third sub-program also includes demand-driven labor market activation programs in Bandung Barat and Makassar to address youth unemployment,” he added.

The ADB has been supporting public financial management and expenditure reforms in Indonesia since 2001. The reform programme was first approved by the lender in September 2016.

The programme’s first two sub-programmes funded efforts to map out the government’s medium-term expenditure linked to targets of the national Medium-Term Development Plan and the SDGs; and helped improve national and local public expenditure management.

The third sub-programme supports efforts implementing SDG-related public spending reforms, including climate adaptation, social assistance, and labour market activation programs.

It also supports reforms in fiscal transfers to subnational governments including making them more performance-based to increase accountability and strengthen service delivery at the local level./.