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World Bank Approves New Financing for Priority Reforms in Indonesia

November 20, 2012

Three new Development Policy Loans to improve public financial management, poverty alleviation, national connectivity, financial sector and investment climate

WASHINGTON, November 20, 2012 - The World Bank approved three new development policy loans (DPLs) for Indonesia today to support Indonesia-led reform programs to improve public financial management, advance the connectivity agenda, as well as strengthen the financial sector and accelerate investment. These three policy loans were developed at the Indonesian government’s request and builds upon the series of annual DPLs that started in 2004.

These DPLs allow the World Bank to engage within the priority sectors that are in line with the Government’s own strategic plans. Altogether, the three new DPLs are designed to help the Indonesian government achieve its medium term goals in economic development and poverty reduction.

“This new series of DPLs represent our ongoing commitment to support Indonesia’s priority reforms. Successful implementation of these reforms is critical to boosting Indonesia’s growth to 7 percent and beyond, and also to improving social outcomes over the medium term,” says Stefan Koeberle, World Bank Country Director for Indonesia. “These DPLs will contribute to the strengthening of Indonesia’s central Government institutions and systems, to make them more effective and accountable. This in turn will help improve national connectivity, enhance the quality of Government spending and improve financial system stability and investment climate.”

Of the three new loans, the Institutional, Tax Administration, Social and Investment (INSTANSI) DPL, worth $300 million, focuses on strengthening public financial management and enhancing poverty alleviation efforts, in order to improve the quality of fiscal spending.

Through the Connectivity DPL, worth $100 million, the World Bank is supporting Indonesia’s effort to strengthen the policy framework for improved trade logistics, transportation, ICT, and trade facilitation. The DPL supports the Indonesian government’s aim to strengthen connectivity, a key strategy underpinning its 2011-2025 Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI).  

Finally, the Financial Sector and Investment Climate Reform and Modernization (FIRM) DPL aims to promote the development of a sound, efficient and inclusive financial sector and accelerate investment, in order to support the Indonesian government in achieving its goals for economic expansion and poverty reduction. This operation supports reforms to improve financial system stability, promote financial sector diversification, enhance financial inclusion and support investment climate regulatory reform.


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