Ministry of Finance and Ministry of National Education jointly signed the first Letter of Agreement for Grant Channeling with 25 districts

September 3, 2009

Jakarta 3 September 2009 – The Ministry of Finance (MOF), together with the Ministry of National Education (MONE) as the technical agency, signed the first Letter of Agreement for Grant Channeling at MONE with 25 partner districts that were the recipients of the Basic Education Capacity Trust Fund (BEC-TF).  The signing of the letter of agreement breaks new ground for the Central Government in financing development programs by channeling grants to districts.

BEC-TF aims to support the Government of Indonesia in carrying out its education reform agenda, which includes: supporting an Education Thematic Dialogue Forum; improving governance, financial management, budgeting, and accountability in the education sector; and strengthening the education information management system.  Local Basic Education Capacity (L-BEC) grants support the capacity development of the districts in basic education governance.  Districts that are successful in developing their education governance will have the opportunity to receive performance-based grants provided by the SISWA (Sector Improvement through Sector Wide Approach) program in the future.

The BEC-TF capacity development grant comes from the Dutch Government (22 million Euro) and the European Commission (17 million Euro), managed by the World Bank and executed by MONE.  BEC-TF began in 2008 and ends in 2012 and works with 50 district governments in 9 provinces.  The districts were chosen through a selection and verification process by an independent team.  In September 2009, BEC-TF is conducted in 25 districts while the other 25 districts will join the program at the end of 2009.

Basic Education Development Grant
MOF’s Ministerial Regulation No. 168/PMK.07/2008 on Regional Grant stipulates that the Central Government may channel foreign grants to District Governments to conduct activities that fall under the district government’s authorities, or activities to improve government function, improve basic public service, and empower district government’s apparatus.  Meanwhile, the District Government is responsible for managing the fund and executing the related activities transparently and accountably, through the regional budget mechanism and in line with relevant laws and regulations.  The signed letter of agreement states the grant’s objective, amount, sources, recipients, requirements, how it is channeled and used, reporting, monitoring, the rights and obligations of both the donor and the recipient, and the related sanctions.  The grant’s objective, amount, and the amount of a particular district’s matching fund are tailored to the characteristics of each respective district that receives the grant.

The signing of the letter of agreement is a follow up of the Memorandum of Understanding between MONE and the district governments, signed on 30 October 2008, which itself was a follow up of the change in grant channeling mechanism from the center to the regions.

“The 25 districts that have signed the letter of agreement are expected to be committed to providing the matching funds for the operation of the program, thus ensuring that the program runs smoothly and delivers the expected results,” stated Prof. Suyanto, Ph.D., MONE’s Director General of Primary and Secondary Education Management.

The grant channeling to regional governments within the framework of central-region financial relation in the education sector, is highly appreciated by donor agencies.

“We believe that the  BEC-TF will be major breakthrough in the way education support is provided to the district level. The new on-granting regulation is a big step forward and I would like to congratulate the Government with making this possible,” stated Dutch Ambassador Dr. Nikolaos van Dam.

“Basic education is the major sector of support for the European Commission in Indonesia. Our grant support to the BEC-TF aims in particular to help local governments in making efficient use of financial resources to improve education outcomes,” stated Julian Wilson, Ambassador/Head of Delegation of the European Commission.

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