JAKARTA (TheInsiderStories) - The Joko Widodo government’s drive to develop massive infrastructure projects in the next five years has got a new boost after the World Bank announced today that it plans to deliver $10 billion to Indonesia in the next five years starting 2016.
The World Bank said in a statement that its board has endorsed a new five-year Country Partnership Framework for Indonesia, in which the bank expects to deliver more than $10 billion to support the country’s energy, infrastructure development and social programs to reduce poverty.
The Framework for 2016-2020 covers one of the largest country programs of the World Bank Group, reflecting “the strong collaboration between Indonesia and the Group’s institutions: the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA),” the multilateral agency said.
The Framework is aligned with Indonesia’s national mid-term development plan, known as the RPJMN, and outlines six areas of engagement between the World Bank Group and the government, the private sector and other development partners.
The six areas that the World Bank will focus are as follows:
First, supporting the Indonesian government to implement its national infrastructure programs, which is essential for growth and improving the lives of Indonesians across the archipelago; second, the energy sector to increase sustainable energy and connect millions of families to reliable electricity; third, the programs to build the maritime economy and improve connectivity and fourth the government efforts to collect more revenue and spend it more effectively.
Fifth, the World Bank will also supports the local governments to provide better services for health-care, education, sanitation and water; as well as (sixth) a comprehensive and stepped up effort to protect Indonesia’s vast natural resources, including efforts to fight peat fires and deforestation to reduce carbon emissions and build sustainable livelihoods for the poor.
“We are confident Indonesia is poised to seize opportunities and emerge even stronger in the face of global and domestic challenges,” said Axel van Trotsenburg, World Bank East Asia Pacific Vice President.
“The World Bank Group welcomes this renewal of support for Indonesia and its commitment to eliminating poverty and sharing prosperity more widely through greater investment in infrastructure programs and in services such as healthcare delivery as well as social protection programs that directly impact the poor,” said Rodrigo Chaves, World Bank Country Director for Indonesia.
In addition, the Framework calls for cross-sectoral engagements that leverage private sector investment and strengthen the business climate and functioning of markets while ensuring that all interventions aim to reduce inequality and eliminate extreme poverty.
“Our partnership with Indonesia strives to improve the investment climate to level the playing field for the private sector, whose role in Indonesia’s development is essential,” said Sarvesh Suri, IFC Indonesia Country Manager.
“The private sector can be a strong partner in enhancing financial inclusion for the poor, supporting small and medium enterprises and women entrepreneurs, and developing sustainable infrastructure that will reduce poverty and the impact of climate change.”
When fully implemented, the new Framework would increase IBRD lending to up to $7.5 billion and include new IFC engagements of up to $3 billion in equity, loans, guarantees and mobilization, as well as a more active MIGA program that bolsters political risk assessment and non-payment guarantees, the agency said.
The World Bank Group Board also approved a new $500 million Inclusive and Sustainable Energy Development Policy Loan (DPL) to support policy improvements by the Indonesian government to encourage public and private sector investments in clean and sustainable renewable energy, especially geothermal, Indonesia’s second largest renewable energy resource. (*)