Indonesia: Poverty Reduction and Millennium Development Goals Acceleration Program

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Lessons

Policy reforms, coupled with institutional measures to address system inefficiencies and capacity constraints, enhance the effectiveness of human development interventions.

The Poverty Reduction and Millennium Development Goals Acceleration Program (PRMAP) evolved from a long-running policy dialogue between the Asian Development Bank (ADB), the Indonesian government, and other development partners on the Millennium Development Goals (MDGs). It helped finance government efforts to accelerate the attainment of the MDGs as it entered the second generation of fiscal reforms that aimed to enable the economy to be more resilient and completely recover from the 1997 Asian financial crisis. The success of the policy reforms supported by the program in speeding up progress toward Indonesia’s MDG commitments on education and health provides evidence of the importance of an enabling policy environment in achieving human development particularly of the poor. By addressing the obstacles posed by system inefficiencies and institutional capacity constraints, the technical assistance provided by ADB and the Australian government had a clear value−addition to the success of the policy reforms.

Accurate baseline data and consistently measurable indicators enable a reliable assessment of end−of−project accomplishments.

While comprehensive and generally sound, the design and monitoring framework (DMF) developed for all the 3 subprograms originally planned for the PRMAP had some weak performance indicators. Specifically, 2 of the 6 outcome indicators were designed without baseline data while a few output indicators were not easy to monitor. To more reliably assess end−of−project performance, the program completion team incorporated additional indicators to the DMF. Future projects should avoid falling into the trap of vague generalities about actual accomplishments by developing precise and consistently measurable indicators and ensuring the generation of accurate baseline data at project inception. Follow−up data collection during project implementation is also critical in assessing progress and improving performance across time.

Background

Just 2−4 years after it was severely hit by the 1997 Asian financial crisis, the Indonesian economy began to steadily recover. Real gross domestic product growth rose from 0.8% in 1998 to 2%–3% during 2000–2002 and reached 5.5% in 2006. Wide−ranging finance sector reforms accounted for much of this recovery. However, while the government had largely attained its goal of fiscal prudence, it had not been able to maintain its development expenditures at the scale needed to accelerate economic growth and poverty reduction and put the country’s social development at par with its neighbors. This held off or even reversed Indonesia’s progress toward the millennium development goals (MDGs).

To address the situation, the government gradually increased its social expenditure and launched several sector policy reforms and new programs. Against this backdrop, the Asian Development Bank, approved in October 2007 a policy−based loan for the Poverty Reduction and Millennium Development Goals Acceleration Program (PRMAP). The PRMAP was originally designed as a cluster program with 3 subprograms that would focus on supporting Indonesia’s MDG commitments on poverty reduction, education, gender equality, and health. Subprogram 1 was implemented in April 2005─March 2007. However, as the government decided to fund the MDG activities from its own budget, subprograms 2 and 3 were cancelled. PRMAP financing thus consisted only of a single tranche $400 million loan, which supported sector and cross−sector policy reforms in education and health. A $1.5 million technical assistance grant from ADB, with $1.0 million cofinancing from the Australian government complemented the program loan.

Cross−sector reforms to which the PRMAP contributed included increased national budgets for health and education, improved district−level incentives and resource allocations, a uniform poverty targeting system in services delivery, and promotion of gender equity in access to services. In the education sector, the goal of universal basic education was assisted by improving access to junior secondary schools in underserved areas, increasing the affordability of education, greater support for smaller and remote schools, enhancing teacher quality and deployment, operationalizing the minimum services standard in education, and greater transparency of education outcomes. In the health sector, the equity and quality of MDG-related health services were enhanced by improving the targeting of the poor in public health financing, enhancing maternal and child health and reproductive health services and communicable disease control, and improving the transparency and monitoring of MDG-related health expenditures and results.

Indonesia’s progress toward achieving its education and health MDG commitments consequently accelerated. For example, the poor’s net enrolment in junior secondary education rose by 18% between 2008 and 2010, met its target of 65% in 2011, and improved further in subsequent years. The poor’s utilization of public health services increased by 54%. At 91.5% in 2015, the ratio of births attended by skilled personnel surpassed the 85% target. Female illiteracy rate decreased by 35%, compared to a target of 30%.

ADB’s Southeast Asia Department rated the program successful. Indonesia’s national planning agency, BAPPENAS, was the executing agency. The Ministry of National Education and Ministry of Health implemented the program.

Project Information

Project Name:

Poverty Reduction and Millennium Development Goals Acceleration Program

Report Date:

May, 2017

Main Sector:

Multisector

Country:

Indonesia

Project Number:

40003-013

Report Type: