Embed Size (px)
Citation preview
Leveraging World Bank Engagements in Indonesia through Trust Funds
Leveraging World Bank Engagements in Indonesia through Trust Funds
Chris Hoban
22 February 2011Knowledge Series – Emerging IndonesiaLocation
Outline
1. Trust Funds in Indonesia
2. Engagements in the Country Partnership Strategy
3. Trust Fund Management
4. Strengthening Indonesian Institutions
Trust Funds support almost 60% of 315 full-time staff in Indonesia
Alignment of Trust Funds & Country Strategy
Country Partnership Strategy
National Institutions
Sub-national
Finance & Private Sector
Infrastructure
Education
Community & Social
Environment & disasters
Major Trust Funds
Public Financial Management
Decentralization Support Facility
Trade & Investment Climate
(coordination w AusAID)
Education
PNPM Support Facility, Poverty
Aceh MDF, Java Reconstruction
Outline
1. Trust Funds in Indonesia
2. Engagements in the Country Partnership Strategy
3. Trust Fund Management
4. Strengthening Indonesian Institutions
2. Trust Funds in the Country Strategy
Country Partnership Strategy recognizes an integral role of trust funds in delivering key CPS outcomes
Portfolio Review combines ratings of loans and trust funds in each sector
Key review point is the Engagement Strategy Note, discussed jointly with Country & Sector Director
Changing Bank Engagement in Indonesia
Events in 2004-2005 requiring fast response December 2004 tsunami March & September 2005: large fuel price increases \
- mitigated by targeted poverty programs 2005 infrastructure summit: needed economic
analysis
Bank’s responsiveness & quality advice strengthened its appeal as a dependable partner Flexible DFID trust fund helped Generated interest in further advice on better ways to
spend funds & increase growth While key partners moving to more senior roles
Key Changes in Approach
Shift from traditional ESW to rapid response notes & continuous advice that are timely, relevant & requested.
Work with reform champions to identify areas of need matched with available Bank skills
Flexibility critical to utilize reform opportunities
Let government own the reforms & pace of reform
Use DPLs to overcome gridlock & bottlenecks
Outline
1. Trust Funds in Indonesia
2. Engagements in the Country Partnership Strategy
3. Trust Fund Management
4. Strengthening Indonesian Institutions
3. Trust Fund Management
All large trust funds are well aligned with country strategy & government priorities and almost all strongly led by government
Integration of trust funds in portfolio review – requires rating of objectives & implementation
Engagement Strategy Reviews for good oversight led by Country & Sector Directors
Trust fund management data challenges
Staffing issues
Alignment of Trust Funds & Country Strategy
Country Partnership Strategy
National Institutions
Sub-national
Finance & Private Sector
Infrastructure
Education
Community & Social
Environment & disasters
Major Trust Funds
Public Financial Management
Decentralization Support Facility
Trade & Investment Climate
(coordination w AusAID)
Education
PNPM Support Facility, Poverty
Aceh MDF, Java Reconstruction
13
Portfolio Review sample - Education
Project TitleNet
Comm ($m)
Likely to ach Obj.
Impl. Prog.
Age % disb
L Managing Higher Edu for Relevance & Eff. 80 S MS 5.2 49%
L Early Childhood Edu & Development (ECED) 73 S MS 4.0 59%
G Education – cofinancing ECED 25 S S 20%
L Education BERMUTU 88 S MS 3.5 68%
G Education – cofinancing BERMUTU 52 S S 3 18%
L BOS KITA 600 S S 1.9 100%
G Education – Bank executed 43 S S 3 23%
G Edu – Gov’t executed (DESP & Teacher Pilot) 11 S S 3 99%
Gi Basic Education Capacity – Gov’t Executed 33 U U 2 14%
L BOS KITA 2 500 NA NA 0.2 0%
L=loan, G=grant, Gi= grant with ISR
Trust Fund Management Issues
Manage budgets, property, staff exposure, deliverables, risks & client relationships across two "lines of business" Overall comfort with these, but Hard to report to management
Some innovative procedures, e.g. Country team screening for ensuring strategy alignment Selection process for grant recipients One Stop Reviews reduce delays in trust fund
approvals
Trust Fund Management Issues 2
Review processes “as for loans”, but Loans: ‘funds in’ once or twice (additional finance);
‘funds out’ through components Trust Funds: ‘funds in’ many times;
‘funds out’ - each child TF requires new review
Fee approval by too many departments
Two approaches for overheads (indirects) not easy to combine & track
Trust Fund Management Issues 3
Difficult to track staff costs and exposure risk Count staff by term or coterm, but not time charged
to TFs
Strong need for consultants (ETC & STC) for speed & flexibility Bank hiring far too slow Two-year ETC limit is very constraining Big gap in field benefits between term & ETC
Indonesia PREM Bank Budget & Trust Funds 2004-2010
Leveraging Bank Budget with Trust Funds
Each dollar of BB spent on staff cost, supports over $2 in TF staff cost.
In PREM, this has risen to $4.50
10/16/08
Utilization of staff between Bank Budget & Trust Funds
1. Bank staff time charged to TF – hard to monitor2. Can’t charge TF staff to BB tasks
Outline
1. Trust Funds in Indonesia
2. Engagements in the Country Partnership Strategy
3. Trust Fund Management
4. Strengthening Indonesian Institutions
4. Strengthening Indonesian Institutions
Challenges of slow reform of key government agencies Rigid bureaucracy doesn’t promote innovation of utilize skills Weak coordination across ministries Severe audit discourages action
Major problems with procurement of consultants Very long time to procure – often 2 years Many good firms do not participate No procurement oversight institutions (now rebuilding) Procurement committees unqualified & not accountable Poor contract management does not deliver quality
4. Strengthening Indonesian Institutions
Success Stories
Stronger Institutions Fiscal Policy Office, Ministry of Finance
Spinoffs Social Policy & Economic Research Unit SMERU Knowledge Forum for Eastern Indonesia BAKTI
Work in Progress Key ministries, Universities, NGOs, Oversight agencies, procurement systems Continue to spin off where this makes sense
Strengthening Indonesian Institutions
What’s next?
Continue timely response to key government policy analysis needs Utilize Bank capabilities Strong government ownership Donor partnerships around government priorities
Help government to lead trust funds itself
Continue to work on country institutions Civil service reform, procurement reform, key units Analysis to support good policy decision-making Spin off where possible Stronger partnerships with universities, NGOs, think tanks
PREM Staffing Changes 1997 - 2010
1997 2010
62 full time
119 in SAP
Many STCs
PREM Work Program Evolution
2004 2010
Macro (Monitoring)
Poverty (ESW)
Decentralization (ESW)
PFM (Loan preparation)
Macro
Poverty
Public Financial Management
Trade
Investment Climate
Finance
Regional Development
Decentralization Support Facility
•
Terima Kasih – Thank you
