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Decentralization: What do we do? The Response of the World Bank in Indonesia

Decentralization: What do we do? The Response of the World Bank in Indonesia. Presentation to Decentralization and Intergovernmental Fiscal Reform Course 24-26 March 2003 By Soraya E Goga – Urban Specialist, EASUR. The Context. What was it about? Transfer of ALL function except 5

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Decentralization: What do we do? The Response of the World Bank in Indonesia

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  1. Decentralization: What do we do?The Response of the World Bank in Indonesia Presentation to Decentralization and Intergovernmental Fiscal Reform Course 24-26 March 2003 By Soraya E Goga – Urban Specialist, EASUR

  2. The Context • What was it about? • Transfer of ALL function except 5 • Explicit Transfer of 11 Obligatory Sectors • Design of new Intergovernmental Fiscal Transfer System • Initial Issues • No Clarity of Functions • No fully developed frameworks • No M & E • Regional Capacity?

  3. Bank Challenges & Response • Questions • How do we respond to our new clients - local governments? • What do we need to support our ‘old’ clients – the central Ministries of Home Affairs and Finance? • What do we need to do to change the way we operate internally? • What information do we need? • Response • 4 AAA • 1 Central TA • 2 local government reform projects

  4. Learning More: AAA and ESW • Regional Public Expenditure Review – Decentralizing Indonesia • In depth analysis of 3 regions • Focus on institutional operations – planning, budgeting, accountability • Urban Sector Review • In depth analysis of 6 kota’s • Focus on poverty, infrastructure, municipal management • Urban Competitiveness Study • Analysis of 6 kota’s • Focus on economic development and investment climate • Governance and Decentralization Survey • About 200 regions • Focus on impact of decentralization

  5. Addressing the Center • TA to Two Ministries • Ministry of Finance – Fiscal Decentralization • Ministry of Home Affairs – Administrative and Legal Decentralization • Through a $7,2m Trust Fund, the World Bank Dutch Trust Fund for Indonesian Decentralization • Policy Dialogue – Donor Group on Decentralization, Sub-Committee of CGI

  6. Addressing the Center • Ministry of Home Affairs • Functional Obligations – elections and politics! • Minimum Standards – re-inforcing control? • Financial Management – Kepmen 29 • M & E?? • Ministry of Finance • DAU (Equalization Grant) • DAK (Special Grant) - Still too new • On-Lending, more like ongranting • SiKD • Banks Role • TA, provision of ‘experts’ • Procurement of Computer Systems • Policy Dialogue

  7. ULGRP Primarily urban Competitive Selection Incentive Structure - Loan Minimum bar reform Procurement FM PID Participation,Forum, CDS Investments Address national issues On-lending CPRS KGRIP Primarily Rural Controlled Selection Incentive - Grant & Loan More Open Reform Procurement FM Revenue Framework Participation, Facilitator Others Investments Addressing the Local Objective: Assist LG in responding to decentralization, but with increasing accountability at local level

  8. Issues for Bank Systems • Most sense for budget support, but that would raise transparency issues • Developing a Single Approach to SNP’s, as a joint effort between EASUR/EASRD/EASPR • One set of reforms • Common Reforms stipulated in each • Selection criteria standardised

  9. What next? • The Supervision Problem • How do we supervise these projects? • A question for the next workshop! http://wbln0023.worldbank.org/internal/eap/EAPInternal.nsf/CountryOffice/Indonesia/Sub-National?OpenDocument

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