ADB's Board of Directors today approved the loan for the Sixth Development Policy Support Program, the last in a series of initiatives to help the Government of Indonesia advance its medium term reform and development agenda. The programs, which began in 2004, have been jointly prepared with the World Bank and Government of Japan.

'These latest reforms will help support higher pro-poor economic growth over the medium term,' said Edimon Ginting, Senior Country Economist in ADB's Indonesia Resident Mission.

Indonesia has made significant gains in growth and poverty reduction in recent years, but economic expansion is still below levels seen prior to the 1997 to 1998 Asian financial crisis, while about 40% of the population remains clustered just above the national poverty line, leaving them vulnerable to economic shocks. Measures to stimulate inclusive growth, cut poverty and improve access to public service delivery have become key priorities for the government.

The sixth program of reforms focuses on improving the investment climate, strengthening public financial management and governance, and accelerating poverty reduction and access to public services for the poor. It covers initiatives such as establishing a national single investment window, simplified investment licensing procedures, and the development of a national logistics framework. In the public financial management area, the program supports measures such as performance-based budgeting, better cash forecasting and an integrated financial management information system.

To improve social assistance and further reduce poverty, measures such as conditional cash transfers, health insurance for the poor, and a National Community Empowerment Program, have been put in place.

'The government is committed to intensifying policy reforms in this crucial area including by enhancing coordination and accountability, improving the accuracy of measuring poverty, and developing a national targeting system to ensure that program benefits reach the poor and vulnerable,' said Mr. Ginting.

The loan, from ordinary capital resources, has a 15-year term, including a grace period of 3 years, with an annual interest rate determined in accordance with ADB's LIBOR-based lending facility. The Coordinating Ministry for Economic Affairs is the executing agency for the program.