PMR cover.psd - ppiaf

Indonesia: Support for Financial and Credit Rating Assessment for Sub-National
Governments
PPIAF Funding: $330,000
Background: About a decade ago, Indonesia implemented a
sweeping decentralization reform, which made empowering local
governments critical. To help increase the level and quality of
local spending for public services and infrastructure, Indonesia
embarked on developing a framework for sub-national borrowing,
in particular on issuing municipal bonds. In this context, the
Ministry of Finance sought guidance from the World Bank on
setting up a system for fi nancial assessment and credit ratings,
and assisting sub-national governments in attaining credit ratings
and issuing of bonds.
PPIAF’s Contribution: As part of the overall work to support the Ministry of Finance in developing a framework
for sub-national borrowing, PPIAF’s SNTA program supported fi nancial management assessments and credit
ratings for four cities: Surabaya, Makassar, Bandung, and Balikpapan.
Outcomes: In 2011 the fi nancial management assessments and credit ratings were completed for the four
cities. The assessments for Surabaya and Bandung were done by Standard & Poor’s, while those for Makassar
and Balikpapan were done by PEFINDO, a local rating agency. A workshop was conducted on November 21,
2011 in Jakarta to present the results of the assessments and credit rating reports, discuss the legal background
of sub-national borrowing (Government Regulation 30/2011), share international experiences with sub-national
borrowing, and share the experience of DKI Jakarta in preparing for the issuance of Indonesia’s fi rst municipal
bond. The results of the fi nancial management assessments and credit ratings for the participating cities were
very encouraging, and the cities also found the inputs from these reports to be benefi cial to improve their fi scal
management practices. Follow-up support to Makassar and Surabaya to help them move towards accessing
market-based fi nancing is currently being explored.
PPIAF Activities Approved in Fiscal 2012 (as of March 31, 2012)
• Indonesia (SNTA): Jakarta Credit Rating, approved February 19, 2012, $75,000
• Laos: Transport Sector Enabling Environment Assessment and Pipeline Screening, approved December 21,
2011, $50,000
• Philippines (SNTA): Assisting Tanuan City in Enhancing the City’s Creditworthiness, approved March 20,
2012, $75,000
• Philippines: Options to Expand Private Sector Participation in the Development of the Irrigation Sector,
approved March 20, 2012, $100,000
• Vietnam: Feasibility Study and PPP Options for the Implementation of a Nation-Wide e-ID System for the
Delivery of Public Services, approved March 29, 2012, $230,620
• Vietnam: Strengthening of the Use of Performance-Based Contracts for Road Maintenance, approved October
17, 2011, $40,000
PPIAF has supported activities in: Cambodia, China, East Timor, Indonesia, Lao PDR, Mongolia, Papua
New Guinea, Philippines, Solomon Islands, Thailand, Vanuatu, and Vietnam