Approach Paper
Indonesia Country Program Evaluation
January 15, 2025
1. Evaluation Purpose and Audience
1.1 This Country Program Evaluation (CPE) will assess the performance of the
World Bank Group’s support to Indonesia between FY 2013 and FY23. The evaluation
will focus on the Bank Group’s contribution to help Indonesia tackle key long-term
development challenges and position the country toward its goal of reaching high-
income status by 2045. The evaluation period spans three country strategies—the FY13–
15 Country Partnership Strategy (CPS), the FY16–20 Country Partnership Framework
(CPF), and the FY21–25 CPF. The evaluation seeks to identify lessons to inform future
Bank Group engagement in support of Indonesia’s development priorities, including the
next CPF, which is due to be completed in the fall of 2025. The primary audience for the
evaluation includes the Bank Group’s Boards of Executive Directors, Bank Group staff
and management working on Indonesia, the government of Indonesia, and a broad set
of in-country stakeholders. Its findings and lessons may be relevant to other middle-
income countries.
1.2 The CPE will assess the relevance and effectiveness of Bank Group support to
Indonesia by examining how the Bank Group designed and adjusted its support in four
critical development areas: promoting adequacy and efficiency of public spending,
ensuring resilient urbanization management, lifting human capital to reduce inequality,
and deepening of the financial sector. These themes are particularly important for
Indonesia in its efforts to achieve, through sustainable and inclusive growth, its long-
term development goal of becoming a high-income country by 2045.
2. Country Context and Development Challenges
Country Context
2.1 Indonesia’s economic performance over the past 25 years propelled it to upper-
middle-income status. Between 1999 and 2023, Indonesia’s GDP growth averaged
5 percent a year—3.8 percent a year per capita. The country is a major global commodity
exporter for palm oil (world’s largest), coal (second largest) and petroleum gas (seventh
largest). The economy is driven by a large services sector and a sizeable natural
resources sector, respectively accounting for 43 percent and about 25 percent of GDP in
2023. After years of engagement and cooperation through Joint Work Programs covering
a broad spectrum of economic, social, and environmental policy reform, the
1
Organisation for Economic Co-operation and Development opened accession
discussions with Indonesia in 2024.
2.2 Indonesia’s growth has been built on commodities. Indonesia experienced robust
productivity improvements early in its development as its economy transitioned from
agriculture and raw commodities to manufacturing.1 Average annual growth rates for
value added in manufacturing consistently outstripped all other sectors of growth from
the mid-1970s to the mid-2000s. However, Indonesia’s economy benefited substantially
from the run-up in commodity prices that has accompanied the rising demand from
emerging markets since the 2000s. Since then, commodity export growth has almost
doubled the pace of manufactured export growth, and as a result, manufactured exports
as a share of total merchandise exports have declined, falling from 56 percent of
merchandise export value in 2007 to 45 percent in 2023.2
2.3 From the mid-2000s, Indonesia’s growth has been increasingly driven by
services, often low value and informal. Service sector growth has exceeded
manufacturing growth by more than 50 percent (figure 2.1). This transition of premature
deindustrialization reflects the fact that the transition away from manufacturing
production occurred before the country could extract the full productivity gains from
industrialization.
2.4 Over the past 25 years, Indonesia has experienced rapid socioeconomic
improvements and poverty reduction. Indonesia’s national poverty rate more than
halved, falling from 23 percent of the population in 1999 to 9.4 percent in 2023,3 and
extreme poverty was virtually eliminated. Between 1999 and 2023, fertility rates fell to
stable replacement levels, and school enrollment rates increased significantly. Net
secondary enrollment rates rose from less than 50 percent to 79 percent of school-age
children, while net tertiary education rates rose from 15 percent to 42 percent.4 With
about 70 percent of the population between the ages of 15 and 64, Indonesia is in the
final years of a demographic dividend, positioning it for stronger growth through
increased labor supply and savings that can be allocated to productive asset
accumulation.
2
Figure 2.1. Average Annual Growth in Value Added by Sector, 1965–2023
12
10
8
Growth (%)
6
4
2
0
1965–75 1975–85 1985–95 1995–2005 2005–15 2015–23
Years
Agriculture Manufacturing Non-manufacturing industry Services
Source: Independent Evaluation Group staff estimates from World Development Indicators data.
2.5 Indonesia is both vulnerable to climate impacts and important to the global
climate mitigation agenda. High population density in hazard-prone areas coupled with
a strong dependence on the country’s commodities make Indonesia vulnerable to a
range of climate-related impacts, including extreme events like floods and droughts and
long-term changes from sea-level rise, shifts in rainfall patterns, and increasing
temperatures. Indonesia is home to significant natural resources, with the third-largest
tropical rain forest in the world and the largest tropical peatlands and mangrove forests.
These natural resources store vast amounts of carbon that mitigate climate change
impacts. However, historical deforestation and forest loss (including in peatlands),
mainly due to the rise of agriculture development (for example, palm oil plantations and
illegal logging), have dampened the benefits from these carbon-rich forests.
2.6 Indonesia’s financial sector is relatively shallow, with a few state-owned banks
playing a dominant role. According to Indonesia’s 2024 Financial Sector Assessment
Program (IMF 2024, 15), the financial sector is comparably smaller than that in regional
peers such as Malaysia, the Philippines, and Thailand, with a credit-to-GDP ratio of
31.4 percent. The financial system is also characterized by low financial inclusion,
informality, and a high cost of providing services in rural areas. In addition, the financial
sector is highly concentrated: the top 10 banks hold 66 percent of the total bank assets, of
which 4 are state-owned banks constituting 43 percent of the banking sector. Nonbank
financial institutions, such as insurance and finance companies, investment funds,
pension funds, and fintech lending remain modest in size. Capital markets are shallow,
3
with systemic policy-level reforms necessary to support long-term local currency
financing.
Indonesia’s Golden 2045 Vision
2.7 Indonesia has set an ambitious target under its Golden 2045 Vision to become a
high-income country and reduce poverty to nearly zero by its 100th anniversary of
independence in 2045. To reach that goal, Indonesia will need to sustain annual growth
rates between 7 and 8 percentage points for the next two decades. Boosting economic
growth to 7 percent a year will require substantial increases in the rates of growth of
physical and human capital and productivity—on average, 45 percent across the board
from the rates observed in 2010–19.5
2.8 Indonesia’s development vision rests on completing its structural transformation.
Indonesia aims to facilitate structural transformation to higher-value activities from its
current reliance on commodities and low-value services by increasing productive public
and private investments, including through deeper capital markets and financial
intermediation. As part of that transformation, it aims to increase the quality and
competitiveness of its human capital and strengthen infrastructure to support basic
services delivery. Moreover, by capitalizing on the economies of agglomeration that
accompany rapid urbanization—a phenomenon yet to occur in Indonesia, in contrast to
China, Thailand, and Viet Nam—the country aims to drive structural transformation
and sustain growth.
2.9 Indonesia’s economic growth aspirations are complemented by a desire to
reduce income inequality. Even though Indonesia has nearly eradicated extreme
poverty, there has been more limited progress in reducing inequality over the past
decade. The Gini coefficient, a measure of national consumption inequality, rose from 33
in 2003 to 41 in 2013, and by 2023 the index had declined to only 38 (figure 2.2).6 As
much as 40 percent of the population suffers economic insecurity, defined as either
being poor with a low likelihood of moving to nonpoor the after year or being nonpoor
with a high likelihood of moving to poor (Pape and Ali 2023).
4
Figure 2.2. Gini Index, 2003–23
43
41
39
37
Gini index
35
33
31
29
27
25
Year
Source: World Development Indicators.
2.10 Indonesia’s shift toward higher and more inclusive sources of growth will also
necessitate decoupling economic growth from greenhouse gas emissions. Indonesia is
currently a significant greenhouse gas emitter, contributing about 3.5 percent to global
emissions (World Bank 2023a). Many of the country’s economic activities are tied to its
rich land and energy resources, including forests, peatlands, and coal. These resources
have been integral to sectors like electricity, industry, transportation, and agriculture,
driving the country’s emissions profile. As part of its nationally determined contribution
plan, Indonesia aims to reduce greenhouse gas emissions 29 percent unconditionally
(and 41 percent with international support) by 2030.
Priorities for Reaching Indonesia’s Development Vision
2.11 The government has recognized the urgency of addressing four critical
challenges to maintain progress toward its high-level development vision. First, the
government must remedy significant public spending deficits in infrastructure and
human capital and ensure spending is efficient and effective. Second, Indonesia needs to
effectively manage and capitalize on the gains it can achieve from urbanization. Third,
Indonesia needs to ensure economic prosperity is broadly shared throughout the
population by addressing long-standing gaps in human capital. Fourth, an acceleration
5
of reforms aimed at deepening the financial sector without compromising macro- and
microprudential standards is needed to accelerate growth.
Promoting Public Spending Adequacy and Efficiency
2.12 Indonesia suffers from significant gaps in human and physical capital, resulting
from years of underinvestment. Although Indonesia has dedicated more resources
toward infrastructure in recent years, this is still insufficient given the large deficit
versus other emerging and developing economies (World Bank 2020c). Between 2000
and 2013, Indonesia spent an average of 3.6 percent of GDP on infrastructure per year,
compared with 17.7 percent in China, 11.3 percent in Malaysia, and 6.3 percent in
Thailand. Indonesia’s public capital stock per capita in 2015 was 2.5 times lower than the
average for other emerging economies, indicating a US$1.5 trillion infrastructure gap
(World Bank 2019b). Indonesia also has a significant human capital gap, impeding its
ability to move up the productive value chain to higher-value activities. Public spending
on health in 2017 was 1.5 percent of GDP, lower than both the regional average
(4.9 percent) and the average for its income country group (4.0 percent). Indonesia’s
spending on education (3.0 percent of GDP in 2018) trails both the regional average
(4.7 percent) and the average for its income country group (4.7 percent; World Bank
2020b).
2.13 Spending on these development priorities has been constrained by low domestic
revenue mobilization and the high cost of energy subsidies. Indonesia has had one of the
lowest revenue-to-GDP and tax-to-GDP ratios among emerging market economies.
Between 2001 and 2019, revenue declined from 17.2 percent of GDP in 2001 to
12.4 percent, placing Indonesia’s revenue mobilization at less than half of the emerging
market average of 27 percent of GDP. Tax revenue stood at about 9.1 percent of GDP in
2021—about 7 percentage points below the estimated tax potential of 16 percent (World
Bank 2024a). In addition to low revenue mobilization, Indonesia’s high level of spending
on improperly targeted energy subsidies is a major factor impeding its ability to ramp
up spending on key development priorities like infrastructure, human capital, and social
protection. These subsidies accounted for as much as one-fifth of the central
government’s budget.
2.14 Closing infrastructure and human capital gaps will require more effective
spending. Indonesia’s spending efficiency and effectiveness are weakened by a range of
factors that reduce the line of sight between spending and outputs, including a complex
relationship between planning and budgeting, fragmentation of spending across
spending units, budget implementation challenges, and cumbersome procurement
processes. After decentralization, provincial units are charged with implementing most
of Indonesia’s recent budgetary increases for infrastructure, but low capacity for budget
6
execution has reduced spending efficiency and enhanced opportunities for corruption.
Execution of the government’s capital budget is low; only about 85 percent of the
allocated capital budget is spent each year (World Bank and Indonesian Ministry of
Finance 2021), and most capital spending takes place in the last quarter of the fiscal year.
Ensuring Disaster-Resilient Urbanization Management
2.15 Indonesia aims to effectively manage the congestion forces pressuring growing
urban populations. Today, about 151 million people—over half of Indonesians—live in
cities and towns, and by 2045, it is expected that more than 70 percent of Indonesia’s
population will reside in urban areas. Indonesia’s rapid urbanization and the
accompanying agglomeration effects are unlocking new opportunities for innovation
and productivity growth. However, there are both large gaps in urban infrastructure
investments and deficient land use planning. Connectivity within metropolitan regions
and between metropolitan and nonmetropolitan areas is hampered by transport
infrastructure underinvestment and lack of metropolitan governance and coordination,
leading to pervasive traffic congestion. Additionally, 20 percent of urban Indonesians
live in slums, with inadequate water and sanitation and solid waste management
infrastructure (Roberts et al. 2019), and pollution adversely affects urban livability. In
Jakarta, air pollution is linked to health issues for 60 percent of residents, and 70 percent
of city dwellers cite pollution as a top urban environmental concern (World Bank 2018).
2.16 Addressing climate change and extreme weather events is central to urban
development. City dwellers are increasingly vulnerable to natural hazards, particularly
from heavy rainfall due to climate change; building resilience to these disasters and
other climatic shocks is essential. Partly to address the continued flooding affecting
Jakarta, the government is developing a new capital, Nusantara, on Kalimantan Island.
Without careful planning and management against disaster risks, rapid urbanization
could escalate risks by clustering populations and assets in hazard-prone areas.
Lifting Human Capital
2.17 Low human capital development is stifling growth and poverty reduction, with
Indonesia facing challenges of low child survival and high rates of stunted growth of
children. Indonesia’s Human Capital Index grew only modestly from 0.50 in 2010 to 0.54
in 2020. On average, a child in Indonesia is expected to be 54 percent as productive as
they would be with complete education, health, and nutrition. This is lower than the
regional average for East Asia and Pacific and is low in comparison with most upper-
middle-income countries. Under-five child mortality currently stands at 21 deaths per
1,000 births, one of the highest in the region (UNICEF 2022). High levels of stunted
growth (21.6 percent in 2022) also limit the extent to which human capital can contribute
7
to the economy. The Indonesian economy loses approximately US$3.7 billion per year
(equivalent to 2.3 percent of GDP) as a result of stunted growth (Murthi 2022).
2.18 Indonesia has large disparities in human capital, which run along income lines
and are further aggravated by high exposure to climate-related disasters. Indonesia’s
human capital challenge reflects its inequality challenge. Poor people face significantly
greater risks for low human capital accumulation: stunted growth of children, reduced
cognitive development, lower learning and educational attainment, and substantially
decreased adult productivity and wages. Indonesia is highly exposed to shocks. The
INFORM Risk Index ranks Indonesia in the top quarter of countries, at 47 out of 191
countries worldwide.7 Since the 1990s, Indonesia experienced over 300 natural disasters
affecting more than 11 million people, with poor people carrying a disproportionate
burden because they more often live in affected areas (figure 2.3).
8
Figure 2.3. Natural Disasters, 1990–2021
30
25
20
Disasters (no.)
15
10
5
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Wildfire 0 1 0 0 1 0 0 1 1 1 1 0 1 0 0 1 1 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0
Storm 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 0 2 0 0 0 0 1 0 0 0 1
Landslide 0 1 1 0 0 0 1 0 0 2 4 4 1 4 4 2 3 2 1 2 1 2 2 2 2 3 2 2 2 2 1 2
Flood 2 2 1 2 6 5 5 0 1 1 3 4 7 8 1 3 8 8 12 5 7 6 7 10 6 6 10 7 6 11 25 16
Drought 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0
Year and disasters (no.)
Source: Independent Evaluation Group estimates from World Bank 2023.
9
Deepening of the Financial Sector
2.19 To break the middle-income ceiling, Indonesia needs to continue developing its
financial system. The Asian financial crisis shifted authorities’ focus to rebuilding and
modernizing the financial system. This included restructuring banks, establishing
deposit insurance, eliminating government funding distortions, and improving
supervision and regulation (including the establishment of the Financial Services
Authority and the Deposit Insurance Corporation). Reforms in capital markets
development, financial inclusion, payment systems, and disaster risk finance have also
been important elements in the reform agenda. These efforts enhanced financial stability
and supported the real economy during the COVID-19 pandemic and recovery period.
Yet, to achieve faster and higher-quality growth, high-income countries have expanded
the depth and efficiency of their financial sectors. Indonesia’s financial sector remains
significantly small compared with those of other middle- and high-income countries
(Strobbe et al. 2023).
2.20 Capital markets do not provide sufficient investment funding and are not yet a
viable alternative to bank financing (Strobbe et al. 2023). According to the 2024 Financial
Sector Assessment Program, the government securities markets are relatively well
developed, but the corporate bond and equity markets remain shallow. Progress in
developing Indonesia’s capital markets has been supported by the Financial Sector
Omnibus Law (Law 4/2023) and ongoing regulatory amendments. However, further
reforms and addressing structural issues are still necessary.
3. The Bank Group in Indonesia
Overview
3.1 The partnership with Indonesia is one of the Bank Group’s most significant ones.
Indonesia is the second-largest borrower from the World Bank, with US$19.5 billion in
project finance disbursed during FY14–24 (World Bank Group Finances One [database]).
As of 2022, the World Bank accounted for 39 percent of Indonesia’s total external debt
outstanding and about 60 percent of Indonesia’s public debt outstanding to
multilaterals, making the World Bank a large player among external creditors
(figure 3.1). The engagement is supported by the Bank Group’s largest country office.
The Bank Group engagement was marked by strong collaboration with development
partners, essential in such a large country with a broad range of multilateral and
bilateral partners working across diverse agenda.
3.2 Over the evaluation period, the Bank Group adapted its support in response to
evolving economic priorities. For most of the period after the 2008 global financial crisis,
10
Indonesia has exhibited steady economic growth and poverty reduction (figure 3.2).
Bank Group support has focused on continued capacity building to meet Indonesia’s
development vision. Early Bank Group support, with the help of third-party financing,
has provided intensive advisory and implementation support. Increasingly, the World
Bank has shifted its modes of support in response to a sophisticated client with a
country-led development agenda using its systems and processes. In most cases, the
World Bank remained a key convener and provider of knowledge services and technical
advice, but occasionally it scaled back financial support where government programs
were successfully launched or where other financing was preferred.
Figure 3.1. Indonesia External Debt Outstanding, by Creditor, 2012–22
70
60
50
Debt (US$, billions)
Bilateral
40
30 Other
multilateral
20
World Bank
10
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Year
Source: World Bank Group Finances One database.
11
Figure 3.2. Main Economic Developments over World Bank Group Engagement
Cycles, FY10–25
Source: Independent Evaluation Group staff from World Development Indicators.
Note: CPF = Country Partnership Framework; CPS = Country Partnership Strategy.
Evolution of Bank Group Support Toward Key Development Challenges
3.3 Bank Group support evolved over each engagement cycle in response to
changing country needs. Support toward public spending adequacy and efficiency
gradually transitioned from a program that initially focused on technical capacity
building to one that delivered both policy advice and investments to match Indonesia’s
advancing capabilities and political windows for reforms. Urbanization management
support has increasingly evolved into climate-resilient urban development reinforced by
the private sector. It included long-running national programs such as slum upgrading
and community-driven development in urban areas and local government capacity
building for service delivery. The agenda to lift human capital required shifting the
focus from developing the basic building blocks of human development delivery
systems, such as targeting, to an equity lens of improving access among the
disadvantaged. This required a “whole-of-Indonesia approach” to tackle stunted growth
of children, the country’s stubborn learning crisis, and uneven health outcomes. The
World Bank’s support to the financial sector evolved from focusing on stability at the
beginning of the evaluation period to an ambitious programmatic series aimed at
enhancing the depth, efficiency, and resilience of the financial sector. Support from the
International Finance Corporation (IFC) to this sector remained consistently focused
mainly on increasing financial depth.
12
Country Partnership Strategy FY13–15
3.4 During the CPS period (FY13–15), Bank Group support responded to a wide
array of complex development challenges facing a fast-growing economy. Though
financial support was scaled back from the FY09–12 CPS period (figures 3.3 and 3.4), the
Bank Group delivered a broad program of support in four key engagement areas: (i)
boosting growth and job creation by facilitating the supply response to the dramatic
change in demand that a rising middle class and urbanization bring (the government’s
progrowth and projobs agenda); (ii) accelerating the pace of poverty reduction and
providing greater economic security for the vulnerable so that they can share the
benefits of growing prosperity (the pro-poor and projobs agenda); (iii) enhancing
sustainability in natural resource management (the progreen agenda) and (iv) deepening
the financial sector (the progrowth agenda).
Figure 3.3. Evolution of World Bank Lending by Instrument and Engagement Cycle,
FY09–25
12,000
10,000
Lending volume (US$, millions)
8,000
6,000 PforR
IPF
4,000 DPF
2,000
0
CPS FY09–12 CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group engagement cycle
Source: Independent Evaluation Group Data Hub, August 2024; Independent Evaluation Group staff calculation.
Note: CPF = Country Partnership Framework; CPS = Country Partnership Strategy; DPF = development policy financing; IPF
= investment policy financing; PforR = Program-for-Results.
13
Figure 3.4. Evolution of World Bank Lending by Sector and Engagement Cycle, CPS FY09–12,
CPS FY13–15, CPF FY16–20, and CPF FY21–25
12,000
Info and
Communication
Industry and
10,000
Trade/Ser
Lending volume (US$, millions)
Agriculture
8,000 Water/Sanit/Waste
Education
6,000 Health
Transportation
4,000 Social Protection
Energy and
Extractives
2,000 Financial Sector
Public Admin
0
CPS FY09–12 CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank engagement cycle
Source: Independent Evaluation Group Data Hub, August 2024; Independent Evaluation Group staff calculation.
Note: Admin = Administration; CPF = Country Partnership Framework; CPS = Country Partnership Strategy; Sanit =
Sanitation; Ser = Services.
3.5 The World Bank provided extensive technical assistance toward the first critical
challenge to improve public spending adequacy and efficiency, which was largely
financed through trust funds. At the time of the CPS, several major trust fund programs
funded by the government of Australia and implemented by the World Bank provided
ground-level support toward evidence-based policy making. This included the
secondment of external consultants directly into Indonesia’s Fiscal Policy Agency,
transferring expertise in macroeconomic management and revenue and expenditure
analytics. In addition to the wide body of technical assistance provided to the Ministry
of Finance, the World Bank also undertook a stream of core analytic activities to
underpin the government’s tax and expenditure reforms (including a Public
Expenditure Review update). With key spending on infrastructure decentralized to the
local level, the World Bank also delivered several projects and technical assistance aimed
at improving accountability and reporting of subnational spending of central
government infrastructure grants.
14
3.6 The Bank Group’s support toward the second critical challenge, to enhance
urbanization management, supported local government capacity for improved
infrastructure and service delivery. Urbanization management support included
support to local governments for public financial management and social and
environmental management. Additionally, the World Bank on-lent to subnational
governments for complex infrastructure projects. IFC, meanwhile, provided advisory
services toward energy and transport.
3.7 Bank Group support toward the third challenge, lifting human capital, spanned
the pro-poor and projobs engagement areas. The World Bank primarily focused on
improving targeting, community development, nutrition, and universal health coverage.
There was a large focus on knowledge building for universal health coverage,
HIV/AIDS, and nutrition around this time.
3.8 The Bank Group support to the financial sector was delivered under the
progrowth agenda. The World Bank’s support included two development policy
operations and one investment project financing totaling US$600 million, targeting
financial sector stability, diversification, and inclusion. IFC complemented these efforts
by allocating US$677 million (58 percent of its total portfolio) to the financial sector and
implementing five advisory services projects (US$12.7 million) aimed at enhancing
access to finance for low-income clients and small and medium enterprises.
Country Partnership Framework FY16–20
3.9 During FY16–20, Bank Group lending increased significantly, addressing both
new policy agenda and critical health, social protection, and energy investments (see
figure 3.4). With a new government in place in October 2014, the World Bank ramped up
policy-oriented support (in fiscal strengthening, maritime logistics, and energy
modernization), investment financing in energy and health (particularly at the
beginning of the COVID-19 crisis), and Program-for-Results. In addition, the World
Bank supported holistic landscape management programs to protect natural resources,
reduce carbon emissions, and support sustainable livelihoods. Overall, World Bank
lending increased from US$3.9 billion during FY13–15 to US$8.8 billion during FY16–20,
a 40 percent annualized increase. The IFC investment amount remained the same
(US$1.3 billion; see figure 3.5). The World Bank also intensified analytical work, much of
it focused on public administration, the financial sector, and social protection.
15
Figure 3.5. Evolution of International Finance Corporation Investments by Product for
CPS FY13–15, CPF FY16–20, and CPF FY21–25
1,400
Investment commitments (US$, millions)
1,200
1,000
800 GT+RM
Equity
600
Loans
400
Annual average
200
0
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group engagement cycle
Source: International Finance Corporation iPortal, July 2024; Independent Evaluation Group staff calculation.
Note: Loans: includes loan-type, quasi-loan products. Equity: includes equity-type, quasi-equity products. CPF = Country
Partnership Framework; CPS = Country Partnership Strategy; GT+RM = guarantees and risk management products.
3.10 World Bank support toward public spending adequacy and efficiency supported
the new government’s ambitious reform agenda. The new administration sought to
tackle the long-standing fiscal risks from subsidies and undertook a decisive program to
remove energy subsidies. The World Bank supported a reduction in energy subsidy
expenditures through an energy sector development policy operation, and provided a
range of technical assistance aimed at improving social protection systems to buffer the
subsidy reform impacts on poor people. This was complemented with a US$1.7 billion
fiscal reform development policy operation programmatic series of three operations
(FY16–19), which sought to improve the effectiveness of fiscal policy in support of the
government’s national plan. A significant program of analytical work complemented
operational support, including toward tax and expenditure policy reform.
3.11 Bank Group support toward urbanization management continued to focus
heavily on enhancing infrastructure and service delivery by local governments. World
Bank support included strengthening the decentralization framework, establishing a
performance-based fiscal transfer system, enhancing the monitoring of local service
delivery by the central government and citizens, and urban planning. The World Bank
prioritized sustainable urbanization in major and growing secondary cities by
supporting essential infrastructure sectors (including urban transport, water supply and
sanitation, drainage, slum upgrading, solid waste management, and urban pollution)
and national programs aimed at universal access to water and sanitation. Additionally,
16
IFC assisted selected municipalities with corporatization, municipal bonds, and private
sector infrastructure investments.
3.12 The Bank Group’s support toward lifting human capital aimed to improve
quality and equity in services delivery, which under federalism was localized, and social
protection. On health, the World Bank’s portfolio was therefore more focused on local
implementation of national programs and technical assistance to districts and villages in
disadvantaged regions to ensure universal access to health-related services. On social
protection, the World Bank aimed to strengthen social protection programs, especially
Program Keluarga Harapan, for poor and vulnerable people. IFC also sought private
sector models for using new technologies to expand health care services to the base-of-
the-pyramid populations in remote regions.
3.13 One CPF objective was to enhance access to finance as part of improving the
business climate and the functioning of markets. IFC investments focused on the finance
and insurance sector, totaling about US$750 million. IFC investments in commercial
banks and nonbank financial institutions aimed at providing financial services to micro,
small, and medium enterprises and women entrepreneurs, complementing the World
Bank’s ongoing policy of lending and advisory services to broaden access to financial
services. Support to Indonesia Infrastructure Finance (a nonbank financial institution)
exemplifies the joint efforts of the World Bank and IFC in this area.1 The World Bank
supported Indonesia Infrastructure Finance with a US$100 million investment policy
financing operation in 2009 and additional US$200 million in financing in 2017.
Meanwhile, IFC provided three loans totaling US$95 million in loans to the same
institution between 2014 and 2017.
Country Partnership Framework FY21–25
3.14 During FY21–25, Bank Group lending increased further, with an enhanced focus
on climate change. Post-COVID-19 and with increased recognition of Indonesia’s
vulnerability to climate change and natural resource degradation, the CPF focused on
promoting a resilient recovery through (i) strengthened competitiveness and resilience,
(ii) improved infrastructure, (iii) enhanced human capital, and (iv) improved
management of natural assets, livelihoods, and disaster resilience. Knowledge and
advisory work centered on public finances, governance, health, and social protection.
3.15 Support toward public spending adequacy and efficiency increased attention to
enhanced domestic revenue mobilization and subnational spending efficiency. Through
a stand-alone fiscal development policy operation (US$750 million), the World Bank
supported increased tax revenues and improved tax equity. With the increasing need to
ensure effective spending of decentralized transfers for infrastructure, the operation also
17
focused on improved expenditure management at the subnational level. The World
Bank supplemented operational support with continued knowledge services, including
a programmatic series to strengthen the fiscal policy framework post-COVID-19.
3.16 Bank Group support toward urbanization management focused on disaster- and
climate-resilient urban development and environmental and financial sustainability. The
World Bank financed disaster risk management, a green urban mass transit system, and
urban water and solid waste management. The CPF also aimed to have a sharper focus
on infrastructure financial sustainability, innovative financing approaches, and private
sector participation. Through programmatic advisory services and analytics (ASA), the
Bank Group aimed to continue to develop advisory products for dialogue on
infrastructure finance; institutional and regulatory support, including for subnational
agencies and state-owned enterprises, with IFC focusing on capital market and risk
products; and green buildings and waste management (figure 3.6).
Figure 3.6. Evolution of International Finance Corporation Advisory Services by Sector
and Engagement Cycle, FY13–25
16
Utilities
14
Transportation
12 1
4
Projects (no.)
Industry and services
10 3
1 Health
8 5 1
4 Finance and insurance
6
5
Energy
4 1
5
2 Construction and real
2 1
1 estate
2 BEE
0 1 1
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group engagement cycle
Sources: International Finance Corporation iPortal, July 2024; Independent Evaluation Group staff calculation.
Note: BEE = Business-Enabling Environment (economy wide); CPF = Country Partnership Framework; CPS = Country
Partnership Strategy.
3.17 The World Bank’s support toward lifting human capital during this CPF was in
line with the previous cycle. The social protection sector focused more on inclusiveness,
and IFC sought to invest in health care platforms with broader geographic reach and
health-related supporting industries in response to the pandemic. On education, the
World Bank aimed to have a comprehensive ASA agenda to enhance evidence-based
policy making and implementation of the National Education Strategy 2020–2024.
18
3.18 Financial sector support aimed to increase depth, efficiency, and resilience. The
World Bank expanded its support to Indonesia’s financial sector with a programmatic
series of three development policy operations with a total commitment value of
US$2 billion, maintaining the core objectives of increasing the depth, efficiency, and
resilience of the financial sector. IFC’s support remained primarily focused on the
financial sector, with close to US$1 billion in investments allocated to this area as of July
2024. Although IFC continued to channel its support mainly through commercial banks
to enhance financial inclusion, more recently it also expanded its support for digital
inclusion initiatives.
4. Purpose, Objectives, and Audience
4.1 The objective of this CPE is to assess how the Bank Group has supported
Indonesia in addressing key development challenges and how that support adapted to
changing circumstances and lessons from experience. The evaluation will cover FY13–
23. Its findings will inform the new CPF. The primary audience is the World Bank’s
Board of Executive Directors, its Committee on Development Effectiveness, the Bank
Group’s management and staff working on Indonesia, stakeholders in Indonesia, and
Bank Group teams working in middle-income countries that are facing similar
development challenges.
5. Evaluation Questions and Scope
5.1 This evaluation will focus on four evaluation questions (detailed evaluation
questions are included in appendix A). These evaluation questions were chosen because
of their strategic relevance to Bank Group engagement over the CPE period and to
Indonesia’s vision of becoming a prosperous, fair, and high-income nation by 2045. In
choosing these themes (figure 5.1), the Independent Evaluation Group (IEG) also
considered the importance of the theme to Indonesia’s development and refined the
evaluation subquestions and cross-sectional lenses based on discussions with the
country team.
• Evaluation question (EQ) 1: In the face of Indonesia’s plans for significantly
increased spending for infrastructure and human development toward higher
and more inclusive growth, how effectively did the World Bank design and
adapt its support toward ensuring Indonesia’s spending adequacy and
sustainability?
• EQ2: How relevant and effective has the Bank Group been in addressing
Indonesia’s rapid urbanization to ensure disaster-resilient cities?
19
• EQ3: How relevant and effective have the World Bank’s efforts been in
overcoming obstacles to inclusive human capital?
• EQ4: How relevant and effective have the Bank Group’s efforts been in
deepening the financial sector while maintaining financial stability and building
institutions?
5.2 Within these four major evaluation questions, the team will also consider how
the Bank Group incorporated cross-cutting challenges of climate change and inequality.
Both climate change and inequality reduction are core to EQ2, and inequality reduction
is at the center of EQ3. Inclusion and climate also feature in the World Bank’s support to
the financial sector. Within each question, the CPE will assess the degree to which the
World Bank’s portfolio of projects and analytical work was informed by and addressed
the government’s climate change and inequality ambitions. For example, in looking at
the relevance and effectiveness of the World Bank’s support toward public financial
management (EQ1), the evaluation will consider how the support was relevant and
contributed to both improved equity and improved climate adaptation and mitigation.
In addition to incorporating these cross-cutting lenses in the evaluation questions, a
portfolio review of lending projects for climate adaptation and mitigation will be
included in a climate change appendix.
5.3 Beyond assessing the relevance and effectiveness of support, the team will draw
on available evidence to understand the factors underpinning the scope, nature, and
effectiveness of the Bank Group engagement. To identify the lessons on relevance and
effectiveness, the team will assess how specific aspects of the Bank Group’s engagement
(including the choices of instruments [Program-for-Results versus investment policy
financing, for example], its level of engagement and coordination with other
development partners, coordination between the World Bank and IFC, the level of
government with which the Bank Group worked, and so on) affected its influence and
effectiveness.
20
Figure 5.1. Country Program Evaluation Themes
Adequate and effective
public spending
Indonesia
Resilient urbanization
Inclusive human capital
CPE scope
Financial sector depth
Source: Independent Evaluation Group.
Note: CPE = Country Program Evaluation.
5.4 EQ1 will assess the degree to which World Bank support approved during the
evaluation period was relevant to and effective toward strengthening Indonesia’s
domestic revenue mobilization and quality of spending. Fiscal policy, in its revenue
mobilization and spending (including transfers) functions, underpins the Indonesian
government’s ability to undertake investments needed to enhance productivity and
competitiveness toward reaching high-income status by 2045, to deliver public services
toward poverty reduction and shared prosperity, and to achieve income distribution
goals. EQ1 will assess the degree to which the World Bank program of support was
relevant and adaptive to identified constraints to more efficient, effective, and
accountable domestic revenue mobilization and spending. 2, 3 EQ1 will also consider the
degree to which World Bank support addressed equity considerations in revenue
mobilization, spending, and transfers, and the degree to which World Bank support
toward fiscal policy and public finance addressed climate considerations (for example,
through energy subsidy reform and public financial management systems that ensure
climate considerations in evaluation and selection of public investment projects).
Relevance considers not only the relevance of what the World Bank did but also gaps in
support: the degree to which identified priorities for improved fiscal management were
not met by the World Bank or other partners. Where possible, the team will determine
(through documentary evidence and interviews) the factors that have driven and the
entry points that have facilitated the areas of World Bank engagement, to draw lessons
on what works. The effectiveness of the World Bank’s support will be assessed in terms
of the degree to which it can be traced to meaningful improvements in “collecting more
and spending better” (drawing on indicators that can be closely linked to reforms
21
undertaken) and whether the World Bank’s support was effective in ensuring impacts
were sustained.4
5.5 The scope of EQ1 will include all World Bank analytical and project support
toward fiscal and public financial management during the evaluation period. It will
cover not only support toward domestic revenue mobilization and improved quality of
spending (including at the subnational level) but also World Bank support toward fiscal
risk management (including through improved transparency of contingent liabilities
such as from state-owned enterprises and improved debt management). The support
includes approximately a dozen projects across four Global Practices (Macroeconomics,
Trade, and Investment; Governance; Sustainable Development; and Human
Development) equivalent to International Bank for Reconstruction and Development
(IBRD) commitments of approximately US$3.8 billion and approximately 35 analytical
activities.
5.6 EQ2 will assess the relevance and the effectiveness of the Bank Group’s support
toward the goal of disaster risk resilience. While this theme will assess broad disaster
risk management policy and capacity building at the central and local levels and disaster
resilience aspects in urban development projects, the analysis will also include a desk-
based review of sustainable development (planet) and infrastructure portfolios to
analyze the evolving Bank Group support to address broader key challenges regarding
climate change and environmental sustainability. Disaster risk resilience will be assessed
in terms of selected elements within disaster risk mitigation and disaster preparedness,
to ensure that these areas are supported by a robust evidence base. These include the
following: (i) effectiveness of supporting robust infrastructure with integrity, strength,
and ability to withstand shocks, specifically coastal and inland floods and earthquakes
(as defined in World Bank 2019a), through applying adequate resilience standards for
road infrastructure, public buildings, and housing (for example, standards for all-season
roads and resilient building codes); (ii) adequacy of operations and management
measures for these infrastructure works; (iii) effectiveness of flood risk–management
works; and (iv) adequacy of the World Bank’s capacity-building support for disaster
risk-preparedness efforts.
5.7 EQ2 will examine the World Bank’s relevant support through approximately 10
World Bank lending projects spread across multiple sectors approved between 2013 and
2023 (equivalent to approximately US$2.1 billion in IBRD commitments) and 95
analytical activities. IFC support for disaster risk resilience focusing on urban areas will
be included in the analysis by assessing three investment projects approved during the
same period, amounting to US$90 million, and two advisory services projects. The
Multilateral Investment Guarantee Agency has no guarantees supporting the urban
sector during this period. EQ2 analysis will assess how the Bank Group’s analytic and
22
advisory activities helped improve understanding of the constraints to resilient
urbanization in Indonesia and then how lending was operationalized to address these
needs.5 The effectiveness analysis will include the closed portfolio of Bank Group
projects during the evaluation period on slum upgrading, the provision of affordable
housing, and urban community development programs.
5.8 EQ3 will assess the relevance and effectiveness of the World Bank’s support for
human capital toward the goal of sustained reductions in inequality and improvements
in shared prosperity. The portfolio suggests a strong focus on ASA in the first part of the
evaluation period, and, therefore, EQ3 will first assess how the diagnostic work helped
improve understanding of the constraints to human capital accumulation and then how
lending was leveraged to address these constraints. The question will also throw light on
the evolution of the World Bank’s support in relation to ever-changing needs for human
capital, including those associated with climate adaptation.
5.9 EQ3 will examine the World Bank’s support through approximately 14 projects
in the Human Development Practice Group approved between 2013 and 2023
(equivalent to approximately US$3.8 billion in IBRD commitments). While these projects
pertain to health, nutrition, and social protection, 71 percent in terms of number of
projects and 68 percent in terms of IBRD commitments of the portfolio falls under health
and nutrition. The team will also assess 34 analytical activities across these sectors and
education, as the World Bank has produced pathbreaking analytical work in the latter.
This theme will cover aspects of gender, disasters, and the pandemic, given the portfolio
focus on reproductive and maternal health, adaptive social protection, and pandemic
response. Because low human capital accumulation is highly correlated with high
poverty, EQ3 will indirectly assess the World Bank’s efforts to reduce inequality and
promote shared prosperity by investing in human capital.
5.10 EQ4 will assess the relevance and effectiveness of the Bank Group’s efforts in
deepening the financial sector. This includes enhancing access to and use of financial
services and capital market instruments. The team will also assess contributions to
financial sector resilience (including stabilization) and efficiency, and examine the
relationships among the three priority areas: depth, efficiency, and resilience. EQ4 will
assess the extent to which the World Bank and IFC analytical and diagnostic work
contributed to identifying the primary constraints and priorities in Indonesia’s financial
sector. It will also assess the relevance and effectiveness of World Bank and IFC support
in addressing the identified constraints in the financial sector and the extent to which
that support adapted to Indonesia’s evolving needs, including shocks. Finally, it will
assess the extent to which the World Bank and IFC collaborated effectively to support
Indonesia’s financial sector.
23
5.11 The scope of EQ4 will cover all World Bank and IFC support to the financial
sector during the evaluation period. This support includes World Bank lending
operations (five development policy operations and two investment project financing)
approved between 2013 and 2023, totaling US$2.6 billion, and three programmatic
advisory services grouping over 20 analytical activities with a total approximate value of
US$20 million. To assess IFC’s support to the financial sector, the CPE will examine 29
investment projects approved during the period, amounting to US$2.3 billion, and 14
advisory services projects.
6. Evaluation Design
6.1 The evaluation will assess the Bank Group’s engagement through two main
evaluation criteria:6
• Relevance. Within each evaluation question, the evaluation will determine the
relevance of the Bank Group’s contribution along three dimensions: (i) whether it
addressed important constraints to Indonesia’s development, as informed by
existing rigorous diagnostics; (ii) whether it took into account its comparative
advantage, the interest of the government, and contributions of other
development partners; and (iii) whether it adapted its engagement in light of
changing conditions, accrued evidence, and experience of what worked and
what did not, for whom, and why.
• Effectiveness. The evaluation will capture the Bank Group’s contribution to
country outcomes during the evaluation period and determine whether the Bank
Group’s engagement amounted to more than the sum of its individual activities
through appropriate sequencing, complementarity of instruments, and leverage.
The evaluation will assess how analytics have informed financing operations and
influenced government reforms. To assess effectiveness, the evaluation will
reconstruct the theories of change—the packages of activities delivered by the
Bank Group during the 11 years and their underlying assumptions—in each
outcome area.
Given the addition of the cross-cutting lenses of inclusion and climate action, the
evaluation will consider the relevance and effectiveness of World Bank support toward
climate and inclusion goals across all four themes.
6.2 To answer the evaluation questions, the team will undertake two levels of
analysis. At the broader level, the evaluation team will undertake a descriptive portfolio
review analysis for the four themes to identify areas of the World Bank’s engagement
and the gaps based on diagnostics. Additionally, the team will delve into the factors that
have driven decisions on engagement (including through Bank Group and stakeholder
24
interviews). At the level of our themes, the team will follow four analytical steps. First,
the team will review major trends for each high-level outcome area. The team will also
review and synthesize key diagnostics and analytics produced by the Bank Group,
development partners, and the government to identify the main constraints explaining
outcomes in the outcome area. Second, the team will reconstruct the main pathways to
country outcomes that the Bank Group pursued, whether direct or indirect, through
document reviews and complementary interviews with Bank Group staff. Third, the
team will use the evidence gathered in the first two steps and additional information to
assess the relevance of the Bank Group’s contribution along the four outcome areas.
Fourth, the evaluation will assess the Bank Group’s effectiveness in contributing to
development outcomes along the most plausible pathways using pertinent causal
analysis techniques.
6.3 For EQ2 and EQ3, given the multisectoral nature of the themes, the team will
create a separate theory of change for each sector. For example, under human capital,
there will be separate theories of change for health, nutrition, and social protection. All
three (considered as pathways) eventually contribute to inclusive human capital. The
team will rely on existing literature, diagnostics, and analytics to inform the theories of
change.
6.4 The CPE will adopt a mixed methods approach to answer the evaluation
questions. Analysis of the development context in Indonesia, including relevant
indicators, will provide a background in which the Bank Group program took place.
Content and portfolio analysis will inform the major development constraints facing
Indonesia (within each development theme) and the areas the Bank Group sought to
influence. A theory-based approach will be used to trace the pathways of influence
between the Bank Group support and intended outcomes, with focus on the role of
analytics and strategy on identifying areas of work and projects to ensure relevance and
coherence. Contribution analysis will be used to explore the degree to which the Bank
Group’s work helped shape policy dialogue, catalyze support from other stakeholders,
and deliver its program effectively and efficiently.
6.5 The main documentation sources that will be drawn on are as follows: (i) World
Bank portfolio documentation during the period, including outputs of ASA, Project
Appraisal Documents, Implementation Completion and Results Reports,
Implementation Completion and Results Report Reviews, Implementation Status and
Results Reports, restructuring documents, Project Completion Reports, aide-mémoire,
review of meeting minutes, and project-related communication; (ii) IFC portfolio
documentation, including Board approval documents, supervision reports, Expanded
Project Supervision Report Evaluative Notes, and Evaluative Notes of IFC advisory
services (project completion reviews); (iii) internal and external diagnostic analytic
25
work; and (iv) formal Bank Group strategies including CPS FY13–15, CPF FY16–20 (and
its accompanying Performance and Learning Review), and CPF FY21–25; and
evaluations from external partners, including the Asian Development Bank. IEG staff
will supplement these sources with information from interviews with Bank Group staff
and stakeholders associated with the Indonesia country program (including
government, development partners, and IFC clients). Geospatial analysis will be drawn
on where relevant to determine whether the Bank Group and other partners targeted
operations in regions or areas of greater need. Each of these methods is explained in the
following paragraphs and illustrated in figure 6.1:
• Content analysis of World Bank documents. The evaluation will review the
World Bank’s strategy documents, outputs of analytical activities (World Bank,
IFC, and external), and existing evaluative evidence both from the World Bank or
IFC and from IEG. Content analysis will help the team (i) establish the core
constraints within each outcome area from which to determine the relevance of
Bank Group support; (ii) build the theories of change that describe Bank Group
support in each output area (based on Bank Group strategy documents, project
documents, and so on); and (iii) establish the effectiveness of Bank Group
support (through existing evaluative documentation).
• Stakeholder interviews. The evaluation team will conduct semistructured
interviews with Bank Group staff (current and former Country Management
Unit staff, regional management, and task team leaders), development partners
(and implementation agencies), and clients (both private sector clients and
government officials—both incumbent and former). The team will leverage tools
such as NVivo to perform qualitative analysis of interview data. Stakeholder
interview data will be used to triangulate findings from other documentary
evidence and bring out information not presented in documentary evidence (for
example, identification of factors that allowed specific projects, programs, or
support streams to be more effective than others).
• Portfolio review analysis. The evaluation team will review and analyze both the
lending and nonlending portfolios to map projects and analytical work to
selected themes and to answer the subquestions, including the ones related to the
cross-cutting aspect of climate change. The team will use a combination of
methods to code projects and ASA, including themes and sector codes from the
operational portal and text analytics of project development objectives and
components. Within the four evaluative questions, the team will assess the extent
to which select ASA have informed lending and Bank Group strategic decisions.
Portfolio review analysis will also inform the adaptation of the Bank Group
26
program (across sectors and choice of instruments) over time in response to
shocks and other changing conditions.
• Partnerships analysis. The evaluation team will review relevant activities of
development partners during the evaluation period within the selected four
themes. Data will be sourced using IEG’s partnership tool and validated with
semistructured interviews. The analysis will focus on assessing the extent to
which the Bank Group has coordinated and cooperated with development
partners to leverage its own and partners’ comparatives advantages, divide
labor, and avoid duplication. Partnership analysis can help determine the degree
to which Bank Group support was well coordinated with other development
partners and can provide insights on the World Bank’s convening power (which
may feature in contribution analysis).
• Geospatial analysis. The evaluation team aims to use geospatial analysis to
assess the extent to which the design and implementation of World Bank
interventions have addressed spatial and socioeconomic disparities. Geospatial
analysis will be used to assess the regional distribution of projects and activities
and whether Bank Group support has targeted places with higher levels of needs
and vulnerability for both EQ2 and EQ3. Geospatial analysis can provide
additional data on urban disaster resilience and urban infrastructure conditions
such as housing and roads. Geospatial analysis will be specifically used to assess
whether housing conditions and community infrastructure have improved in
targeted areas. Since the Bank Group support on urbanization is dispersed across
many cities in the country, a sampling methodology has been developed to focus
the geospatial analysis under EQ2 (for details see the Deep Dive into the Four
Evaluation Questions section of appendix A).
• Contribution analysis. The evaluation team will reconstruct theories of change
using literature and diagnostics for specific sectors. Document reviews and
interviews with Bank Group staff will help uncover the sequence of activities and
identify how Bank Group contributions addressed key knots and issues
pertaining to those sectors. Clear contribution claims will be formulated and
validated with key stakeholders. They will then be tested through triangulated
sources of evidence.
• Administrative data. To enhance the effectiveness analysis under EQ2, available
administrative data will be used, including the government’s database on slums
developed under the National Slum Upgrading Project,7 management
information system data from the National Community Empowerment Program
27
in Urban Areas, and data from the National Affordable Housing Program. These
data will be used to assess results at the subnational level.
• Expert opinion. Under EQ2, to evaluate the effectiveness of Bank Group support
on resilience, an international expert and a local consultant will be engaged.
Their task will be to assess the adequacy of resilience codes and standards
applied to road and housing construction works, as documented in project
design documents.
• Structured virtual interviews.8 To complement the analysis of EQ2, structured
interviews will be conducted with selected representatives from local
governments and implementing agencies at the local level. These interviews aim
to assess the effectiveness of World Bank support in applying resilience
standards and operation and maintenance arrangements for supported
infrastructure works. Additionally, the interviews will evaluate the strategies
used by implementing agencies to include poor communities and households for
closed projects. Active projects that are sufficiently advanced to provide tangible
results will also be included. The sampling strategy for this survey is detailed in
the Deep Dive into the Four Evaluation Questions section of appendix A.
6.6 The evaluation will validate findings through data and methods triangulation.
Figure 6.1 presents an overview of the key methods for answering the four evaluation
questions.
28
Figure 6.1. Triangulation Methods
Source: Independent Evaluation Group.
Note: EQ = evaluation question.
29
7. Limitations
7.1 The evaluation faces limitations which may constrain the analysis. Among them,
information contained in project documents can be missing or superficial on key
dimensions of importance. Data that are sufficiently longitudinal, reliable, and
disaggregated (both socially and geographically) may not be available in project
documents. Moreover, sensitive information, pertaining to, for example, the political
economy, might not be mentioned explicitly in Project Appraisal Documents,
restructuring documents, and Implementation Completion and Results Reports. The
team will mitigate these limitations through the use of multiple sources of information
and data, particularly from development partners working in Indonesia, and through
the application of various evaluation methods, particularly stakeholder interviews, to
triangulate the information.
7.2 Reconstructing the theories of change of Bank Group support over time can fall
prey to choice-supportive bias. Also, interview data can be biased, with recall bias and
positive illusions particularly affecting memories of early years of the evaluation period.
The team intends to codify interview and other documentary evidence to substantiate
the strength of findings based on a burden of proof.
7.3 It may be difficult to reach key counterparts and informants, particularly those
involved with early years of the evaluation period. To the extent possible, the team will
draw on the Indonesia country office to assist in locating former government officials
and others to ensure sufficient stakeholder representation for the early period of
engagement.
7.4 It may be difficult to obtain plausible outcome-level results by Bank Group
support. Where such outcomes are not available, the team will use intermediate
outcomes or outputs that approximate the intended final outcomes but are more likely
to be measurable and achievable over the lifetime of the Bank Group support. These
pertain particularly to EQ3, where outcomes such as lower rates of stunted growth of
children are visible only after significant lags. In addition, the team will use other data
sources to obtain outcome-level data such as geospatial analysis and media analysis.
7.5 The Bank Group’s influence is likely to be less tangible through instruments such
as analytic and advisory activities, capacity strengthening, and support toward
institutional change. The outcomes of these activities are difficult to observe, measure,
and document. To address this challenge, where possible the evaluation team will
selectively draw on process-tracing principles and techniques to investigate change
processes. The team will gather a range of qualitative and quantitative evidence to
reconstruct plausible contributions.
30
8. Quality Assurance Process
8.1 Quality assurance will take place through peer-review arrangements, close
collaboration with IEG management, and triangulation of evidence. Peer reviewers for
the Indonesia CPE include Maria Gonzalez, ASEAN2 division chief and mission chief
for Indonesia, International Monetary Fund; Bert Hofman (director, East Asian Institute,
National University of Singapore; former chief economist for the East Asia and Pacific
Region, World Bank); and Martha Bowen, deputy vice president for policy in the
Department of Policy and Evaluation at the Millennium Challenge Corporation. An
additional peer reviewer with subject matter expertise in financial markets, including at
the micro level, will be added at the decision draft stage.
9. Expected Outputs, Outreach, and Tracking
9.1 The main output of this evaluation will be a report that presents relevant
findings and lessons that can inform the next CPF for Indonesia, currently planned for
no earlier than the second quarter of FY26. The CPE is planned for e-submission at the
end of the first quarter of FY26.
10. Resources
10.1 The evaluation team will be led by Jennifer Keller (senior economist, IEG,
Economic Management and Country Programs), Ebru Karamete (evaluation officer, IEG
Infrastructure and Sustainable Development), and Stuti Sachdeva (evaluation officer,
IEG Corporate and Human Development). Team members include Melvin Vaz (senior
evaluation officer, IEG Financial, Private Sector, Infrastructure, and Sustainable
Development), Leonardo Bravo (senior evaluation officer, IEG Financial and Private
Sector Micro Unit), Santiago Tellez Canas (extended-term consultant), Claudia Rokx
(adviser), Deborah Delmar (consultant), and Sengphet Lattanavong (consultant), in
addition to other international and local consultants to be determined. The estimated
budget for delivering this evaluation is US$823,000.
31
Chapter 2
1Average annual growth rates for value added in manufacturing continually overtook all other
sectors of growth from the mid-1970s to the mid-2000s.
2 Independent Evaluation Group (IEG) staff estimates based on WITS/UN Comtrade Database.
3 IEG staff estimates based on World Development Indicators data.
4 IEG staff estimates based on World Development Indicators data.
5Based on standard growth accounting estimates, given expected rates of labor force growth
2025–45. IEG staff estimates based on World Development Indicators data.
6 IEG staff estimates based on World Development Indicators data.
7INFORM is a global risk index of natural disasters hazards and exposure, vulnerability, and lack
of coping.
Chapter 3
1 PT Indonesia Infrastructure Finance (IIF) is a private national company providing infrastructure
financing and advisory services, which is managed professionally and focuses on commercially
viable infrastructure projects. IIF was established by the Ministry of Finance of the Republic of
Indonesia along with the World Bank, Asian Development Bank, and other multilateral
institutions. It was established in accordance with the Regulation of the Minister of Finance of the
Republic of Indonesia No 100 of 2009 regarding Infrastructure Financing Company. IIF was
established on January 15, 2010, based on Company’s Deed of Establishment. Its Business License
was issued through the Decree of Minister of Finance No 439/KM.10/2010. IFC is a shareholder
with 19.99 percent stake in IIF (see the IIF website at https://iif.co.id/en/).
Chapter 5
2This evaluation question will focus on World Bank support and will not include activities of IFC
or Multilateral Investment Guarantee Agency.
3Domestic revenue mobilization includes policies and interventions to increase the tax base,
increase tax compliance, strengthen tax efficiency, and strengthen nontax revenue administration.
Public spending includes policies and interventions to strengthen the government of Indonesia’s
ability to plan, budget, execute, and monitor priority public spending, at both the national and
subnational level.
4While in some cases, World Bank–supported reforms or interventions can be directly linked to
revenue- or expenditure-related outcome indicators (for example, value-added tax revenue
raised, after the implementation of such a tax), in other cases, effectiveness must be judged in
relation to the achievement of intermediate outcomes that lie within a broader results chain to
higher-level objectives (for example, the number of income tax returns filed electronically, toward
the higher-level objective of reduced tax administration costs).
32
5 This will be done first by comparing the Bank Group’s ASA work against literature on urban
development, and then by assessing the relevance against the government’s urban development
strategy. Furthermore, it will examine how these insights have been translated into lending to
address the needfor building disaster resilience in urban areas. Consequently, the analysis of
relevance will also assess whether the Bank Group interventions on building resilience have also
benefited poor communities and individuals in urban settings. In addition, the evaluation will
examine climate mitigation and adaptation measures in selected infrastructure projects. This will
be conducted through a desk review of project interventions and relevant indicators presented in
project documents and climate assessment reports prepared by the World Bank’s Climate Change
Group. These reports determine climate change commitments and the intended outcomes related
to climate change from FY18 onward.
Chapter 6
6Other evaluative measures may be drawn on as relevant to supplement these two main criteria,
for example, those related to project implementation.
7The Ministry of Agrarian Affairs and Spatial Planning and Ministry of Public Works and
Housing established a slum profiling database in collaboration with the Central Statistics Agency
(Badan Pusat Statistik) to provide updates on slum profiles at the national level based on an
annual survey and ranking of slums by measuring the severity of the deficiencies in living
conditions. Local governments conduct regular monitoring, publish results, and report
information for the management information system (MIS) and on the project website. The MIS
was built on the tested system under the predecessor program NCEP-Urban. This system
monitored the activities and achievements of sector targets across Indonesia with georeferenced
data and photographs at the ward, city, and provincial levels. The NSUP MIS was web based and
was accessible to the public through kotaku.pu.go.id. The MIS covered data and information on
baselines, progress, and the performance of urban communities (kelurahans) and cities.
8 To enhance the evidence base for the effectiveness analysis under EQ2, the evaluation team
considered conducting a survey targeting the local governments and local implementing agencies
involved in the World Bank urban projects. However, this approach was ultimately dismissed
due to anticipated difficulties in reaching the relevant contacts, the rapid pace of the evaluation,
and the extensive time required to complete such a survey.
33
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36
37
Evaluation Design and Methods
Evaluation Questions
To help answer the evaluation questions listed in chapter 5, the evaluation will seek to
assess the following subquestions for the four selected cross-sectoral objectives:
Evaluation question (EQ)1. In the face of Indonesia’s plans for significantly increased
spending for infrastructure and human development toward higher and more inclusive
growth, how effectively did the World Bank design and adapt its support toward
ensuring Indonesia’s spending adequacy and sustainability?
• How effectively did the World Bank design and adapt its support for enhanced
domestic revenue mobilization (including through tax policy, tax administration,
and nontax revenue management)?
• How effectively did the World Bank design and adapt its support toward more
efficient and effective public spending, including at the subnational level?
• How effectively did the World Bank design and adapt its support toward
management of fiscal risks?
o Climate lens. How did the World Bank’s support toward public financial
management support improved climate adaptation and mitigation? How
effective was this support?
o Inequality lens. How did the World Bank’s support toward public financial
management support reduced inequality? How effective was this support?
EQ2: How relevant and effective has the World Bank Group been in addressing
Indonesia’s rapid urbanization to ensure disaster-resilient cities?
• How has the Bank Group’s analytical, diagnostic, and advisory work contributed
to better identifying the constraints and priorities for resilient urban
development, and how relevant was the Bank Group’s support in addressing
these identified constraints?
• How effectively has the Bank Group applied disaster risk resilience measures in
urban infrastructure projects and to what extent have these targeted the
vulnerable communities (via slum upgrading, urban community-driven
development, and affordable housing projects)?
• To what extent has the World Bank integrated climate mitigation and adaptation
across select key sectors in urban areas (transport, water, housing, solid waste)?
39
EQ3: How relevant and effective have the World Bank’s efforts been to overcoming
obstacles to inclusive human capital?
• How has the World Bank’s analytical and diagnostic work contributed to a better
identification of the constraints on and priorities for inclusive human capital?
• How relevant and effective was the World Bank’s lending in addressing the
identified constraints to improved human capital to reduce inequality and
promote shared prosperity?
• How has World Bank support adapted to Indonesia’s evolving needs, including
shocks?
o Climate lens. How did the World Bank’s support toward human capital
enable households to become more resilient to climate change? How effective
was that support?
o Inequality lens. How did the World Bank’s support toward human capital
reduce inequality? How effective was this support?
EQ4: How relevant and effective have the Bank Group’s efforts been in deepening the
financial sector while maintaining financial stability and building institutions?
• To what extent has analytical and diagnostic work of the World Bank and
International Finance Corporation (IFC) contributed to identifying the primary
constraints and priorities in Indonesia’s financial sector?
• How relevant and effective was the World Bank’s and IFC’s support in
addressing the identified constraints in the financial sector?
• How has World Bank and IFC support adapted to Indonesia’s evolving needs,
including shocks?
• To what extent did the World Bank and IFC collaborate effectively?
40
Table A.1. Evaluation Design Matrix
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
EQ1: How effectively did the World Bank design and adapt its support toward ensuring Indonesia’s spending adequacy and sustainability?
1.i. How Content analysis Interviews with (i) Review and Review of Using theory of
effectively did of (i) analytical World Bank Group analysis of PFM- development change for
the World Bank work (along with staff to triangulate related portfolio partner support World Bank’s
design and statistical data on scope, (with country toward PFM- support to PFM-
adapt its analysis) to breadth, and comparisons) to related agenda to related agenda,
support for identify main rationale of World triangulate data identify explain how
enhanced constraints over Bank support; (ii) on scope of complementarity interventions
domestic time; (ii) World government World Bank of World Bank contributed to
revenue Bank program counterparts to support over support; support result
mobilization? documentation triangulate data on time; assess (at coverage; support
(tax policy, tax to identify scope, effectiveness of broad level) gaps
administration, breadth, and World Bank support effectiveness
removing tax rationale of (and factors affecting (using
exemptions) World Bank effectiveness) performance
support; (iii) indicators)
evaluative
documentation
toward
determining
effectiveness
(and factors
affecting
effectiveness)
41
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
1.ii. How Same
effectively did
the World Bank
design and
adapt its
support toward
more efficient
and effective
public
spending?
1.iii. How Same
effectively did
the World Bank
design and
adapt its
support toward
management of
fiscal risks?
42
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
EQ2. How relevant and effective has the Bank Group been in addressing Indonesia’s rapid urbanization to ensure disaster-resilient cities?
2.i. How has the Content analysis Interview with Analyze the Bank Review of relevant Geospatially Interviews with
Bank Group’s to assess how development Group’s lending activities of analyze the select local
analytical, ASA and partners (and and nonlending partners working World Bank’s government
diagnostic, and diagnostic work implementation portfolios to in overlapping urban lending officials to
advisory work helped improve agencies) and clients assess the sectors to assess to assess how triangulate data
contributed to understanding of (government relevance of the extent of Bank effectively the on scope,
better the constraints to officials) to validate design and Group support’s World Bank has breadth, and
identifying the resilient how ASA have objectives of complementarity, targeted rationale of
constraints and urbanization helped influence operations and using IEG’s disaster-prone World Bank
priorities for when compared their work analytical work partnership tool areas and support
resilient urban with urban (project level) vulnerable
development, literature and Interview Bank communities.
and how government Group staff (current
relevant was the strategies and former CMU
Bank Group’s staff, regional
support in management, and
addressing TTLs), development
these identified partners (and
constraints? implementation
agencies), private
sector and civil
society
representatives to
triangulate data on
scope, breadth,
rationale of World
Bank support
2.ii How The Bank Group’s Interviews with Assess project Geospatially Using theory of Analyze Expert opinion Interviews with
effectively has resilience World Bank staff, outcomes analyze Bank change for the databases to assess the select local
the Bank Group framework and government officials, mapping key Group slum World Bank’s developed for adequacy of government
applied disaster principles and and civil society to performance upgrading support to urban projects to resilience officials to assess
risk resilience literature will be assess project indicators to operations, to urban-theme- assess project codes and the project
43
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
measures in used to define results, extract what measure the assess before- related agenda, results on standards results on
urban resilience worked and what did achievement of and-after explain how disaster risk applied to road disaster risk
infrastructure indicators on not work, and the objectives, changes in interventions resilience and and housing resilience and
projects, and to select appropriateness of assess infrastructure contributed to targeting of poor construction appropriateness
what extent infrastructure disaster risk appropriateness and living results on people works, as of targeting
have these projects resilience of indicators to conditions in resilient cities documented in strategies used
targeted the interventions and measure select slums project design by Bank Group
vulnerable Content analysis outcomes and objectives documents. projects
communities of (self-) targeting strategies
(via slum evaluation used by Bank Group Extract and
upgrading, documents (and projects assess relevant
urban CDD and validation and information on
affordable program access to
housing evaluation, when infrastructure by
projects)? available) to poor people and
capture evidence targeting from
of contribution to project
outputs (and documents
outcomes on
disaster risk
resilience and
targeting poor
places or people
in urban settings
2.iii. To what The Bank Group’s Assess project
extent has the climate co- outcomes
World Bank benefit mapping key
integrated assessment performance
climate reports will be indicators to
mitigation and used to assess measure the
adaptation climate achievement of
across select key mitigation and objectives on
climate
mitigation,
44
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
sectors in urban adaptation for adaptation
areas? urban projects assess
appropriateness
Content analysis of indicators to
of project measure
evaluation objectives
documents to
capture evidence
of contribution to
outputs and
outcomes on
climate change in
various sectors
EQ3: How relevant and effective have the World Bank’s efforts been in overcoming obstacles to inclusive human capital?
3.i. How has the Content analysis Interview World Bank Analyze intent The team will use
World Bank’s to assess how staff (current and and impact of administrative
analytical and ASA are helping former CMU staff, ASA to inform data to identify
diagnostic work in identification regional World Bank HD issues
contributed to a of underlying management, and country prevalent in the
better causes of HD TTLs) to assess how strategies and country.
identification of issues prevalent ASA have informed lending; this
the constraints in the country; lending and would also
to and priorities the team to facilitated the involve
for human identify whether promotion of shared analyzing
capital? ASA have helped understanding on supplemental
inform lending HD issues within and ASA associated
operations outside the World with lending
Bank operations
Interview
development
partners (and
implementation
45
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
agencies) and clients
(government
officials) to validate
how ASA have
helped influence
their work
3.ii. How Interviews with Assess relevance Assess Geospatially Assess The team will use
relevant and World Bank staff and of the World coordination and analyze the effectiveness of administrative
effective was the government officials Bank’s lending extent of World Bank’s the World data (to the
World Bank’s to to address complimentary of lending our HD Bank’s support extent possible)
lending to underlying HD World Bank sectors to for each sector to assess the
address the On relevance, to issues identified operations in assess how using separate impact of the
identified validate scope, (for example, relation to effectively the theories of World Bank’s
constraints to breadth, and were the partners; coupled World Bank has change efforts in areas of
improved rationale of World projects focusing with interviews, targeted engagement
human capital Bank support on the right this analysis would disadvantaged
to reduce priority areas?) throw some light areas
inequality and onto the World
On effectiveness, to
promote shared Ascertain Bank’s convening
validate the
prosperity? effectiveness of power
magnitude and
significance of the World Bank’s
contribution on portfolio based
human capital on achievement
of performance
indicators
3.iii. How Content analysis Interviews with Overlay the The team will use
adaptive were of the World clients and partners World Bank’s administrative
the World Bank’s analytics to assess portfolio with data to map out
Bank’s efforts to and external data adaptability, development the country’s
Indonesia’s to map out the flexibility, and agility needs to assess evolving HD
evolving needs? country’s of the World Bank’s relevance of needs.
evolving HD portfolio evolution
needs such as
46
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
those associated Assess the
with changing variability in
demographics, instrument
climate change, choice in the
and so on World Bank’s
portfolio such as
The World Bank’s CERC and CAT-
CCDR will help DDOs
guide the
evaluation to
benchmark
operations to the
needs of the
country.
47
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
EQ4: How relevant and effective have the Bank Group’s efforts been in deepening the financial sector while maintaining financial stability and building institutions?
4.i. To what Content analysis Interviews with
extent has the to assess the World Bank and IFC
World Bank’s Bank Group’s staff to take stock of
and IFC’s efforts in terms of the most relevant
analytical and coverage of analytical and
diagnostic work analytical and diagnostic and
contributed to diagnostic work gather their views on
identifying the to understand the robustness of the
primary the depth, studies and value of
constraints and efficiency, and the findings.
priorities in resilience of the
Indonesia’s financial sector Interviews during
financial sector? field mission with
government and
private sector
counterparts to
gauge their views on
the extent to which
World Bank and IFC
analytical and
diagnostic work have
accurately assessed
the sector’s
constraints
48
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
4.ii. How Relevance: Effectiveness: Relevance: The team will The team will use
relevant and Content analysis Interviews with Mapping the reconstruct a administrative
effective was the to determine the World Bank staff and analytical theory of data (for
World Bank’s extent to which external counterparts underpinnings change to example,
and IFC’s the identified to gauge their of the main Bank identify financial sector
support in constraints in the perceptions on the Group potential gaps regulators) to
addressing the analytical and scale and operations to for the assess the
identified diagnostic work significance of the determine achievement of effectiveness of
constraints in were used to World Bank’s and whether the long-term the World Bank’s
the financial inform the IFC’s contributions to prioritization, effects based on and IFC’s efforts
sector? strategic address the main sequencing, and additional in the areas of
selectivity of the financial sector approach aligns evidence engagement. The
program in the constraints with the gathered from team will
Country constraints content analysis complement this
Partnership identified in the and findings information with
Framework analytical and from interviews other sources of
diagnostic work (both internal data such as
and external). existing surveys,
other
evaluations, and
public records of
enacted
legislation.
49
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
4. iii. How has Content analysis Interviews with Mapping of
the World of internal and external counterparts portfolio
Bank’s and IFC’s external data to during the field evolution
support adapted identify the mission to gather against major
to Indonesia’s changes in the their perceptions on contextual
evolving needs, financial sector the World Bank’s changes (for
including needs such as and IFC’s example,
shocks? those associated adaptability, restructuring of
with the COVID- flexibility, and agility objectives or
19 pandemic and to respond to components or
climate change evolving needs and results
shocks frameworks of
projects) to
assess adequacy
and agility of
response
4.iv. To what Content analysis Interviews with Identifying joint
extent did the of internal World Bank and IFC World Bank and
World Bank and documents to staff to extract IFC projects to
IFC collaborate identify lessons learned and understand the
effectively? mechanisms of best practices in extent to which
systematic (not collaboration (for the two
anecdotal) example, IIF) institutions
collaboration coordinated and
between the Interviews with collaborated at
World Bank and external counterparts the project level
IFC, if any during the field
mission to gauge
their opinion on the
World Bank and IFC
coordination and
collaboration
50
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
Cross-cutting lens
How effectively Content analysis As part of PRA
did the Bank of Bank Group within each
Group support analytics and theme, analysis
for PFM, external data and of portfolio
urbanization information to trends and
management, identify evolving portfolio
and inclusive climate change performance for
human capital issues and projects that had
development priorities within climate change
take into PFM, considerations
consideration urbanization
climate change management,
challenges? and inclusive
human capital
development.
Analysis of World
Bank program
documentation
to identify scope
of Bank Group
support (within
PFM,
urbanization
management and
inclusive human
capital
development)
toward climate
change issues
51
Portfolio Structured
Evaluation Content Stakeholder Review Partnerships Geospatial Contribution Administrative Expert Virtual
Questions Analysis Interviews Analysis Analysis Analysis Analysts Data Opinion Interviews
Review of
evaluative
documentation
of the Bank
Group portfolio
to determine
effectiveness
(and factors
affecting
effectiveness)
How effectively Review of As part of PRA
did the Bank evaluative within each
Group support documentation theme, analysis
for PFM, of the Bank of portfolio
urbanization Group portfolio trends and
management, to determine portfolio
and inclusive effectiveness performance for
human capital (and factors projects that had
development affecting inequality
take into effectiveness) reduction
consideration considerations
inequality
challenges?
Source:
Note: ASA = advisory services and analytics; CAT-DDO = catastrophe deferred drawdown option; CCDR = Country Climate and Development Report; CDD = community-driven
development; CERC = Contingent Emergency Response Component; CMU = Country Management Unit; EQ = evaluation question; HD = human development; IEG = Independent
Evaluation Group; IFC = International Finance Corporation; IIFP = Indonesia Infrastructure Finance ; PFM = public financial management; PRA = portfolio review analysis; TTL = task
team leader.
52
Deep Dive into the Four Evaluation Questions
Evaluation Question 1: Public Spending Adequacy Theme Portfolio
Portfolio Details
EQ1 will cover a lending portfolio of 16 operations over the evaluation period: 8 from
the macroeconomics, trade, and investment Global Practice, 7 from the Governance
Global Practice, and 1 from the Urban Resilience and Land Global Practice (including
support for improving the accountability and reporting of the central government’s
Specific Purpose Grants for basic infrastructure, consisting of roads, irrigation, water,
and sanitation, within selected local governments; figure A.1). The portfolio represents
US$5.7 billion of International Bank for Reconstruction and Development lending (along
with trust fund finance, particularly for projects within the governance practice).
Figure A.1. Lending Portfolio for Evaluation Question 1
Lending IBRD
Project Status Instrument
Project Id Project Legal Name Approval FY Global Practice Name Total
Name Type Name
Commitment $
P126162 Institutional, Tax Administration, Social and Investment 2013 Closed Governance DPF 300,000,000
(INSTANSI) DPL
P144775 Institutional, Tax Administration, Social and Investment 2014 Closed Governance DPF 400,000,000
(INSTANSI) DPL 2
P123940 AF to the Local Government and Decentralization Project 2015 Closed Urban, Resilience and IPF $ 500,000,000.00
/LGDP Phase II Land
P152551 Public Financial Management and Revenue Administration 2016 Closed Governance IPF -
Reform Program*
P154291 Indonesia Energy Sector DPL 2016 Closed MTI DPF 500,000,000
P156655 Indonesia Fiscal Reform DPL 2016 Closed MTI DPF 400,000,000
P157761 Indonesia EITI Post-Compliance - NR4D* 2016 Closed Governance IPF -
P158140 DPL to reform the Indonesian maritime logistics sector 2017 Closed MTI DPF 400,000,000
P159448 Strengthening Internal Audit* 2017 Closed Governance IPF -
P161475 Indonesia Fiscal Reform DPL 2 2018 Closed MTI DPF 300,000,000
P163973 Second DPL to reform the Indonesian maritime logistics 2018 Closed MTI DPF 300,000,000
sector
P167297 Indonesia Fiscal Reform DPL 3 2019 Closed MTI DPF 1,000,000,000
P172439 Indonesia Investment and Trade Reforms DPL 2021 Closed MTI DPF 800,000,000
P173429 The PFM MDTF III Support to Government of Indonesia* 2021 Active Governance IPF -
P175864 Indonesia EITI Transition and Mainstreaming Support* 2021 Active Governance IPF -
P177726 Indonesia Fiscal Reform Development Policy Loan 2022 Closed MTI DPF 750,000,000
5,650,000,000
Source:
Note: AF = additional financing; DPL = development policy loan; IBRD = International Bank for Reconstruction and
Development; IPF = investment policy financing; MTI = Macroeconomics, Trade, and Investment.
* Trust fund financed.
Evaluation Question 2: Urbanization Theme Portfolio and Sampling Strategies
Portfolio Details
EQ2 will cover the 10 unique projects listed in figure A.2 that have a total lending
commitment of US$2.1 billion and were approved during the evaluation period. There
are 3 closed projects with a total lending amount of US$932 million and 7 active projects
with a total lending amount of US$1.15 billion.
53
Figure A.2. Lending Portfolio for Evaluation Question 2
Project Id Project Legal Name Approval Project Global Lending Total Areas Supported Number of Number of Central/Local Implemeting
FY Status Practice Commitment $ Locations Cities (Kota) Agency
Road, water sanitation, solid waste, drainage, house Ministry of Public Works and
National Community Empowerment
P125405 2013 Closed URRL $ 266,000,000 improvements, capacity building for communities and local 20* 0 Housing, Kota and Kabupaten
Program In Urban Areas For 2012-2015
governments Governments
Road, water sanitation, solid waste, drainage, slum alleviation,
Ministry of Public Works and
P154782 National Slum Upgrading Project 2017 Closed URRL $ 216,500,000 house improvements, capacity building for communities and 113 40
Housing and Local Governments
local governments
Ministry of National
Development Planning, Ministry
Mortgage-Linked Down Payment Assistance and Home
P154948 National Affordable Housing Program 2017 Closed URRL $ 450,000,000 48 0 of Agrarian and Spatial Planning,
Improvement Assistance
Ministry of Public Works and
Housing
Ministry of Public Works and
P156125 National Urban Water Supply Project 2018 Active Water $ 100,000,000 Water supply and capacity building for local governments 212 70
Housing and Local Governments
Resilient construction of housing units and public facilities Ministry of Public Works and
Central Sulawesi Rehabilitation and
P169403 2019 Active URRL $ 150,000,000 with appropriate infrastructure connections and capacity 4 0 Housing and Central Sulawesi
Reconstruction Project
building for resilient building standards Department of Housing
Improvement of Solid Waste Solid waste management infrastructure, capacity building for
Ministry of Public Works and
P157245 Management to Support Regional and 2020 Active ENRB $ 100,000,000 local governments and communities on solid waste 19 0
Housing
Metropolitan Cities management,
National Disaster Management
Indonesia Disaster Resilience Initiatives Disaster preparedness and emergency management capacity,
P170874 2020 Active URRL $ 160,000,000 2 0 Authority (BNPB) and Local
Project Geophysical early warning services
Governments
Rapid bus transport system in two urban areas, institutional
P169548 Indonesia Mass Transit Project 2022 Active URRL $ 223,996,591 structures to manage mass transit at the national and sub- 12 0 Ministry of Transportation
national levels
Flood risk analyics and planning and flood risk management
initiatives that enhance urban resilience outcomes, Ministry of Public Works and
Indonesia: National Urban Flood environmental protection, climate adaptation (e.g., green Housing, Ministry of Home
P173671 2023 Active URRL $ 400,000,000 6 0
Resilience Project urban “corridors” and restoration of coastal mangroves and Affairs, Ministry of National
wetlands for flood protection), and climate mitigation (e.g., Development Planning
restoration of mangroves and floodplains for carbon
Capacit building on urban planning and capital investments to Ministry of National
Global Environment Facility Indonesia
P173446 2023 Active URRL $ 15,870,200 integrate biodiversity and/or climate-smart management 5 0 Development Planning/National
Sustainable Cities Impact Project
approaches Development Planning Agency
Total $ 2,082,366,791.00
*Geolocation name is provinsi, which translatse into province (administration level 1), whereas city (kota) is administration level 2.
Source: Independent Evaluation Group.
Note: ENRB = Environment, Natural Resources, and Blue Economy; URRL = Urban, Disaster Risk Management, Resilience,
and Land.
Sampling Strategies
Using project geolocations, given that the Bank Group projects are dispersed throughout
the country and not concentrated in specific cities, the evaluation team will select sample
of cities to conduct various evaluation methods (see figures A.3 and A.4).
1. Geospatial analysis. In addition to the broad geospatial analysis to understand the
relevance of the Bank Group portfolio, EQ2 will use geospatial analysis to assess the
effectiveness of slum upgrading projects, in terms of resilience. More specifically, the
geospatial analysis will aim to understand changes in slum extent and morphology,
assess improvements in livability within upgraded areas, and evaluate the resilience to
flooding. Four cities will be selected by using the following criteria:
• Excluding Jakarta and Surabaya (the two largest cities), tier 1 cities with
populations exceeding 1 million, and tier 2 cities with populations over 500,000
that exhibit the highest population growth rates
• The concentration of Bank Group projects
Based on these criteria, two tier 1 cities and two tier 2 cities will be selected for the
geospatial analysis for the World Bank–supported National Slum Upgrading Project.
54
2. Structured virtual interviews. Twenty subnational governments from closed and
advanced active projects will be selected to conduct short interviews from cities that
have not been visited or covered by other evaluation methods. Other criteria will
include high population growth and availability of online access for the interview.
55
Figure A.3. World Bank Indonesia Urban Portfolio Project Locations
Source: Independent Evaluation Group and World Bank project data.
56
Figure A.4. IFC Indonesia Urban Portfolio Project Locations
57
Source: Independent Evaluation Group and International Finance Corporation portal.
58
Evaluation Question 3: Inclusive Human Capital Theme Portfolio
Portfolio Details
EQ3 will cover the 14 unique projects listed in figure A.5, which have a total lending
commitment of US$3.8 billion and were approved during the evaluation period. There
are two closed projects.
Figure A.5. Lending Portfolio for Evaluation Question 2
Source: Independent Evaluation Group.
Note: DPF = development policy financing; IPF = investment policy financing; PforR = Program-for-Results.
Evaluation Question 4: Financial Sector Portfolio
Portfolio Details
EQ4 will examine the support provided to the financial sector through World Bank
lending operations (5 development policy operations and 4 investment project
59
financing) totaling US$3.4 billion, and 3 programmatic advisory services, grouping over
20 analytical activities with a total approximate value of US$20 million, which includes
the activities supported under the Indonesia Financial Sector Technical Assistance
Programmatic Advisory Services and Analytics originated in 2017 (figures A.6 and A.7).
IFC’s financial sector portfolio includes 29 investment projects amounting to
US$2.3 billion and 14 advisory services projects (figures A.8 and A.9).
60
Figure A.6. World Bank Lending Portfolio for Evaluation Question 4
Source: Independent Evaluation Group.
Note: DPF = development policy financing; IPF = investment policy financing.
Figure A.7. World Bank ASA Portfolio for Evaluation Question 4
Source: Independent Evaluation Group.
Note: MSME = micro, small, and medium enterprise; TA = technical assistance.
61
Figure A.8. IFC Investment Portfolio for Evaluation Question 4
Source: Independent Evaluation Group.
62
Figure A.9. IFC ASA Portfolio for Evaluation Question 4
Source: Independent Evaluation Group.
Note: AS = advisory services; ASA = advisory services and analytics; ESG = environmental, social, and governance; IFC =
International Finance Corporation.
63
World Bank Group Portfolio
The evaluation team conducted a preliminary identification and classification of the
World Bank Group portfolio in Indonesia spanning 10 years: FY 2013–23. The Country
Program Evaluation portfolio review highlights the Bank Group’s engagements in the
country based on activities that were approved between FY13 (that is, after July 1, 2012)
and FY24 (that is, before June 30, 2024). Portfolio identification is based on the data
extracted from the World Bank’s standard reports database (World Bank advisory
services and analytics), and the management information system and advisory services
databases of International Finance Corporation (IFC; investment and advisory projects).
For World Bank advisory services and analytics, only activities that were approved and
completed during the evaluation period were included. Multilateral Investment
Guarantee Agency approved two guarantees in Indonesia during this period.
World Bank
Lending
During the evaluation period (FY13–23), the World Bank approved 108 financing
operations for Indonesia; of these, 12 were additional financing, with a total
commitment of US$21 billion. The World Bank had the highest commitment volume,
US$8.9 billion, during the second Country Partnership Framework period covering
FY16–20 (table B.1). Over one-third of the portfolio was investment project financing
totaling US$8 billion. The portfolio was primarily focused on public administration,
which accounted for 48 projects; of these, 10 were development policy financing with a
total commitment of US$5.8 billion, followed by 21 projects in health for US$2.7 billion
and 20 projects in energy and extractives for US$2.5 billion (figure B.3). Throughout the
Country Program Evaluation period, public administration was the largest sector
(figure B.4).
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Table B.1. Approved Lending and Nonlending Projects by Financing Instruments, FY13–
23
CPS FY13–15 CPF FY16–20 CPF FY21–25 Total
Commt. Commt. Commt. Commit.
Projects (US$, Projects (US$, Projects (US$, Projects (US$,
Financing Instrument (no.) millions) (no.) millions) (no.) millions) (no.) millions)
DPF 6 1,700 8 3,500 5 3,300 19 8,500
IPF 11 2,105 20 3,426 9 2,470 40 8,001
Program-for-Results — — 6 1,900 5 2,300 11 4,200
Trust funds 16 241 10 92 12 147 38 479
World Bank ASA a
131 79 135 173 32 41 298 293
IFC investment 3 308 19 1,787 17 1,048 39 3,143
IFC advisory 11 20 9 9 7 1 27 31
MIGA 1 200 — — 1 517 2 717
Source: Independent Evaluation Group, Datahub, September 29, 2023.
Note: — = not available; ASA = analytical and advisory services; commt. = commitment; CPF = Country Partnership
Framework; CPS = Country Partnership Strategy; DPF = development policy financing; IFC = International Finance
Corporation; IPF = investment project financing; MIGA = Multilateral Investment Guarantee Agency.
a. Number of ASA approved based on the activity initiation sign-off fiscal year. Thus, ongoing ASA were included in this
table.
Figure B.1. Approved Lending Projects, FY13–23
18 3,500
16 3,000
Total commitment
14
(US$, millions)
2,500
Projects (no.)
12
10 2,000
8 1,500
6
1,000
4
2 500
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Approval fiscal year
Projects (no.) Total commitment (US$, millions)
Source: Independent Evaluation Group. Datahub, September 29, 2023.
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Figure B.2. Approved Lending Projects by Lending Instrument Type, FY13–23
18
16
14
12
Projects (no.)
10 PforR
8 IPF
6
DPF
4
2
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Approval fiscal year
Source: Independent Evaluation Group. Datahub, September 29, 2023.
Note: DPF = development policy financing; IPF = investment policy financing; PforR = Project-for-Results.
Figure B.3. Approved Projects by Sector, FY13–23
7,000 60
Commitment (US$, millions)
6,000 50
5,000
40
Projects (no.)
4,000
30
3,000
20
2,000
1,000 10
0 0
Sector
Commitment Projects
Source: Independent Evaluation Group. Datahub, September 29, 2023.
Note: Sanit = Sanitation; Ser = Services.
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Figure B.4. Approved Projects by Sector During World Bank Group Strategic Periods,
FY13–25
100
Information and
90 communication
Industry and
trade or services
80 Agriculture
70 Water, sanitation,
Share of total lending (%)
and waste
60 Education
50 Health
40 Transportation
30 Social protection
Energy and
20
extractives
Financial sector
10
Public
0 administration
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank strategic period
Source: Independent Evaluation Group. Datahub, September 29, 2023.
Note: CPF = Country Partnership Framework; CPS = Country Partnership Strategy; Sanit = Sanitation; Ser = Services.
Trust Fund Projects
Over the evaluation period, 38 projects were financed by trust funds with a total
commitment of US$479 million. All but one project financed by trust funds were for
investment project financing; the other was for a Program-for-Results (an additional
financing for Investing in Nutrition and Early Years Project, approved in FY23;
figure B.5).
67
Figure B.5. Evolution of World Bank Financing from Trust Funds, Indonesia, FY13–23
3,500
P4R (trust fund)
3,000
2,500
IPF (trust fund)
2,000
Financing (US$, millions)
P4R (IBRD/IDA)
1,500
1,000 IPF (IBRD/IDA)
500
DPO
0 (IBRD/IDA)
Fiscal year of approval
Source: World Bank and Independent Evaluation Group databases.
Note: DPO = development policy operations; IBRD = International Bank for Reconstruction and Development; IDA =
International Development Association; IPF = investment project financing; PforR = Program-for-Results.
Advisory Services and Analytics
The World Bank delivered 268 advisory services and analytics (ASA) over the evaluation
period, with the majority (161 ASA) delivered during the Country Partnership
Framework FY16–20 period. The World Bank significantly increased the number of ASA
after 2014. Throughout the evaluation period, ASA were primarily focused on the public
administration sector, followed by the financial and social protection sectors (figure B.7).
68
Figure B.6. World Bank Advisory Services and Analytics by Sector, Indonesia, FY13–23
45 60
Total costs (US$, millions)
40
50
35
30 40
ASA (no.)
25
30
20
15 20
10
10
5
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Fiscal year delivered
ASA Total costs
Source: Independent Evaluation Group. Datahub, September 29, 2023.
Note: ASA = advisory services and analytics.
Figure B.7. World Bank Advisory Services and Analytics by Major Sector, Indonesia,
FY13–23
a. Fiscal years 2013–15 (total 49)
Water, sanitation,
and waste, 1 Agriculture, 4
Transportation, 4
Education, 6
Social protection,
2
Energy and
extractives, 2
Financial sector,
11
Public
administration, 26
Health, 3
Industry and trade
Information and or services, 3
communication, 8
69
b. Fiscal years 2016–20 (total 161)
Water, sanitation,
and waste, 9 Agriculture, 6
Transportation, 9 Education, 13
Energy and
extractives, 4
Social protection,
15
Financial sector,
26
Health, 7
Public Industry and
administration, 58 trade or services,
Information and 11
communication, 3
c. Fiscal years 2021–25 (total 58)
Water, sanitation, Agriculture, 3
and waste, 2 Other*, 2
Transportation, 2 Education, 4
Energy and
extractives, 3
Social protection,
9 Financial sector, 5
Health, 2
Industry and trade
or services, 3
Public
Information and
administration, 20
communication, 3
Source:
Note:. ASA = advisory services and analytics; Sanit = Sanitation; Ser = Services.
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Evaluated Projects
A total of 22 projects that were approved and closed during the evaluation period were
evaluated by the Independent Evaluation Group. Of these, 14 were investment project
financing, 7 were development policy operations (including programmatic series), and 1
was Program-for-Results. The majority of the projects (12) had an overall outcome rating
of moderately satisfactory, and 6 projects were rated satisfactory or higher (figure B.8).
The outcome of the projects remained above moderately satisfactory or higher after the
first Country Partnership Strategy (FY13–15; figure B.9).
71
Figure B.8. Independent Evaluation Group Outcome Ratings, FY13–23
14
12
10
8
Projects (no.)
6
4
2
0
Highly Satisfactory Moderately Moderately Unsatisfactory Highly
satisfactory satisfactory unsatisfactory unsatisfactory
IEG outcome rating
Source: Independent Evaluation Group. Datahub, August 12, 2024.
Note: Approved projects during FY13–23 that received Independent Evaluation Group outcome rating (n = 22).
Figure B.9. Independent Evaluation Group Outcome Rating by Approval Fiscal Year,
FY13–23
10
8 2
Highly Satisfactory
6
Projects (no.)
Satisfactory
5 1 1 Moderately Satisfactory
4
1 1 Moderately Unsatisfactory
2 2 Unsatisfactory
1 3
2 Highly Unsatisfactory
1 1 1
0
2013 2014 2016 2017 2021
Approval fiscal year
Source: Independent Evaluation Group. Datahub, August 12, 2024.
International Finance Corporation
Investment approvals of the IFC remained consistent across the three strategic periods
assessed in this Country Program Evaluation, with an average of US$317 million in new
72
net commitments per fiscal year. Throughout the evaluation period, IFC’s total net
commitments amounted to US$3.66 billion. The composition of investment volume was
predominantly loans (89 percent), followed by equity investments (8 percent), and
guarantees (3 percent), as depicted in figure B.10. The finance and insurance sector
received most of the support from IFC investments, accounting for 64 percent, while the
industry and services sector benefited from 21 percent of the investments. Notably, the
construction and real estate sector saw a steady increase in new investments during the
past two strategic periods, culminating in 6 percent of the total investment commitments
by FY24, as illustrated in figure B.11.
Figure B.10. Evolution of International Finance Corporation Investments by Product,
FY13–15, FY16–20, FY21–25
1,400
1,200
Commitment (US$, millions)
1,000
800 GT+RM
Equity
600
Loans
400
Annual average
200
0
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group strategic period
Source: International Finance Corporation iPortal, July 2024; Independent Evaluation Group staff calculation.
Note: Loans: includes loan-type, quasi-loan products. Equity: includes equity-type, quasi-equity products. CPF = Country
Partnership Framework; CPS = Country Partnership Strategy; GT+RM = guarantees and risk management products.
73
Figure B.11. Evolution of International Finance Corporation Investments by Sector,
FY13–25
1,400,000
Utilities
Investment (US$, millions)
1,200,000
Transportation
1,000,000
Industry and
800,000 services
Finance and
600,000 insurance
Energy
400,000
Energy
200,000
Education
0
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group strategic period
Source: International Finance Corporation iPortal, July 2024; Independent Evaluation Group staff calculation.
Note: CPF = Country Partnership Framework; CPS = Country Partnership Strategy.
The IFC advisory services portfolio experienced a slight increase in the number of
projects over the three strategic periods under review. However, there was a significant
shift in portfolio distribution. While initially concentrated on the finance and industry
sectors, the projects’ focus expanded to include a more diverse array of activities. These
activities extended support to the health and transportation sectors, while others aimed
to enhance the business-enabling environment across the economy, as illustrated in
figure B.12.
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Figure B.12. Evolution of International Finance Corporation Advisory Services by
Sector, FY13–25
16
Utilities
14
Transportation
12
Industry and services
10
Health
8
Projects (no.)
Finance and insurance
6
Energy
4
Construction and real
2 estate
BEE
0
CPS FY13–15 CPF FY16–20 CPF FY21–25
World Bank Group strategic period
Source: International Finance Corporation iPortal, July 2024; Independent Evaluation Group staff calculation.
Note: BEE = Business-Enabling Environment (economy wide); CPF = Country Partnership Framework; CPS = Country
Partnership Strategy.
Multilateral Investment Guarantee Agency issued US$717 million in guarantees for the
PT Rajamandala and PT Perusahaan Listrik Negara Electric Power projects during the
evaluation period. The agency’s gross exposure in Indonesia saw an increase of
US$200 million in 2015, followed by a further rise of US$517 million in 2021.
75