The World Bank’s Board of Executive Directors today, May 10, approved USD 200 million in financing to support the Indonesian Government’s social assistance program expansion, as stated in the press release received by Tempo, Wednesday, May 10.
The financing supports the expansion of the government’s conditional cash transfers under the Program Keluarga Harapan (PKH or Family Hope Program), the strengthening of the program’s delivery system, and improved coordination with complementary social programs.
Due to PKH’s high impact, the government decided to scale up its coverage from 3.5 million families in 2015 to 10 million, or 15 percent of the population, by the end of 2020.
World Bank Country Director for Indonesia Rodrigo A. Chaves says the PKH expansion to 10 million households is expected to help achieve government targets of accelerated poverty and inequality reduction.
“By expanding social assistance, Indonesia is taking a step forward to further reduce poverty and inequality; not just in the near term, but also to improve the future of children from poor families through better education and health services,” said Chaves.
Among Indonesia’s social assistance programs, the PKH, implemented by the Ministry of Social Affairs, has the highest impact per dollar spent in terms of poverty and inequality reduction but has the lowest budget allocation. With the expansion, the government takes a welcome step in ensuring that its most effective social assistance program is scaled up for maximum impacts for the poor and vulnerable.
“With the expansion, all provinces in Indonesia are now covered. PKH will become the second largest conditional cash transfer in the world, only behind Brazil, from over 70 countries implementing such programs,” said World Bank Senior Economist Pablo Ariel Acosta.
Based on their analysis and projections, the World Bank expects that PKH will achieve a similarly strong performance in poverty and inequality reduction as the other large programs of its kind.
The US$200 million financing will support the government’s budget allocation of US$5.5 billion, over the next five years, to improve the capacity and systems to deliver the expansion of PKH.
The World Bank’s support for Indonesia’s social assistance program is a key component of the World Bank Group’s Country Partnership Program Framework for Indonesia, which focuses on government priorities that have a transformational impact. Integration of family-based social assistance through conditional cash transfers is a key strategy of Indonesia’s mid-term development plan.