Final report : evaluation of partnership for economic growth (PEG) contract

Interim evaluation covers the period 10/98-3/02, against a PACED of 10/02. An extension of the project to 6/03 is under discussion. PEG provides TA to various Indonesian ministries and agencies, namely, National Development Planning Agency (BAPPENAS), the Office of the Coordinating Minister for Economic Affairs (EKUIN), the Ministry of Finance (MOF), the Ministry of Industry and Trade (MOIT), and Bank of Indonesia (BOI). In addition, PEG implements a partnership grant program that encourages the development of long-term linkages between U.S. institutions and counterpart groups within Indonesia. In spite of the trying conditions in Indonesia over the past few years, the PEG project has admirably achieved its objectives. The PEG team, which includes TA advisors, Government of Indonesia (GOI) counterparts, and USAID personnel, should be commended for its professionalism and dedication. Undeniably, PEG's support of five GOI ministries has contributed appreciably to the GOI embarking upon stronger economic policies and its willingness to implement practices associated with increased openness. Indeed, PEG's collaboration with BAPPENAS on fiscal sustainability, investment, and labor issues has contributed to a more refined macroeconomic framework, a better investment climate, and an acute awareness of the need to balance employment growth with other pressing social demands. Similarly, PEG's recent assistance to EKUIN and the MOF was instrumental in conveying to the GOI the importance of freezing terrorist assets and adopting tough money-laundering legislation. By the same token, PEG's cooperation with MOIT promotes Indonesia's competitiveness by building the ministry's capacity to advance market access, foster regional trade arrangements, and reduce internal and external trade barriers. Finally, PEG's help on small business development for the BOI through assistance in regulatory and financial services as well as earlier project support to improve analytical proficiency in macroeconomic modeling, inflation analysis and forecasting, and exchange rate analysis resulted in more effective institutional capacity. On the down side is the deficient quality of the contractor's required annual reports and annual workplans. In some cases, this documentation was not prepared. No workplan has been produced to cover project activities from January 2001 forward, nor has an annual report been completed for the past year. In other cases, the reports lacked analysis, recommendations, and cohesion against the project objectives and resource allocation. Moreover, except for the 1999 report, annual reports were predominantly compiled from individual team member reports and did not include a comprehensive review of the PEG project, indicate whether the project was collectively meeting its objectives, or provide historic and prospective financial appraisal of the use of available project resources. The absence of quality annual reports does a disservice to the PEG team, since these reports are the ones that external reviewers and the public at large first consult to determine whether a project has met the wide-ranging and complex objectives mandated under the terms of its contract. Recommendations to remedy the project's deficiencies are made. (Author abstract, modified)