Indonesia municipal finance and shelter program : second year assessment

External evaluation covers the period 8/88-7/90. Although the program has been delayed in some areas, overall performance has been adequate over the past year. The GOI has: (1) completed studies on expanding private urban services and begun a number of private-public partnership ventures; (2) strengthened the property tax and improved the administration of local taxes and service charges; and (3) completed a number of new, integrated local investment programs. the program remains high, and a sense of urgency has persisted in all program components. On the negative side, progress in establishing a lending facility to support local government borrowing has been slow, and the overall volume of work accomplished during the past year has been below that of prior years. This seems largely due to a temporary reduction in donor assistance. Capital funds from previous agreements ran low and promised TA teams were being recruited but had not begun work. However, substantial resource increases appear certain for 1990-91, as TA teams are being mobilized and major new World Bank lending programs get underway. The proposed policy action plan for 1990-94 calls for actions to solidify accomplishments under the current plan and adds important new objectives, e.g., the full integration of the program into the regular local government budgeting processes, the expansion of cost recovery goals to other sectors besides water supply, the design of improved methods for pricing local services, and the establishment of a loan-grant linkage mechanism. In sum, the GOI's program for decentralized urban development is one of the most innovative, forceful, and pragmatic in the developing world, and there is every indication that the GOI remains seriously committed to its implementation.