Indonesia municipal finance and shelter program : third year assessment

The evaluation covers the period 8/90-7/91. The GOI has made substantial progress under all components of its shelter program and is clearly committed to its objectives. Highlights include: continued progress in decentralized investment programming and local revenue generation, laying the groundwork for expanded private sector participation, adopting precedents to improve the structure of municipal borrowing and central grant allocations, beginning civil service reforms that promise to enhance local government capacity, making a serious commitment to upgrading the status of some local governments, strengthening systems for overall program monitoring and control, and clarifying responsibility for program coordination at the central level. Progress has been slower than promised in: (1) providing a viable nationwide system of loan finance for local governments, including the full institutionalization of a regional development account; (2) bringing a larger share of grants for regional and local development under the discretion of local officials; (3) expediting improvements in local institutional capacity and enhancing the role of local officials in the investment programming process; and (4) updating the plan's targets for future achievements. Also, special emphasis should be given to assure that local governments honor their debt service obligations. A.I.D. support has become increasingly important to the GOI program. TA has expanded in key policy areas that have not been addressed by other donors, and housing guaranty loan funds have become vital to the investment program, as the level of capital support from other donors has declined. (author abstract, modified)