Part 2 of 2 What Millennium Development Compact means

Part 2 of 2 What Millennium Development Compact means

Romeo Austria Reyes, Program Development Advisor UNDP Indonesia,
Jakarta

The issue of debt relief is most critical for the Sub-Saharan
African countries, where currently the amount of money spent on
foreign debt servicing is estimated at twice the amount spent on
basic social services. Debt relief is pursued mainly through the
Heavily Indebted Poor Countries (HPIC) Initiative.

Based on certain eligibility criteria, including preparation
of a Poverty Strategy Reduction Paper (PRSP), good reform
performance and debt service as a proportion of exports, debt
relief is provided initially through reduction of interest
payments (decision point) and later through reduction of the debt
stock itself (completion point).

Seven years after its launch, the HIPC results are mixed.
Whilst it is true that the debt burden has decreased for most
HIPC countries, non-HIPC countries saw their debt burden fall by
a similar magnitude as HIPC countries did. The 16 HIPC members
that did not reach "decision point" saw their debt decline by a
similar degree as the seven HIPC countries that reached
"completion point".

In summary, progress in aid, trade and debt relief, has been
very little, if any, casting doubt on the feasibility of
realizing the MDGs and the sincerity of the rich countries to
accept and fulfill their responsibility in the proposed
Millennium Development Compact.

Let us now turn to Indonesia's record toward realizing the
MDGs. HDR 2003 reported that Indonesia generally made good
progress toward realizing the MDGs based on key indicators such
as GDP per capita, gender equality, child mortality and access to
water and sanitation. It partly confirmed the projection made by
the first Indonesia HDR published in 2001 that based on 1993-1999
trends Indonesia would attain the MDG targets on poverty
reduction, gender equality, child mortality and maternal
mortality before 2015. Based on the two reports, Indonesia
appears to be generally on track at the national level.

The challenge for Indonesia is at the sub-national level.
Based on the analysis of trends in poverty incidence and other
indicators at the provincial level, many provinces were found not
to be on track and will likely reach the MDG targets way beyond
2015. With reference to poverty reduction, the projection is that
it would be reached by 2008 at the national level.

A number of provinces are on track to attain the targets by
2015, with Yogyakarta projected to attain it even earlier in
2004, East Java, Jambi and East Kalimantan in 2006, and Central
Sulawesi in 2008. However, the majority will not attain it by
2015. For North Sumatra, Aceh and West Nusa Tenggara, it will be
attained only in the next century, unless the 1993-1999 trend is
drastically altered. A number of provinces will similarly be left
behind and will not realize the goals by 2015.

What then can and should Indonesia do to make the trends
toward realizing the MDGs less uneven among its provinces so that
human development becomes more inclusive consistent with the
principle that it is a fundamental human right. And what can and
should the foreign assistance community do to help?

Preparation is now underway for the first Indonesia MDG Report
(MDGR). Government Inter-Agency Working Groups are now collecting
and analyzing information at the provincial level, and even at
the regency level, on the extent to which the MDG targets have
been achieved. Apart from serving as a monitoring tool, the
report, which will be available by October 2003, could serve as
an effective advocacy tool.

Indonesians could use the report as a basis for holding their
government accountable to the goals and the quantitative targets
that it committed itself to at the Millennium Summit. Candidates
running in the 2004 elections could even consider realization of
the MDGs as an election platform.

Preparation is also underway for the Second Indonesia Human
Development Report. As the thematic focus of the report is
financing human development, it will in effect be looking at
issues relating to financing of the MDGs. With information from
the MDGR regarding progress achieved thus far and new projection
of the time path toward realizing the targets, the second
Indonesia HDR could analyze the cost implications of the MDGs and
make a projection and analysis of the magnitude of financial
resources that would be required to fully realize them, including
those to be mobilized from external sources.

The Indonesian MDG Report and Human Development Report could
be used as critical inputs for building a national consensus and
forging a National Millennium Development Compact. The compact
should be between the center and the regions as well as among the
regions, taking full account of the decentralization policy and
the special regional autonomy laws for certain provinces that
have been adopted in the context of the Unitary State of
Indonesia (NKRI). The compact could specify the targets for each
of the seven goals for each province, with a corresponding
resource framework and how the resources are to be raised.

Once a national consensus has been formed, it can be embodied
in a National Millennium Development Compact, specifying the MDG
targets at sub-national levels, as well as the strategies and the
amount of resources for realizing them, including those to be
mobilized from external sources.

An Indonesian Social Summit could then be convened to
officially launch it. At the launch, the foreign assistance
community could indicate the nature, amount and terms of
assistance that might be provided to help Indonesia realize the
MDGs, in line with Goal 8.

The compact should then be reflected in any National Poverty
Reduction Strategy that Indonesia may eventually adopt to enable
it to access development credits with concessional terms, and
inputted to the formulation and implementation of national and
regional development plans.