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.