RI gets $225m in ADB loans for audit sector reform
The Jakarta Post, Jakarta
The Asian Development Bank (ADB) has approved two loans totaling US$225 to help improve efficiency, accountability and transparency in the management of the state finances.
The ADB said in a statement on Tuesday that the project comprised a $200 million program loan and a $25 million investment loan for a mixture of policy and capacity-building initiatives to develop an audit sector that operated to internationally accepted standards.
"An effective state audit function is key to an effective and well-functioning accountability framework for parliament, the executive, the judiciary, and civil society," Farzana Ahmed, an ADB Financial Management Specialist and team leader for the project, said in a statement.
"Through improved financial management, scarce government resources will be better used and more effectively deployed than before. It will also foster public-private partnerships and boost investor confidence, benefiting Indonesia's economy in general."
The legal, policy, and institutional frameworks for Indonesia's public sector audit system have not significantly evolved to promote transparency and accountability since they were established in the early 1940s, according to the Bank.
The program loan will work on strengthening the legal and regulatory framework for public sector audits.
It will initiate a realignment of national auditing resources, which have not always been used in line with policy and legal mandates, to enable audit institutions to fulfill their mandates.
It will also improve the currently deficient parliamentary oversight on public audit institutions, and provide strategies to increase the low public awareness of the benefits of audits.
The audit sector's capacity has also been weak, the Bank said, adding that decentralization has necessitated the strengthening of local audit institutions.
The investment loan will be used to enhance the capability of the audit institutions.
Two technical assistance (TA) grants totaling $5 million, provided by the government of the Netherlands, accompany the two loans. A $1.3 million TA grant will ensure that the project objectives are achieved, and a $3.7 million TA grant will enhance project monitoring and quality assurance reviews of investment loan activities.
Local governments will contribute $4.2 million and the Central Government $8.5 million toward the project cost.
The Ministry of Finance is the executing agency for the program loan, with the project due for completion in June 2007. The National Development Planning Agency (Bappenas) is the executing agency for the investment component, due for completion in December 2009.