WB approves financial support for social assistance program

The World Banks Board of Executive Directors approved a US$200-million (Rp2.6 trillion) financing to support the expansion of Indonesias social assistance program, notably the Family Hope Program (PKH), managed by the Ministry of Social Affairs.

Rodrigo Chaves, World Bank Country Director for Indonesia, in his statement received in Jakarta, Wednesday, explained the funding was for expansion of the government conditional cash assistance through PKH, strengthening the system for program implementation, and coordination with other social assistance programs.

"By extending social assistance, Indonesia is taking steps to reduce poverty and inequality, not only in the future, but also to improve the future of children from poor families through improved education and health services," he said.

Previously, due to the high impact of PKH, the government decided to increase the programs reach from 3.5 million families in 2015 to 10 million, or 15 percent of the total population, by the end of 2020.

"The extension of PKH to 10 million households is expected to help achieve the governments target of accelerating the decline of poverty and inequality," Chaves remarked.

To date, among other social programs, PKH has the highest impact for any funds spent in reducing poverty and inequality, despite having the smallest budget allocation.

With the expansion of the program, the government took the first step to ensure that the most effective social assistance programs have been upgraded, to have the maximum impact on the poor and the vulnerable.

Pablo Ariel Acosta, World Bank Senior Economist, noted that through the expansion of the program, all provinces in Indonesia would be served immediately. Additionally, PKH would become the second largest conditional cash assistance program in the world, the first being the one in Brazil.

"Based on our analysis and projections, we expect PKH to perform well in poverty and inequality reduction like other major programs," said Acosta.

Further expansion of the programs coverage will be complemented by better targeting, especially among vulnerable populations falling below the poverty line due to various shocks, and by focusing on the disadvantaged and remote areas with high indigenous people.

PKH also has an impact on improving the utilization of health and nutrition services, as well as reducing stunting of children by three percentage points, an important milestone for a country with very high levels of malnutrition.

"One-third, or nearly nine million, children under five in Indonesia are stunted, and PKH expansion has the potential to play a greater role in combating malnutrition in Indonesia," explained Changqig Sun, World Bank Senior Economist.

The $200 million financing will support the $5.5 billion government budget allocation for the next five years to improve capacity and systems to expand PKH.

The World Bank Groups support for Indonesias social assistance program is an important component of the World Bank Country Partnership Framework for Indonesia, which focuses on government priorities to effect major changes.

The integration of family-based social assistance through conditional cash transfers is one of the key strategies in Indonesias medium-term development plan.

Through cooperation with strategic development partners such as the Australian Governments Ministry of Foreign Affairs and Trade (DFAT), the World Bank will continue to provide financing and technical assistance to the Ministry of Social Affairs.

On a separate occasion, Bambang Brodjonegoro, Minister of National Development Planning and Head of Bappenas, submitted the verification of the data collected by the Government of Indonesia National Team for Accelerating Poverty Reduction (TNP2K), so that the implementation of social assistance program is more effective and targeted.

"The Ministry of Social Affairs has the task of verifying, because there is the possibility that there are mistakes in the data collected, especially the data on poor, because the change is dynamic," he affirmed.

The governments primary focus is to reduce the inequality gap and improve the lives of 40 percent of the lower community by providing them with social assistance, so that their welfare can increase and can be close to that of the 40 percent middle class and the 20 percent high class.

"I think the level of the lowest 40 percent segment should be raised, to bring them closer to the middle class, to reduce absolute poverty," Bambang stressed.

Currently, the target number of houses is registered at six million, he revealed. The lowest 40 percent households are about 25 million; thus, the verification of data is important so that social assistance is not abused, he added.(*)