Source: The World Bank 
Date: 22 June 2020

The Indonesia Public Expenditure Review (PER) aims to support the Government of Indonesia in identifying key constraints to efficient and effective public spending and offer ways to improve the spending quality to achieve Indonesia's development objectives. The report is divided into three parts.

  • Part 1: Aggregate level of Indonesia's public finances and the institutional environment, providing the instruments to improve the quality of spending
  • Part 2: Spending on human capital
  • Part 3: Spending on infrastructure.


Overview

  • Indonesia's development trajectory has been remarkable over the past 20 years, supported by macroeconomic stability and prudent fiscal management.
  • However, Indonesia still faces large human capital and infrastructure gaps that impede its competitiveness, and its ability to create jobs and reduce poverty in the medium term. The ongoing COVID-19 pandemic in 2020 is putting these gains at risk and making closing these gaps more difficult with lower fiscal space.
  • Indonesia needs to urgently increase fiscal space and the overall resource envelope, by enhancing domestic revenue mobilization (particularly tax collections), reallocating poorly and regressive subsidy spending, and mobilizing infrastructure financing from the private sector; and improving the efficiency and effectiveness of public expenditure across (systemic constraints) and within sectors to maximize its impact on development outcomes.