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INDONESIA: Strengthening Subnational Fiscal Capacity for Infrastructure Financing

Provide technical assistance for strengthening municipal fiscal capacity in Indonesia to support the financing of infrastructure development. The activity aims to improve sub national governments (SNGs) awareness of alternative sources of infrastructure financing and improve SNGs access to capital markets through issuance of municipal bonds. The activity is built on the previous PPIAF-SNTA assistance for “Indonesia: Support for Financial and Credit Rating Assessment for SNGs” closed in 2012 “Strengthening Sub-national Fiscal Capacity for Infrastructure Financing”.

This activity supports the Governmnet of Indonesia, both central and local government levels, on the preparation of municipal bonds. Capacity building were provided to central and selected local governments (Yogyakarta, Balikpapan, East Kalimantan, and Semarang) on bonds instruments, fiscal and debt management, and DMU training for East Kalimantan. Policy notes on guidance towards municipal bonds and international experiences on bonds issuance as well as regulatory frameworks were part of this activity, where the team hired international consultants who have extensive experience on the bonds market. Regular communications among stakeholders were also held to discuss unresolved issues.

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