Indonesia: Boosting Productivity through Human Capital Development Program-Subprogram 2

approved

This proposed Program will provide a policy-based loan under the COVID-19 Crisis Recovery Facility of the Bank and will be co-financed with the Asian Development Bank (ADB). The government's Vision of Indonesia 2045 and National Medium-Term Development Plan (RPJMN) 2020-2024 focus on human capital development as a critical driver of long-run economic growth, which underpins the transition to an upper middle-income country. The RPJMN is complemented by the National Strategy to Accelerate Stunting Prevention, 2017-2021, which aims to prevent child stunting caused by malnutrition in as many as 2 million children. The proposed program is centered on the RPJMN's human capital development strategy, incorporating reforms in educational attainment, skill development, and social protection and public health systems improvement. The proposed Program will support three reform areas: (i) Reform Area 1 - Strengthened policies to finance and monitor the implementation of the Sustainable Development Goals (SDGs). This reform area focuses on the overall monitoring and implementation of SDGs, including at the local level, as well as health program financing (budget allocation and fiscal transfers) to meet SDG targets such as universal health coverage; (ii) Reform Area 2 - Improved educational attainment and skills development. This reform area focuses on educational and skills development outcomes; and (iii) Reform Area 3 - Enhanced social protection and public health systems. This reform area aims to improve human capital development through interventions in social protection and health.