Indonesia Fiscal Reform DPL 3

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The development objective of Third Indonesia Fiscal Reform Development Policy Loan Project is to support fiscal sector reforms that will assist the government of Indonesia (GOI) in achieving its medium‐term economic development and poverty reduction goals. While Indonesia has a sound macroeconomic framework, a slew of natural disasters in the second half of 2018 created an unanticipated financing requirement for the government. The government has remained committed to the implementation of the actions supported by the proposed operation in a challenging political environment and has a strong track record of effective implementation of fiscal reforms. The operation endorses Indonesia’s continued sound macroeconomic management in the context of global financial volatility in 2018 and elections in 2018 and 2019. The operation is aligned with Indonesia’s 2015 systematic country diagnostic. This DPL series is also aligned with the FY 16‐20 country partnership framework (CPF) for Indonesia. Increasing the quality of spending remains a priority to achieve the government’s medium-term development goals, despite recent progress. Reforms to collecting more revenue are also crucial to increase potential growth and provide basic services for all. Finally, improved resilience to natural disasters and climate change is critical for achieving Indonesia’s development goals. The ongoing Fiscal DPL series supports the government’s overall objective to collect more fiscal revenue and improve the quality of spending by supporting institutional and policy reforms being undertaken by the government. The ongoing DPL series is structured around the following three pillars and set of objectives as follows: Pillar A - Improving Quality of Spending; Pillar B - Strengthening Revenue Administration; and Pillar C - Enhancing Tax Policy.