Public Expenditure Support Facility (DPL-DDO)

closed

The Indonesia Public Expenditure Support Facility (PESF), in the form of a USD 2 billion single tranche Development Policy Loan (DPL) with a Deferred Drawdown Option (DDO), comes at a critical time for Indonesia, and is designed to support Indonesia's key development efforts at this time of need. Like many other developing economies, Indonesia has had to cope with the immediate ripple effects of the turmoil and crisis of confidence that has disrupted the global financial system in the last few months, while at the same time preparing for an anticipated growth slowdown and continued tight liquidity in 2009. The government has responded proactively to the rapidly evolving situation and the Bank and other partners have assisted in and continue to support these efforts. The PESF represents an opportunity to provide enhanced support to an important client with a sustained record of prudent macroeconomic management and fiscal discipline at a time of increased stresses in global financial markets. The government has clearly indicated that it feels that the Bank's engagement on the policy dialogue is critical, both in terms of the substantive support provided as well as in terms of the signal it sends to the market and to Indonesia's bilateral and multilateral partners. At the same time, by helping Indonesia to meet its gross financing needs in the event that liquidity conditions do not ease, the PESF would ensure that Indonesia is able to maintain and even scale up public spending on critical infrastructure and human capital investments and social protection at a time when they are most likely to be needed.