Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 24340

IMPLEMENTATION COMPLETION REPORT(SCL44710)

ONA

LOAN

IN THE AMOUNT OF US$ 600 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR THEQ,f%1T AT C A T1"1Tk''~ TT,1r A 'T1rTQ1XrT -M'TM~r Y A kT3J.auti.L1 at%rzL I I,r £NL tuJJi Ua I 1LE In, I.AJJtu'

JUP4r 2i, 2002

Environment and Social Development Sector UnitEast Asia and Pacific Region

-his document has a restricted distribution and may be used by recipients only in the performance of their'official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of January 2, 2001)

Currency Unit = Indonesia Rupiah (Rp)

US$ 1 = Rp 9440

FISCAT. VAR

January 1 December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankASEM Asian European MeetingBank Intemational Bank for Reconstruction and DevelopmentBappenas Badan Perencanaan Pembangunan Nasional (Natonal Development Planning Board)BKRKRN R,idan Koor,linnHi K4eha.ma Ber-rmn,a Nasion-Ra (Natinann Familv P!anninn roordinntinn

Board)BLN Bantuan Luar Negeri (Donor's Fund)BULOG Badan Uirusan Logistik (Logistc Agency)CGI Consultative Group for IndonesiaCIMU Central Independent Monitoring UnitCipta Karya Directorate General of Human SettlementsCRU Complaint Resolution UnitCSOn Civ.l Sodcety OrganizationDBO Dana Bantuan Operasional (Block Grant)DIP Daftar Isian Proyek (Budget Document)FLP Forum Untas Pelaku (Stakeholder's Forum)Gol Govemment of IndonesiaHH HouseholdIMF Intemational Monetary FundJBIC Japan Bank for Intemational CooperatonJPS Jaring Pergaman Sosial (Social Safety Net)JPS-BK Jaring Pengaman Sosial Bidang Kesehatan (Health Safety Net)KTP Kartu Tanda Penduduk (Identity Card for Residence)LLI Local Level Institution StudyMoF Ministry of FinanceNGO Non-Govemment OrganizationOPK Operasi Pasar Khusus (Sale of Subsidized Rice)Padat Kar,ya Labor Creation ProgramPDM-DKE Pemberdayaan Daerah dalam Mengatasi Dampak Krisis Ekonomi (Community

Fund)PKP Padat Karva Perkotaan (Urban Labor Intensive Program alias padat karva prnaram)PKPP Prakarsa Khusus bagi Penganggur Perempuan (= SIWU)PKSPU-CK Labor Intensive Program In Public Works (alias padat karya program)Posyandu Pra Prtayanan Terpadu (heaith services post)PRSL Policy Reform Support LoanSBG Scholarship and Block GrantSIWU Speclal Initiatives for Women's UnemploymentSMERU Social Monitoring and Early Response Unit (a research institute)SSN Social Safety NetSSNAL Social Safety Net Adjustment LoanSUSENAS Survey Sosial Ekonomi Nasional (National Social-Economic Survey)TKPP rim Koordinasi PenaeloIaan Proaram (Proaram Management Coordination Team)TKPP-tkt I TKPP at the provincial levelTKPP-tkt II TKPP at the district levelUPM Unit Pengaduan Masyarakat (Complaint Resolution Unit)WB World BankWFP World Food Program

Vice President: Jemal-ud-din Kassum, EAPVP

Country Manager/Director: Mark Baird, EACIF

Sector Manager/Director: Zafer Ecevit, EASES

Task Team Leader/Task Manager: Jacaueline Pomerov. EACIF

Vf11%T t%'MJ'vfT AT VTVWE 91r ^X wen *P%%i r a TC!IIU l rd %J t rA. vr s LPWE ivLL.L xIE JVL

IMPLEMENTATION COMPLETION REPORT

INDONESIA

(LOAN 4471)

SOCIAL SAFETY NET ADJUSTMENT LOAN

Page No.

1. Project Data 1

2. Princinal Performance Ratings I

3. Assessment of Development Objective and Design, and of Quality at Entry 2

4. Achievement of Objective~ and Outputs 5

5. Ma or Fatortrs A .ec Wim pmrntotnon nn-d Ouf,tc nm ,e 1 2

6. Sustainability 19

7. Bank and Borrower Performance 20

8. Lessons Learned 21

9. Partner Comments 21

10. Additional Information 22

Annex 1. Key Performance Jndicators/Log Frame Matrix 23

Annex 2. Proiect Costs and Financin2 24

Annex 3. Economic Costs and Benefits 27

Annex 4. Bank Inputs 28

Anrrex 5. Ra:ing. so for AAhie-v4 fofC....... vnts 29

Annex 6. Ratings of Bank and- Borrower Performance 30

Annex 7. List of Supporting Documents 31

Annex 7.1. Golis Comments 31

Annex 7.2. Other Partner's (-omments 43

lThis document has a restricted distribution and may be used by recipients only inthe performance of their official duties. Its contents may not be otherwise disclosedlwithout World Bank authorization.

Project ID: P063939 |Project Name: SOCIAL SAFETY NETA r%11 TrnII ShPTr

Team leader: Jaceline Pomeroy TL Unit: EASES

C-R Type: C-ore iCR Report Date: June 20, 2002

1. Project Data"l,ame:SCA lT -s= AD"JT.v. "A . -w-,um cr. aL7 'A ne:.. ~CrI'TAT S AM-VNTE .TT AT'ITT TQT1rAA-VX1` F I/rL'P AL..k..... Cf'T AA'7f

Country/Department: INDONESIA Region: East Asia and PacificDII,;""

Sector/subsector: SS - Social Protection Adjustment

KEY DATES()r.iog.al R.'e/cta

PCD: 11/16/1998 Effective: 05/28/1999 05/28/1999Apnnrni.i- nd/n01 /1999 AJTD:

Approval: 05/20/1999 Closing: 12/31/1999 12/31/2000

Borrower/Implementing Agency: REPUBLIC OF INDONESL/MNISTRY OF FINANCEO.ther Partne.ns: rB!C (co-.f-in.arcer)

S MA FF Cm-rent At Ap isalVice President: Jemal ud-din Kassum J. Severinofo.tJ. JvAsafla

5- r --- a.- la.- TA4A-- .. T TN. ra

Sector Manager: Zafer Ecevit K. Georgievan-am Adeat TCJ.: jacJuel=n te Por fb e LIltLt

ICR Primary Author: Lant Pritchett

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly

Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

uu.r..^ib..5..U IIyT TLT

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: U

QAGJ (f availaule) lCnQuality at Entry: S S

rroject at Risk at Any Time;

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The SSNAL should be assessed against its three World Bank objectives, which evolved out of theCGI discussions/Fund program in July '98. Based on the strategy note in October 1998 thatbecame the basis for the adiustment loans that were being prepared there were three objectives forwhich it was decided a Social Safety Net Adjustment Loan would be the most reasonable

i ,tru.m.n-t.

bujec-i-ve A) G.JeL a reasoriaubl set Vi "safet Unet pIVruaL up azdu Ingur iaL &v touram, tuh

social impact of the crisis and reach poor (subsidized rice) and "impacted" households (laborcreation, community funds) and prevent deterioration in human capital (nealth, scholarships).

Objective B) Make some steps forward on a governance agenda. This was taken broadly asattacking corruption, expanding information dissemination about government actions, making thelocal government as a service provider more responsive to citizens. The idea was that since theSSN nrograms were (a) the orioritv in the short run and (b) new. incremental. Drograms withoutestablished and vested interests they would serve as the "vanguard." What was done in the keySSN programs would then be picked up and spread to other progarms/activities in the samesectors (e.g. education, health, public works) and to local governments (e.g. stakeholder's forum,budget information, reguiar performanlce reporutng).

Objective C) Make sufficient amounts of financing available to the government to stabilize theeconomic situation from a "free fall" and create at least sufficient economic stability to allow forthe elections planned for June 1999 to be carried out and the newly elected government to takeover economic policy. Both elections and the resulting legitimated stable (even if not "new")government with a mandate were thought (in October 1998) to be preconditions for resumptionof economic growth. Given the nublic disclosures about corruption in general, and in Bankprojects in particular in August 1998, large amounts of adjustment lending were organizationallysrnmn- "not on" nh- 1 1 t ce- .cnfcs of both go,veance A QQSNJ bearng aAdrese.. TA tv e xf.entauuj,JY Ifh tt y nmu t%,tmt s ta.n -5.V ~na~. . cnn Lflf- at_ .OO . *w -IA fU U

the existence of the SSNAL was a necessary element to be in place for PRSL II (and any othercontempiated adjustment lending).

The joint logic made something like the SSNAL (an adjustment loan with conditions related toimplementation of SSN programs and governance improvements) not so muchdesirable--everyone involved was aware of the limitations of adjustment lending for addressinginstitutional issues--as inevitable. Given the need for speed and budget support some tvpe ofadjustment lending was necessary. Given the need for SSN programs, it was natural to addressthose concerrns. Given the conce-_rn for crnmuption and the environmne-nt in whirh corunption cnluldnot be addressed generally at least until a new government using the new SSN programs was seenas e<vUg"UoUU vi eruWance, iviruJi1ir and u1e vluy viauib opLLuLL.

- 2 -

3.2 Revised Objective:There were no revisions to objectives.

3.3 Original Components:The SSNAL was an adjustment loan approved by the -W-B Board in June 1999 of up to US$600million (in two US$ 300 million tranches) in which the Bank would disburse untied, fungible

resources to the govermnent based on the government's achievement of certain conditions (As anadiustment loan the SSNAL did not directly finance any SSN mrogram in the sense there was anaccounting/disbursement trail from WB loan to SSN program activities. Inagine WB loan fundsa uredyed red-it ic nt the cas N berp.ei.ciar.e ixuuill rcv red rtik.-it is thrat the iihole

government budget is pink). The conditionality of the SSNAL hinged on adequate performanceadU saug-uaruingV UoLf, brI1snding Ui siA jurpriog i Ussigiiau d as 4U LL I &Y ae'S4 prugidflls. I nv

performance conditions had two parts: responsibilities of the programs and overallsafeguarding/policy improvement.

Programs: The six programs were:

[Program.. IBrief description [By ~ [Financed ]When? OPK (Operasi Pasar | Sale of rice at a subsidized price | BULOG Recurrent | Aug 1Khusus) (I (lOOOrp/kg) ll 98-on l

SBG (Scholarships and Scholarships to individual students J Education IWB/ADB ISept IBlock Grants plus block grants directly to schools I I98-onJPS-BK (Health safety Umbrella for many programs: Health ADB Gotnets) health cards entitling to some free started

health services, subsidies to late-stilmidwives, extra nutrition tunding I going.(posyandu)

P aat Karya kLaDor Labor creation program in uroan Cipta iarya Rupian Alter r Ycreation) areas (replacing a variety of Murni 98/99

SeCtOXL-Vaiiin IlUSlj vprps s)sebwa:not until

SIWU (Women's labor I Labor creation nrogram for I Cinta I R nia not until Icreation) women's Karya/Human Mumi Sept 2000

employment-responding to Settlementsproposals from NGOs/others

PDM-DKE (community Block grants to kelurahans and Bappenas | Rupiah Impleme| fund) desas to be used for revolving fund Murmi nted once

to community groups, and labor beforewages for infrastructure SSNALmaintenance. not again

until Oct

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 2 0 0 0 .

For each of the key programs there were requirements that they set monthly physical performancetargets of benefits actually reaching beneficiaries are set. The targets were not just process orinput or disbursement targets but rice received, health cards used, etc.

- 3-

Safeguarding. In addition, each key program set targets for the implementation of a five point"safeguarding" which included (1) regular reporting on the performance targets, (2) independentverification of the reporting of the programs, (3) an information campaign to inform potentialhPbnficiaries/c4uivil society abhot thp nrnoram () NC.O involvpmPnt in monitoring, (S) s.tting up a

complaints resolution mechanism.

In addition, each district and center had a group (TKPP) carrying out parallel activities. Therewere also general safeguarding activities related to all SSN programs carried out by the districtsand center, such as the dissemination of SSN budgets and eligibility for all programs to the public.

Safeguarding activity | Programs [ TKPP-regional [ TKPP-PusatRegular reporting on Each key program Produces a report for Produces the overallperformance targets produces monthly report the programs within report

the areaVerification of the Carried out by Lembagaperformance reports Demografi through a

survey directly tohouseho;Xs.

Information campaign Each program An overall awareness A national campaign.Canailp WA T;Ur Lu

(programs, budeseliaihifitSe of enhprogram)ll

WM invnlvy-mt-nt in IPlan fnr each nrnoram I imonitoring l l l l

I Comnlaint resolution I Mechanism in each I Mechanism in the I Mechanism at the Pusatmechanism program| district to receive level to resolve "big

complaints about any tickef' complaintsprogram l

Non-Program p|Safeguarding activifiesllll| Budget informaion Each district produces Folders colected atfolders a folder with detailed national level for each

information about districtl _ _ _ each program I

Stakeholders Forum Each district creates aI I I forum with NGOvI

cooperation in which

presented periodically

3 4 Revisepd Componentg

The only major revision was an extension of the deadlines by which performance would beacoeve. ^^s "asn ecessary, bep2 ,caue of delays in thn "itia! Aibcl,,vme'tc ofth 'S an fnO:ras

external to the loan itself. (see section 5.4. for more detail on the inital disbursement delay.)

3.5 Quality at Entry:n-A vIN _- I'% A row r-aXU4VL baba%,LsScul kz uy w£

-4-

4. Achievement of Objective and Outputs

4.1 v(jJ UUJoE5V.;-v

Judging against these objectives (SSN programs, vanguard of governance, stabilize economy)there are two different quesuons: (1) were ithose broad oDjectives accomplished? (2) was there avalue added of the SSNAL to the objectives?

This section justifies the seemingly paradoxical "satisfactory" rating for a two tranche adjustmentloan in which the second tranche did not disburse. As this section will show, the most importantof the overall obiectives of the adjustment lending strateav-economic stabilization, stablepolitical transition, reduction in poverty, avoiding dramatic worsening in human welfare-werencermnmiihed The RSNAr. was an integral and nece-Pcsry nprt nf th_t strateg.p The -.ex-.at vahlu-

added of the SSNAL is difficult to assess, but is a hypothetical in any case. So, while in theWLULVst ol ICssons" tLh ICRiA 1ocuses oin iMUy of LL-eIVVI.LL, sc ic aSN U JJaLiUA.LL-ly UVVgoverc.V

improving elements of the SSN which did not implement fully, for a variety of reasons detailedbelow, our judgment is that to rank the SSNAL "unsatisfactory" ignores the broader context,strategy, and outcomes.

I) Were the broad objectives achieved?

Obiective A) Launching a SSN. There are two levels to deciding this auestion. First, did thingsget better or worse? Second did the SSN programs have anything to do with that?

On the first, there is no question that not only were the effects on poverty and social indicatorsno;L as uau as oiLIa.Uy feareU--bUL nie4Lary 4LL LiUUI.WAJb shUW UUbsWUt41 IcUUVeIy IUoUI Wi4tever

crisis troughs they had. Poverty is down substantially from its Aug-October 1998 peaks, schoolenrodments are back up, utiiization of health services is back up, mainutrition generally is notabove pre-crisis levels. While all of this may be due to general economic recovery (or at leaststabilization from the free fall) there is no obvious evidence that the SSN failed because conditionsdid not continue to deteriorate-they improved substantially.

But, post hoc is not propter hoc. What was the impact of the SSN programs in achieving thosebroad objectives? The performance of the SSN is by now reasonably well documented, in termsof cover,a-ge, tnrgeting, nnd impact. Thic ;S bhP.use in aAddition to the reportng of the programqthemselves there are now at least three large scale household surveys ("100 villages" 12,000 HHs,OT TQXT A C 'flrA (bflf' lILYtX I II AfA IrTTT.\: --. lL--L .13 ' _' nCMThaUaLumrka 2v0,vv0-r r0x+ , LLI 1200V KU-l) iLL WhiJch HoiUiuelu repotLL uheir paruicipauun in SN4

programs. The answer is mixed so a brief assessment program by program on (a) coverage, (b)targeting and (c) safeguarding (see table 1).

-5-

Table 1: Coverage Targeting and Selected SSN Programs

100 Villages data, 12,000 HHs | SUSENAS, Nationall________________________ l_ _ October 1999 | February 1999

Proram/ I 0T 1 Bottom 40 1 Ratio 01 to i 01 [Bottom 40 Ratio 01 to OVI

Activity coverage percent q5 coverage percent [ (richestI I I coverage I s 0~~~n I nh9"i..+lp)

pPK | 78.2 72.0 2.5 | 52.6 | 49.4 2 2.0 l0 IC -7 Z A____ ___ ___ I 7 .I . _ _ _ _ _ _ _ _ _ _ _ _

0.0 1 .0 t.J 1.0 1. .

Health 25.9 19.9 3.8 10.6 8.9 2.9PdU4at ya 7.0 3.6 8.3 7.6 3.0

Subsidized 8.1 5.8 4.0

otes: Sudarno Sumarto, Asep Suryahadi, Wenefrida Widyanti, "Designs and Implementation of the,,ndo Soc SaI Net Pmrnl msviApni' frim the 1PS Mndlp in the 1099 SUS1NAS" S..MP12U

orking paper, the SMERU Research Institute, Jakarta.

Objective B) Vanguard of governance reforms. Rapid decentralization to the districts, an event-,C4 reseen at th +Mm0 .eof pr-Io ectCias.a-tn all e ls0. There i s noA e.pirical ev idenceunJtol LO'4 LLl'Ifll'V JtJ'' tAt'Ol& , £150 tfJlLn~t VU .'Ot. A fl%'JV 10 11)tUljJ 6& /VIWhtt

that governance has improved over the last 2 V2 years (e.g. that there is less corruption, betterservices, more opennaess, more accouniability). However, thnere are indications that elements andideas behind SSNAL are being picked up regionally as well as sectorally. Transparency,accountability and NGO involvement, part of the good governance elements that the Bankintroduced through SSNAL, are starting to be accepted and discussed openly among civilsocieties as well as government officials as the country is transitioning into the decentralized mode(see section 4.5)

Ojective CJ Stnbilization, elections, resumption onfgrowth. The ecnnnmy did in fact stahili7ed.

Poverty did in fact come way down from 27% in January 1999 to 16% in January 2000 (BPS... \ A ..Z--. T.NA1,l.l.k 0 .. A.. A --

figuL-.-es). A-leo was held inU .1 June 1979 W1vrtu was wide'iy MMl Lu Le it' anu IaLL. Ai nLIw

government was chosen and, at the time, widely regarded as legitimate. The hoped for stabilityand resumption of growth have not materialized to the extent one could have wished.

2) What was the value added of the SSNAL to achieving the objectives?

Overall: programs. There was a general value added for nearly all of the SSN programs justthrough engagement with the SSNAL conditions. For instance, in neither the Health Card normany of the Padat Karya programs were there performance targets. The requirement for regularranort,niv on physicnal nprforrn.ov i tfar,etc act .iily crratued a hepfi1 i nftprnal A! disc,ein, + to %hat the

objectives of the programs were and how they might be measured. Surprisingly perhaps this wasUig vaIue, UUU Uaded uaMV rmIoUt prUgrUa1 Ul u uh y fim4nI.wiM aLlU amiuLu uaUve repUrLuiig

requirements.

Overall: safeguarding. There were a number of innovative actions taken on openness andtransparency, information dissemination, stakeholder consultation, and complaint resolution.

- 6 -

These clearly set important precedents, but it is hard to assess their impact on project performanceoverall or their likelihood of being sustained in a changed and rapidly changing politicalenvironment.

First, one of the requirements of the SSNAL was the creation and public disclosure of a "budgetfolder" -hich --- +,ed- A-tz;I-A -.r-.or.4-o on -aho L. SSNM pror -eg Iow ... zn

scholarships to each school). This information could be disaggregated-so that the amnounts ofeach lower unit added up to those of the nigher unit. Not only was this information not publiclyavailable before it was not even available to lower units of the government-village heads/schoolprincipals were told only their amount, not the total or distribution.

Second, the "stakeholder's forum" in which the government held meetings with concernedcitizens and NGOs to report on progress in the SSN were a precedent. The NGOs themselvesbecame quite engaged in the design and implementation of this at the national level and at least inrPrt_in districts the proessc generatedl considerable participaAtion.

uu, uie vei.ic%atuio uo pu LivL. r .poLrL co AoSL it wii s i u

government that in order for a performance report to count as "success" an independent teamwould do a sample of the report directly to the beneficiaries to see if they agreed they hadreceived the amount and type of benefits the report said they did. It was a big, and useful,innovation when The Bank formally declined to accept the report on the performance of OPKbecause it did not correspond to reality. (The OPK team had set a target for numbers ofhouseholds receiving 20 kgs of rice. The reporting system however simply measured rice leavingthe warehouses and divided by 2Okgs to derive households. Obviously when a survey attemptedto verify the accuracy of this report they did not-many more households had received rice thanwere r.tn rteA earlh rpppi.vir, less r.ce)

Fourth, the openness of the SSNZ AT process ictsef xwas a hbnefit of pro,ec Tn fLe end f.e

SSNAL genemted more public discussion than perhaps any other operation. The Board loanuuu l were d ii-u p-UUbicAly avai,uable (otiuie firLst Winne), 1Nus wrIC uivo;-veu in suprviision,

when the decision was made not to extend the loan closing date that information and itsjustification was made public (see annex 7.3. for information posted in the Banks externalwebsite).

Objective B) Basically decentralization overtook any notion of a central strategy for improvinggovernance. Taking up the innovations on transparency, complaint resolution, stakeholderconsultation. etc. became a district by district issue. Moreover, since the innovations were brandnew and run by centralized ministries they could not be evaluated, assessed, and disseminatedbeafore tme Aeerotro 7B.-ofnn Since th,e unAoa..eta1 c+.ram, of din nn,,,..nn (and B 0

-WlJ& LLV t%~fftAfC&1J. L m Z~IIW f1l4 OL.L%..rj WA Llud V hf AAuflt %4Jt AJaf)

towards govemance shifted, the lasting SSNAL impact was/will be small-this is unfortunatesome elements were promis-In, but essentialllly peuple wno nave expenence With tnese newattempts at improving governance have little or no leverage on the levels of government nowresponsibie.

Objective C) Obviously the contribution of the SSNAL to overall economic stabilization is

- 7 -

impossible to assess. The existence of the SSNAL did allow the disbursement of US$ 1.1 billionas a package--PRSL LT, US$500 million, first tranche Bank US$300 million, Japaneseco-financing US$300 million. It also, for better or worse, became the focus of Bank engagementon a num11ber high level issues (e.g. Bank- a1AlJee below. On the other band, the faillre of thesecond tranche to disburse did mean a shortfall of $600 million in FY00 financing (Bank plus

I-IC), which some would argue in and of itself implies te loan did noi accomLplish its objecti-ves.Our view is that the early financing (and particularly the commitments to the financing) were moreessential to stabilization and the failure to disburse did not, in and of itself, cause substantialmacro damage.

4.2 Outputs by components:This section reviews the accomplishments of each key program, followed by an assessment ofWorld Bank/SSNAL value added. The structure is program by program discussing (a) programoperation, (b) program safeguarding, (c) value added (if any) of SSNAL to program orsafeguarding. After the six programs there is a section on the safeguarding activities.

OPKPerformance. By February 1999 half of the population had received some OPK rice. The issuewith this program was that while officially only BKKBN poor ("pre-prosperous" and "prosperousT") hnll<hnlds we,re elihihle there is amnle anectintesRand data to _how that in fact the rice wasgiven almost universally. But while this was a deviation ftom "policy," it is not clear it was eitheravoiuabivenr LU l'oc.a.l sioial neajiu o; nece.sa±.ly a uadu U1ur ngao (jsn, WouLL Ldav v tob pIe..y

convinced the BKKBN criteria were the legitimate targeting criteria to be too upset about"spreading"). This "spreading" icely accounts for its ahmost universal popularity.

Safeguarding. On "safeguarding" one would have to give good scores as there were fewcomplaints and a widespread publicity campaign and the program was very well known.

SSNAL. The Bank supported OPK, which was under continual attack from parts of thegovernment that wanted exclusively "development budget" SSN, but it is doubtfil that SSNALsuppoirt~ was depte-rmin ituP ThP RBnal"-'s iiiJlompnAt ic that aPTO hnnripiniA b-aim RI IT V OG was

deeply committed to it (it was their defense against elimination and chance for redemption).

The Bank supported using NGOs for direct delivery of the rice in urban areas (via WFP) forwhich The Bank's intervention was perhaps determiinative. Tlhis addressed big problems withOPK in cities (particularly in Jakarta where well less than half of poor residents have KTPs andthe city government was very reluctant to deliver to non-KTP holders).

The information campaign was better because of SSNAL. Other aspects of safeguarding (NGOinvolvement, complaints) also had some implementation due to SSNAL. The Bank had someengagement on the flexibility of targeting at local level.

-8 -

Neharvships

D.,o, ,,,.ce Ths p.-O.l was A4ec-, g d byk .X1-.1A W ld--, A TB, zndA t'tTI Ther.A ~IjJ I 4f L "O FA L F&ji~~Li1 waLO u"L L Y 1Ua Y~% LLUI Tvv1)1. LJUnAa. rLLPLJI aLuu ~JLJ IL%,I.

program got up and running fast. The target coverage was reached. If one is allowed a little posthoc ergo propter hocery the feared magnitude decline in enrollment rates did not materiailze.There is some evidence on program impact from the HH surveys (Cameron, 2000). In spite ofgood performance, current thinking is that the idea of getting money directly to parents as long astheir children were in school and the parents could choose how to spend it was not workable andperhaps not even desirable. In the end, although most of the scholarships were "received" bystudents most of the resources stayed with the school as the schools convinced parents to use it topay school fees, etc. Since however the schools were starved for funds this is perhaps the bestwa,v tn hnve mmintnined Flnrn1lment in sqnv rc-'q-hv intnginn novPrll nllalitu nf thf schnnorather than targeting specific children.

Safeguarding. On safeguarding, the program was very innovative with its own "independentmonitoring unit"(but financed out of huge incremental donor financing for these activities).

SSNAL. Since the SBG program was Bank financed the WB had sufficient leverage toaccomplish whatever it wanted without the SSNAL.

Health Programs

Perormance. The niinntitntivp ... v asuaSgeSt tknt health card ncverage" reached am% vMtehy 10percent of the population by Feb 1999. They have perhaps become even more widespread (theVAUrl",rely UnU-rVe1presn aUVV IVV Vi 'aesugges,s 2b5 perLceUL UIU Ul,e rxUiiieiy

non-representative LLI2 data suggest over 40 percent coverage in those 42 poor villages). Thetargeting of the "health cards" with respect to expenditure poverty or consumption expenditures(as an income proxy) was neither significantly better nor worse than other programs. Oneevaluation suggests that they did in fact raise health card usage among the poor (Pradhan,Sparrow and Saddah, 2000). In any case the drop in use of medical facilities that emerged in thefirst year of the crisis was reversed.

Safeguarding. The safeguard programs did get the attention of the Health Ministry and are beinghnilt uponn in new prnoiets fior PDrvnuiuri21l HUalth Prw%ct T Ir TT nn 1z7h ich it aaccountability" sub-component.

SSNAL. The JPS-BK is a complex program with some real deficiencies. The engagement withthe SSNAL did help improve the implementation of the program by getting them to focus onmonitorable and measurable results. The adoption of the safeguarding program also had somevalue added.

Padat Karya

Performance. In the initial response to the crisis in which budgets were inflexible one response

-9-

was to reallocate budgets within programs to more labor intensive activities. This created a seriesof sectoral padat karya programs that were neither well targeted geographically nor to workers asthe wages were different, etc. By being implemented by so many different ministries there was noaht;llh tn imnn..p, rntintn1 tnroe-inc, nr desigrn or "snfcmu§ard" thes.e nrno2m-s as "qafetv netq" and

there was substantial anecdotal evidence (from community surveys from the Local Levelli11ULULIUo .3LUUY). IThy aIs e UV s ,VAL4LU4, UUL DstII UUsWiaIaLd Lu Z U1se pIUoLgLLr were

being abused. The response was to propose a single large padat karya carried out by publicworks that would focus on urDan areas. For a series of institutional reasons this program neveremployed anyone until November 2000--three years after the beginning of the crisis. Since thisprogram was implemented very late it is too soon to know how well it worked-either in terms ofcoverage, targeting, or benefit of the works.

Safeguarding. The first generationpDadat karva left a lot to be desired, but it is impossible to tellhow much better the new safeguarding was.

SSNAL. The SSNAL attempted to reduce support to the older padat karya and launch a new,redUeIgUU, UIJJLIUVVU pFIUraLII. IL had JLIUIVAUiLV success if g lrL, Lth UIU paUatL &aya UUL VI tUh

"safety net" but this was then not replaced with anything until the new program began inNovember 2000. Tne question is: were the old padat karya so awful that cutting them andreplacing them (for 16 months from April 1999 to November 2000) counts as success? Maybe,but recent research (Sudarno Sumarto, Asep Suryahadi, Lant Pritchett, "Safety Nets and SafetyRopes: Comparing the Dynamic Benefit Incidence of Two Indonesian 'JPS' Programs", SMERUWorking Paper, the SMERU Research Institute, Jakarta) on the targeting of padat karya suggeststhey may have been filling a gap in the SSN for those with large reductions in income.

w, omen 's po 5s, am

Perjormance and Safeguarding. Th Aprugram had interubeing lfeaures, uut sinc it Wab bU lUo

delayed in implementation and it was so small it had little direct impact. In addition, since it wasimplemented so late, it was too early to measure the impact of the safeguarding measures.

SSNAL. While there was widespread support among NGOs and some parts of the government todo something about the poor coverage of women in the existing padat karya, the SSNAL wasprobably determinative in creating a distinct program (that was in addition to higher targets forfermale participation in the redesigned "mainstream" padat karva)

Performance. Tnis was a controversial program from the beginning. in response to an IMFagreement on the July 1998 budget, there was a substantial amount of revenue designated for a"safety net" without any particular program in mind. PDM-DKE was designed by thegovernment (Bappenas) as a mechanism to quickly disburse large amounts of assistance by usinga modified "community fund" approach. However, by using the existing "community" groupsthat were created by the New Order government this was obviously controversial. Theimplementation of this program in early 1999 (FY 98/99) created controversy, especially in

-10-

Jakarta. It is believed that the negative reaction of NGOs and the general public to "JPS" wasbecause T Jat--,a at leasat PDfl?,f1lT(P and TDP wvere exmnnumnlic The PThM-DfC1F diA not

disburse in FY 99/2000 and a substantially revised PDM-DKE was implemented again in lateM^i%^ T_ , 2-- -3 Y~Yt_ I%% T-.T.7T 1L_A .. ~.i ~ .... 2UU0. irL iW sfirS rouUUd, LUC rPDIVM-DrJn prograli FIaI llxAu peILiLuVLLIU, WILU succs UVJLLUurg

largely on local conditions being favorable, such as dynamic, newly chosen village heads.

Safeguarding. Here the old was very weak, but since the implementation of the new was so longdelayed there is no evidence.

SSNAL. Here the principal value added of the SSNAL was delaying implementation ofPflM-KF. intil it was redesigned Again this is obviouslv a mixed message. The best wouldhave been implementation of a redesigned PDM-DKE, but instead there was no implementation.

'aJt 'wZaS it SO.V Lf;l Lila. jit blda,21 imp.er,,.enffion of unchanged P.YJnlace.dt by noJLL

counts as a win? In this case, given the incredible negative publicity PDM-DKE created, theanecdotal evidence of abuse and tne limited evidence of effectiveness, the answer is -yes.

Summary: All of that said, the overall impact on the human dimensions of the crisis from the SSNwas likely modest-because the effort was modest. At their peak, the SSN program realized(both recurrent and development) expenditures were less than l/2% of GDP-several fold less thanthe cost of Bank restructuring, many fold less than the fuel subsidy.

4.3 Net Present Value/Economic rate of return:Not applicable.

4.4 Financial rate of return:Not applicable.

4.5 Institutional development impact:Within the rapid decentralization, the "institutionalization" of the good govemance objectivesintroduced through the SSNAL could not be promoted centrally, but were dependent on theiradoption by the regions. In the spirit of decentralization, however, the impacts had varied acrossregions. Some districts for instance were successful in maintaining a balanced FLP (stakeholder'sforum) involving Gol as well as CSO elements. In other regions the FLP evolved into NGOfonrms, with little gove.rnme.nt participation- In other regions the FLP is considered govemmentdominated ("red-plated"). In some regions the FLP has disappeared..

Because many of the mechanism were specific to the JPS programs, the simultaneousdecenualization and ending or the JRS programs (wimcn deprved uLem of an msututonal home)without any period of transition meant that some SSNAL elements disappeared entirely in theirexisting form. The clearing house and grievance unit which were highly under utiiized arenon-existent. Performance reporting based on monthly targets are not sustained as a regularfeature, and the verification efforts were conditionality specific.

However some of the ideas and values promoted via the SSNAL have been adopted andinstitutionalized in some sectors. The scholarship program continues to implement a monitoringsystem which is quite efficient in resolving grievances. Although only introduced in the phase out

- 1 1 -

stage, the health program in some district monitor program implementations and tried to respondto complaints.

5. Major Facors Affeeung Imiplementaion and Outcome

5.1 Factors outside the control of government or implementing agency:Process versus outcome conditions. Part of the goal of the SSNAL was to get citizens/civilsocietv/NGOs more engzaged in the process, both for the immediate purpose of safeguardinz andas a "vanguard" of governance reform. These are issues of process: did people have adequateirfiorat.nt.on on ,Z,hich tor, £rn,n onpimnion; w -ere th-y g i n an -iirtunt to express tht o

flfltsflnt~a ~fl T Af~#fl~ *tflfl tW **.I 5l I - W -tSyjJt - I~J.A T j.0 .

was that opinion given reasonable consideration. These kinds of process conditions createproUIIns aIout iiUe Dai s UaU tiie goUer-umei s sincenty.

For The Bank there are issues in which we think technical considerations narrow the range ofdesirable options and we don't want process-we want a specific outcome (e.g. targeting). Inthese cases a condition which specifies only process can be manipulated by the government-theycan always plant people in meetings to make precisely the suggestions they want to adopt andthen ignore all other proposals (while claiming they were "duly considered") and claim theirdesired proposals are the result of consultation with "the people=" This in fact bpnnened in someof the early SSNAL consultations.

A second problem is that one cannot legally stipulate that someone be sincere in theirconsulitaions. For instance, one second trancne condition was that the procurement reguiaionswere being revised and the NGOs were very upset about certain elements of the priorprocurement regulations (particularly that all contracts for "consultants" on projects had to gothrough the consultants association, which many regarded as a device for facilitating collusion).Since the regulations had not been written aid since it was not clear what the desired outcomewas, other than that NGOs be engaged in the process. The Bank tried to stipulate a process (atleast three meetings, minutes made publicly available, government and non-government memberson a cnmmittee tn dr_ft rnrnirntndqlnnq) Honwever etven if they diid in fa-t llItimntelv y*nmn1v

with this particular condition legally (which is an open question) there was no evidence TheB 'I-s sFpecification ofI -- le prcs o' mr-e+nsi oe e.twsntc=ij.MJaIuL ~JJ-~.Ii'.aUV Uf .L ULL LU,-0 IVLUUIL UJLjLIJ UVI UUUrO JIi ~ILiU Wao LLuL LAJ1iiJ.LLLvu.

This lack of the ability to contract on the sincerity of process creates three bad options.

First, The Bank can only have legally verifiable objective performance conditions (e.g. householdsreceiving health cards). The downside is that this puts the responsibility for consultation backwith The Bank, as if The Bank wanted people/groups consulted. The Bank would have to consultwith them bilaterally (without government) and then insist on the results of that consultation(tempered with The Bank's own judgment) as an outcome condition, not a process condition.T, iiS iS obviousl a stpn baho ,-jor in njitg rong

Secon'u, i. uC aiUK has process U-Ondi'LIOLUU -WI'LU -Uiii SupuLitLUoU Lo Uii ieUK B s satisfacuon anuexercise The Bank's discretion to judge on sincerity. This can only be done early in thepreparation process (the government would never accept this in negotiations as part of a legaldocument).

- 12 -

'T- rA, --- pranoces conA&4mns. -A be for-eAdo acc.ept governemt .,orm a.c evn if7 1,-A ` `LA' 1 V '.`., %v.AJ 4LL wJ1. ".U& LO... 1JLv &L J IluL.O.jJ v F% VLIILv.Ij ISJLvIIIL , u L. tL4%iUI

NGOs/civil society groups (and The Bank) believe they are only going through the motions.

NGO/Civil society engagement. The SSNAL did attempt to engage civil society throughout theprocess of preparation and supervision. While in general there were some positives, there werealso a number of issues.

Positives. The Bank did manage in supervision to work with NGOs and arrange someconsultation with locally based NGOs in every location The Bank did supervision. This wasneefill in three wave Firet it helneti infnrm the NM'Os what thp RBnk re-llv was (not a nprfit

making body), what the SSNAL was (not a specific program), and some chance to explain therationale. Second, it was v.; usIe L togL utLeI necessa.-y opeJrIes an.-U vL1VUV1F, Ljj, NGs ULuere

really were objective criteria on which the tranches would (or would not) be disbursed. Third, itwas a great reality check on what the government was saying. in one district, the Govermnentspent the morning telling us about the great information campaign and dissemination activitiesthey had undertaken. In the afternoon in a meeting of 35 different NGOs not one had heard ofany of it.

On some issues (like the district stakeholder's forum) the NGOs and government worked tozetheron design and then the national/coalition NGOs took the lead and disseminate the design andnrno m tn rpoeinn;A n/1p Nr MMO whirh vin,rppased thp i'hav,p the NCMrns wouiild epp the ,irn,mm, me

a genuine advance.

Issues. There are a number of issues with NGO engagement.

First, disentangling specific adjustment loan issues from an overall advocacy stance. Many NGOsadopted a general stances towards the Bank and adjustment lending in particular: there should beno adjustment loans at all to the Habibie governmenti there should be debt relief, etc. This madeit difficult for many NGOs to engage on the substance of the conditionality or in supervision as iftheir stance was "no adiustment loans period" they were understandably reluctant to answer thequestion "say we ignore your stance and do one anyway-what should the conditions be?"Similarly at each stage in whicchtehre wprp Adenv on Aia,ivremp,nft there-tvas a con,ipa"nt

stance that was independent of anything actually happening in the SSN programs or the SSNAL.At WLV regLVinUl lVVVe LUrVIV WerV ULLOU bJIlU.L U1di11fUfUi UUIWVVI iVe aUvUocacy s incub of rugio5Iil

NGOs (e.g. "no dictates from the center") and questions of how to monitor implementation ofcentrally driven and implemented programs.

A second issue was how to finance NGO involvement, if at all. There is often miscommunicationabout the term "NGO involvement in monitoring." Many NGOs assumed it meant they would behired in one way or another on a fee for service basis by either the Bank or the program. When itis sua2ested this would compromise their indenendence (and *tey would become ijust like theexisting evaluations they did not trust) The Bank then faced the difficulty of how The Bankepvnect.A thn'rn tn fyn,ii'p the f neess o,A;-.. (Save!,l lao:,o e - . The1 0 A.- A pA r

k'--- - - - - - JILU v , U1AC&IA All%,ii X-UCLAIA jJVr5IO.UI

demonstrated how difficult it is to mobilize finance on an independent, small scale, basis for

- 13 -

NGOs to carry out new activities. On other activities (like stakeholder's forum) ASEM grantswould finance NGus activiues. For some reason the ASEM monies were seeu as sufficienuydistant from the Bank that they could be accepted even by stridently anti-Bank groups.

A third issue was the existing negative and cynical attitudes, on both sides of thegovernmentlNGO divide. Many of the NGOs were (perhaps justifiably) cynical about promises.For instance, in visits with NGOs on supervision The Bank had this dialogue numerous times:

NCiOs: There are many problems in the nrorrms-WB: Have you raised any of these problems with the complaint resolution mechanisms

- plac - 'heprovnsor 'h A;is.-;cts

NGOs: No, because nothing will happen anyway.'win: But iI you don't complain ulen tue govemmeni will claim ihe programs are

working because there are no complaints.NGOs: We'll only complain once the mechanism is outside of government control.WB: But if you don't complain and then show that those complaints are not resolved

successfully there will be no rationale to move the mechanism outside ofgovernment control.

NGOs: Tough.

In this dialogue the NGO position has substantial merit. After years in which filing officialcom'Ui-paiaLLLs co%JUIU get yoU 1i DrIVUU -oUUJif not JIVL phAysIcally L 1eatvenedu), it was a ub ILLUIAI m u

expect this to emerge quickly even if the government were serious about change.

A fourth issue was capacity of the NGOs to engage in detailed policy dialogue or monitoring.Two examples are the experience with the budget folders and the program redesign.

The budget folders were successfully produced in many districts and were disseminated to manyNGOs. In addition to the conditionality reuuired dissemination by the governtnent to 5 outlets(two NGOs, two media outlets, and one university), SMERU was involved in obtaining everyfiolder that was producedl photocopnying it and se.ndling it to every N§0 they had on their mailinglist in that district with a detailed letter explaining what the data was and how it might be used). It

~~~~~~- __.__ : _ _ -L --- ,L-_w -L 1T ___.- L_t_--- _r:_ was no'Ut pi hLat UIaL gIvv UlaL U1 1%b Ua ULV;k U bb WLU UWn Lyjp U1 aunuamuou

before, they also did not know quite what to do with it when they had it.

In the dialogue with the NGOs during SSNAL preparation, the Bank convinced the Governmentto share with the NGOs all existing operational manuals. That way, rather than just complainingthat, in general, the program was not sufficiently transparent or "the people" were not involved orthere was not enough time for information dissemination before decisions, they could makeconcrete suggestions. How many meetings should be held? How should people be invited?What should the decision mechanism be? Again, not at all surprisingly, given that many peoplein.volved in the gove.men.t could n.ot a.swer tese questions, the .GOs-""wh had never ac Uallybeen exposed to the details of project design-were often at a loss to map their general objectionsinto specific cnanges. To be fair to tne 1NOs, at ieasi some of te reluctance was eimer a(perhaps correct) assessment that even if they did devote the time to understanding the specifies

- 14 -

and make concrete proposals they would be ignored or a view that some projects were hopelessno lr%innano~ thp,-x iuArp- nAmii"n c^t,wA IiL, tynx,rn,avifnas long as theLy wer by go.e.m.-

A CXX ___ ___1_ L I Tn--_ __._'_ - 1:_ . _v L_ 1iT_- % -IL---, _ -1_ _ _ 1___ __-Ail U se - e 11KU Wlb W1 L G Di. W4 U1 lugiUw u WlUlz iN1kJS WUuuL du 4UJUbUilIt liUWi 4HU

how that dialogue might affect the course of events. There were two suggested models ofNGO-Bank dialogue.

One was that the dialogue was between the Bank and the NGOs and its purpose was that theNGOs would tell the Bank what should happen with the SSN and the Bank would then attempt toenforce this as conditionality. In some instances it did work this way in that NGOs would havegood ideas which the Bank would listen to and then argue for in negotiations. The governmentwas naturally quite suspicious of Bank-NGO dialogue for this very reason.

The second model was that the dialogue was between the government and the NGOs and Bankwoiuu enforce as conduiuonatyL tat ine government wouiu "isten to te raNwus. I ms noweverwas impossible to negotiate as conditionality. Either the loan conditions specified process (e.g.the government will hold X meetings) in which case the government could meet the conditions bygoing through the motions (see discussion above) and the NGOs would see right through that andbe unhappy. Or the loan conditions specified that governments would create some mechanismand then do what "the NGOs" said-which is just unacceptable to either the government or Bankas a loan condition.

5.2 Factors generally subject to government control:Adiustment loans for implementation and institutional obiectives (Multi-sectoral operations).The SSNAL was just unavoidably complex (and perhaps more so). The six programs wereimni1e-mp.nt-ti hv fiv. e diffprpnt miniItp../alnr.ipq t(IT fl. O,PdlGt,2hAtl ini plth RAPPRVNA5,

Public Works (now Human Settlements)) each of which was operating nationwide in a hugecouLny. wnL tJJ Uof lat, JL% saieguai UJLr, IU.lleaiUsIrs a.tedLLLU Lu eunage U..-cCIly wLe local ULt.

II) governments (TKPP-tkt II). OPK was recurrent budget (as a subsidy). SBG was cofmancedby WBslADB. Te JirS-BK was financed by the ADB. Activities that were part of, or reiated to,the SSNAL conditions were financed by two different ASEM grants (without which action wouldhave been impossible, see above), AusAid (local monitoring).

The main counterpart agency was Bappenas, which given the multi-sectoral nature of theoperation was probably inevitable. But, this left BAPPENAS mainly trying to move the processalong with only sticks and no carrots. That is, they could threaten to cut off funding or eliminatethe nrnomm nnthrplv bhit Giild nnt (nr wunulti inot) nrnmise anu nidiitinnnl fiTdr tn narrru oit mannu

activities. Once sectoral ministries (like Health) figured out that whether or not SSNAL monieswere disbursed did not affect their projUect budget (which was dono… -s tsaraeVl-;)cooperation was more difficult. With BULOG, The Bank was often trying to convince them tolaunch safeguarding mechanisms. BAPPENAS had told BULOG these funds should come out ofthe "administration" fees BULOG was allowed for operation of the program. However, duringmuch of the period MOF was in huge arrears on not just the administration cost, but reimbursingBULOG for the rice sold. Since BULOG was pre-fmancing the whole package, BAPPENASprodding fell on deaf ears.

- 15 -

5.3 Factors generally subject to implementing agency control:1AdJL 17o,II5,flL Opurj forIM jr m or. ar.d 1F&)LiLui&or.al UuJrcL4 Ves II/C,fJ ar. .a;se, )

One lesson from the SSNAL-but that was obvious from decades of engagement withprojects-is that reality based reporting on physical performance imndcators tas opposea tOfinancial) is not part of the institutional culture. Basically there is a "disbursement" culture on thefinancial side and a non-reality based reporting on the physical performance side. Only thedetailed, continuous, conscientious engagement on projects can overcome these obstacles.

Oftentimes reporting conditions were not met because those in charge of program design hadnever actually thought about reporting on performance and hence had no idea not only what couldor could not be met as ta rget hi t no idea .wh,at -riiId ac't,ua!!y hbe rpnnrt-d on.

LLUVV VAmL1pIle. IU itL Wa .UUWU WjU1.TL liUlIl LUVuvu.uh b ug UkLe pr IUrI U'oL uI. fLcereaching villages was "spreading" to more individuals than those strictly eligible. This was notnecessarily a bad thing (as The Bank was not comfortable witih the eligibility criteria in the firstplace) and was inevitable given the local social conditions (bagi bagi rata) which tended to resultin equal distribution. Nevertheless, in negotiations the government agreed to a performance targetof the number of households receiving 20 kgs of rice. However, the reporting system wasgenerated at the rice warehouse so that the sub-dologs released rice against eligibility lists andwas incanable of accurate reporting on the target.

5.4 Costs andfinancing:One problem the SSNAL faces is that the disbursements became so high profile that it wasdifficult for the Bank to adhere to technical arounds alone. although in the end loan disbursementswere always made based on loan conditions. Taldng the package to the Board before theelections as calt up rifh faars the 1 t would ho Icf.. "ney- polits"-n i.su , -t

-1, ...- - - - -. y -W ,s' -- %n *tlf - Aflf yWjfl - fl .0014d JU

was adequately addressed by the GOI by comnitmnents to the timing of disbursements. Thedisbursement of tihe firt draiche, which was very nearly ready in early August 1999 was delayedtill January (the loan conditions were never technically met) by concerns over Bank Bali scandaland the inadequate response. While this delay was perfectly justified-the Bank simply could notbe in the position of disbursing fungible budget support in an environment without some basiccommitments to addressing large scale corruption-this did in fact delay the implementation ofthe SSN programs because of the conflict between sectoral ministries and MOF (see below).Even though the staff involved felt the conditions were clearly not met and that certainly theapner2I nh,iptiveq nf the SSN afnd "afetnirdina" activities hnd nnt hee_n rmnmn1iqhPA the

decision to cancel the second tranche would have been very difficult in the absence of the FundpiU.gam gOuill uii uaLk, agaLL ubcause LUM UI:0ULnsVIIIQUL0 WerV DU isog psUIUr tLm paLL iii uUS

instance because of co-financing-see below).

At the original design stage, one proposal was to have a large first tranche and then basicallydisburse against monthly performance, rather than have a big first tranche and then an equallylarge second tranche after some huge, complex, second tranche conditions. It is not clear thiswould have been able to lower the profile significantly (and would not have helped in the firsttranche-Bank Bali issues in any case).

There is a fia n4j1mntnl rnnfriaA,tinn in the desig orf ^faAiictrent Innsic A,, th9 onae h,andA the., are

-16 -

justified as filling a budget gap to produce good macroeconomic outcomes and hence arerncieMorPd a npPeesrnj npr+t nf fininincy the hbudel,t gnid faillgrp to tichirep eiiffirientiv largeY

tranches endangers the macro balance. On the other hand, if there are two tranches there is atIlesL d posbiUULY LUVe UhVIWoV UditionU1U1 WnL UItL eV JIMAL iI UIVy atI, aL au and nuVi auct LL LU lav&

they are enforced rigorously.

In this case though The Bank could not really go with a much bigger one tranche operation (if atall) because of the fundamental nature of the programs (which required implementation) and thereforms (which required institutional innovation). This meant the government had very little doneby first tranche other than budgets, plans, and promises.

Adjustment operations with implementation and institutional objectives (budget issues).Arirthe. probdlem. the SSN.JA facedr was th fr, stir lo lre f 1.u,lrsem.pntg ofgeld,ustrnpt lP-nding >rwI

the structure of the Indonesian budget were, if not completely incompatible, at least problematic.I LUSUU W i PUbli S iiad two impacts.

First, while the SSNAL had conditions (either Board or first tranche) about budget allocations forthe key SSN programs, in the Indonesian system it is a long, long way from "being in the budget"to actually being able to spend money. The difficulty was that in development projects there is avery sharp distinction between BLN and rupiah mumii. The budget officials in both Bappenas andFinance want the BLN to be in place before releasing the funds. This led to an unsolvablestandoff when the first tranche was delayed: in order to make progress on the programs and theinstitutional innovations on the safeguarding activities within programs the programs needed theirb-Audg*s released (TDs or qn,-rivaten.) But nithe,kr noBarntao nor Financ wuas goutine tn aiit1i,w,27P

the actual expenditures (even though they were budgeted) until the monies were in place.

Second, in projects all required activities are budgeted. The SSNAL wanted projects toundertake additional activities on safeguarding but, by being an adjustment loan, had no directfunds of its own to budget and disburse. So, take the Health program (JPS-BK) which wasfunded by the ADB. The ADB did not budget in any money for safeguarding activities. So whenthe SSNAL required the JPS-BK to undertake safeguarding activities the question was: wherewas the money to come from? From Bappenas/MOF the answer was: you must do the activitieshut no additional monev. The ministries naturally wanted incremental finds for each activity.While the first tranche included conditions about their being "adequate" monies budgeted for ther.na d,nm..n act.v..u;es ,n achn progh m,,his b.devn was controversia (as Bappeas ,x,Zanted a

central DIP they controlled while the ministries did not). This conflict, which was the result of thestructure of adjustment finance lacking any direct control over line items, resulted in significantdelays.

The safeguarding activities that were implemented the best were those that were financedseparately out of grants. A series of ASEM grants supplemented the ability of the government todo things like the budget folders. Since these were more "normal" ways of financing activitiesthese made everyone comfortable and with Bank execution could be very rapid.

Of course Bank execution of grants to carry out activities that were part of conditionality of a

- 17 -

Bank adjustment loan treads a very thin line of the Bank not being responsible for implementation.aupp-ose 'Lue Task. Imiaugeo Ui BLaiK exc-uLdU a1A1 tkaAi WiLL Was Uscu Uy uiv Vunum gro-up tocoordinate implementation of the safeguards and approved the TORs and all activities.This wouldmake it difficult for the Task Manager to turn around and find performance unacceptable.

This contradiction between adjustment finance and implementation is of course why otherinstruments have been proposed like "hybrids" and the move from sector adjustment loans to"sector investment loans" (with more line item control).

Cofinancing.This section has been reviseA in light of TRflC corments ont fre *t Adft lx,khich re .-_rodiueA

below:

"JBIC considered that the budgetary impact caused by the cancellation of the 2nd tranche wasnot sufficiently debated among GOi, WB and JBIC. Since GOI explained to JBIC on thenecessity of Loan extension clearly and possibility to achieve the conditions, JBIC suggestedholding the joint meeting to solve miscommunication.Then, WB, GOI and JBIC jointly discussed the status of the achievement of conditions andnecessity of Loan extension. However, WB could not be convinced by GOI's additionalexnlanation that showed GOI' commitment to_fulfill the conditions and concluded that there wasno possibility to achieve the conditions even after Loan extension. As a result, WB notified GOI

ard .1-J.-U of4- th -ra .es.;r ..t..'..t -U l.A 00-,v.hu the 2rd- .i,1a.hWr.ae

!Arnougn JBIC unaersrooa nar itne WE supervision mission in August 2000 expressed concernabout the difficulty offulfilment of all the loan conditions for the 2nd tranche, at the CGImeeting in October 2000, the 2nd tranche of the SSNAL was specifically included in the WB'sdisbursement pledge. That regrettably misled the co-financier about the status of SSNAL untilthe very last moment when WB notified there would be no Loan extension. The lesson learnedfrom SSNAL is that we should have more detailed guidelines and framework to operationalizethe Procedural Arrangement to minimize possibilities to mislead each other. "

The co-financing led to mniscommunication with JBIC and substantive disagreement about theW'II~IJ I LID.V i,rIi C 1'JL L U1OI LrIu".~ III VJ.~i IJ ~ &V I.. . JIii.1 ILi1L UIaL IL Wa3D IKL alVJU LI

informed and consulted by the WB before the decisions were taken.

The question is: can The Bank help out the Japanese meet their legitimate financing targetswithout getting itself into the position again where the institutions are in conflict. One lesson isclearly to have better communication and establish a means of informing each other on all majorsubstantive decisions that allows adequate time for resolving miscommunication. However, thereis no guarantee that even with ample communication there will not be disagreement. How canthat be addressed. One possibility is that The Bank could get JBIC to write legal documents thatAllowed them tn fnrm the-ir own, in.depndent, judgments about whether conditons had been met.It is doubtful that they will agree to this, as it defeats to some extent the purpose of The BankprovidinLg UUlo Ivan ppiu duL supenv-ision srvice.

- 18 -

A second possibility is to only allow co-financing of first (or only) tranches. If of course The Bankstops two tranche operations this is moot.

6. Sustainability

6.1 Rationale for sustainability rating:

Since the second tranche of the loan did not disburse, and the ratings on sustainability is'Uiiky , soume explnikUUUUI of-why 'uIh UlLUa ULU did not dUUThiib isl in rUdir.

U- O~T AT I -L I-- ---

ITe, SSlNAL sei ambitious perfurrnance wtrget oii ooin new SiN programis anu innovativesafeguarding activities for those programs. Substantial progress was made in both areas. TheOPK, SBG, and J-PS-BK programs made impressive gains. Some of the safeguarding activitieswent well and set precedents that can be sustained and replicated in the new decentralizedenvironment for programs and projects. However, the ambitious targets were not achieved byDecember 2000. Rather than change the goals, the Bank [and GOII decided to allow the loan toexpire rather than extend its (already twice extended) closing date. This reflects a commitment toa new and more transparent working arrangement that is GOI nnlicv

Th'"ue SSNAL as presented to the World B 's Board te to be a one-.ye& r pro,g 1. Allof the conditionality for the second tranche referred explicitly to the GOI fiscal year 1999/2000.One of the key second urancne conudions was that tnere nad to De --aaequate performance-- m thekey SSN programs in at least three months. Adequate performance was defined as meeting theperformance targets in both program implementation and safeguarding in all but one of the SSNprograms that were in operation in any given month (so that one program missing its targetswould not block performance). In addition, each program had to have at least one month ofsuccessful performance. In negotiations with the GOI it was agreed that reaching adeauateperfornance in 3 of the 12 possible months in FY 1999/2000 constituted an ambitious (sinceprogrmm hAd ne.ver been subjected to this level of scrutiny before) but achievable target. In fact,the original loan document set the closing date for the loan for Dec 31, 1999 in anticipation ofrapid complJeltion of Ul fU1I st, 1IIU Ov AIvLrU UaLA.11 LLLiLAU1h1ULI.

However even tnougn tme ioan was approved by the Board in june i999 tme disbursement of tmefirst tranche did not occur until January 2000 and the loan closing date was extended until June2000. Even though there was no direct legal or financial connection between the disbursementsof the SSNAL and the operation of the programs, in reality this delay caused the release of thefunds for project implementation to be delayed. This delay meant that three of the programs(which were rupiah mumi financed) were not implemented at all in FY 99/2000.

lp.rmicp nf thk delyv it ws agrpped thnt the nprinoi in Wuhis h the GMlT eiild meiet the t rgpt nfthree months of adequate performance would be extended to include the nine month FY 2000

nAAA- -L- T: V .. .AnPA ALA_ A li -- Ulu [ /' n..LA A1n _:- _ TLAA_Ast2'- l- A_ _ A -: Akuv,auzv ui L- ir wa; v.uaurbu r i 77/ VVV liau Xu IlUiILUI; auu r I I.uVuv liU HIUlU). I11Ub IILVUHL

that essentially the GOI had 21 months to achieve the same performance targets originally slatedfor only 12 months. With agreement of the Bank on the design of the programs and with anagreement on the program by program performance targets for FY 2000 the loan closing date wastherefore extended until Dec 31, 2000, with the anticipation that the performance targets and

- 19 -

reporting and vertication would have been fully completed by that date.

When the loan closing date was reached the conditions had not been met. In spite of the successof some of the SSN programs and the important innovations in openness, consultation, andsafeguarding made, the World Bank exercised its option to not extend the closing date of the loanfnr fonr reasons. First, is was administratively imnnpsihle to extend the nerind fnr comnliancewithin the structure of the existing loan agreement given the decentralization that happened in FY2001 as mawy oft e progra.-as c-1A' not -ny, longe lbe i.n.nln,a as -r4 -;-.lll A-ineA

'JJIA.VV JflL IJ LA , j)l51 ~ lA L%JUL"% JIuI GL". IIJJLnr%,IU.. 5pl1~U~t V., U1lrLUGIL1J '.J~0WAVU..

Second, there was considerable uncertainty as to whether certain of the conditions could ever bemet as agreed (e.g. conditions on consultation with civil society groups on the procurementregulations, their participation in the SSN programs, the extent of district level meetings on SSN)On the substance of the compliance with loan conditions see the detailed note "The SSNAL Disputed Conditions.".Third, importantly, even by December 2000-4hree years after the crisis began-certain of theSSN programs had not reported a single successful month and hence the only hope the conditioncould be met was that their performance in December successfully met the target for that month.Even if the loan closing date were extended sufficiently to allow for reporting on the performanceof each of the SSN programs (and verification of those reports) it w2s not nt al clear the mnotimportant second tranche condition-SSN program performance-would ever be met. Fourth,Cven iu y some 1.. IjJVUaUL%, combJLioUUnU VI of VcVUfl -Lv lozn %,nIULL1LLUJ.i.0 wer Lw.tUInu y r.etI. by

performance in December of 2000 it hardly seemed in the original spirit of the loan agreementapproved in june 1999.

6.2 Transition arrangement to regular operations:Not applicable.

7. Bank and Borrower Performance

Bank7.1 Lending:Satisfactory

7.2 Supervision:Satisfactory

7.3 Overall Bank performance:Satisfactory

Borrower7.4 Preparation:

7T5 Governmrnit ip mfinpo manro:The second tranche conditions were not fully met due to the many difficulties encountered during

7.6 !,,mplementing Ageny-

-20 -

BAPPENAS was the implementing agency and as an implementing agency of the overall SSNALtheir performance was "mostly satisfactory". However some of the sectoral ministries (andBappenas as an implementer of a program) were unable to launch programs under revisedguidelines in time, so their performance would have to be `unsatisfactory"-although the reasonsfor failure were complex and sometime not under the control of the ministries (e..g. the change ingovemrments led to ministerial change) Promeess and cnnsultation requLrements tended to be

weakly met.

7.7 Overall Borrowerperformance:

TTInqtisfacntry. The broad range of obiectives were not met to the extend which would enable secondtranche release.

8. Lessons Learned

Lesson: Adjustment loans of sufficient magnitude to have macro-economic consequences arevery high profile, and hence are a very problematic instrument for institutional changes.

* Lesson: No more two big tranche operations. Avoiding multiple tranche operations involatile environments is recommended Bank practice now in any case.

* T esson: AdAiintmi.-nt Innin thnt renuite rrnQc_QPttnrnI imnlpmontatinn (ean nnnoned to

simply policy adoption) by line ministries will be complicated.* J 'son void adusLLu..e,.LLt loan withL process condit:ons whetever possible ',.he

process is a necessary part of the condition, do consultations very early in the loanpreparation (so they can be done a number of times, if necessary).

* Lesson: Avoid cofinancing of second tranches.

9. Partner Comments

(a) Borrower/implementing agency:* Desnite all the lessons learned from efforts to fulfill SSNAL's conditionalities, government

officials continue to think that is unfair of the Bank not to extend the loan and give GoIopporl tr~^ -lAll all the senicond tranhe'sc rnmAitionsa

t FWL&n ... n. w .. fi. SJS OW.-J* - - -

* Lesson: For a national program, the central government should have a general but reliablepoverty data necessary o prepare geograpbiC LkUng do-w *o *Le diUUML level.. rom +e

sub-district downward, geographic allocation should be conducted locally by the localgovernment band in hand with civil society.

* Lesson: Uniform and nationwide program should be replaced by specific and flexible programbased on local needs and characteristics, which are able to be quickly disbursed.

* Lesson: good governance initiatives is a long-time effort, while SSN program is a rescue andshort-time effort. Although sometimes conflicting, it was the auspicious time to instfill goodgovernance values and start implementing them as the country is in a transition stage.

/(Se Ar,r.ex 7 1 f-r C'. surnf..a.f the rm,I,i,'f. n report on VAS n,, its vf,n7faznvd.i.

(b) Cofinanciers:

(See the comments by JBIC inserted into section 5.4)

(c) Other partners (NGOs/private sector):* In spite of the transparency that the Bank tried to implement within its institution --in addition

to transparency instilled all through the SSN program cycle as part of the government effort-civi! society orgraniz_t.ons continluef to h;nl- fhnt foep rBankn ic a non-trancnsprent inctilht_tn tlhatapplies double standard: unwilling to disclose all SSNAL documents (e.g. Minutes of1-4V%V.UL1U1io) W LUI s jJu&ingll VVIJIV eryn LU tUJsPUIL fIo andU appliy udLu0paIaIII..%y VIfIfo.

* While understandably never formally praising the Bank, the CSOs were almost uniformly arepleased that the Bank did not disburse the second tranche given that the Go!, by theirstandard, did not fulfill second tranche's conditions.

* SSN and its safeguarding designs are seen as full of gaps, a clear reflection that Gol as well asthe Bank misunderstood how communities work at the lowest level.

(See Annex 7.2 for summary of CSOs comments on SSN programs and its safeguarding)

10. Additional Information

Annex 1. Key Performance Indicators/Loa Frame Matrix

Outcomel Impact Indicators:

I IndIiitorIMstrIx I Prmlectedin last PSR. I AciaLate4t- EsUm_ate

I ___ .__ _ I1 ..__ _

Output Indicators:

IndWatr/Matrix Prolected In lastPSR AtuajlLatest Eitlmate.

End of projectNA

-23 -

Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)1 - A-praisai: . | AitfualiLaat`t | Percentage of 1

Estimiate :-- mate- AppraisalProject Cost By Component US 'm~ bIin --US$nmillion.;

Total Baseline Cost 0.00 0.00

T. P. la p'_ __rt _ _ _ _ _ n nn_I_I

Total Financing Required 000 0.00

NA

-24 -

rrojecx C.osts Dy rrocuremeni Arrangements (Appraisai Estimatej (US$ mii;;on equivaient)

I . .--A--u.N-r^ E-- ~ |i ~-b-~ ft-f_ 1 ,Pirocurern.nt Meth'od.- , L12?7-T- 1 { ,;< - - B; -I N.r. I UNLa

2.rGoods 0.00 (0.00 1 0.00 [ 0.00 0.00

(0.00)_(0.0.00) (00) (0.00) 0.00)___________ ________ _ I I I I__ _ _ _ _ ___ ___ ___ (0.00)

3. Services 0.00 0.00 0.00 0.00 0.00I (0.00) (0.00) (0 00) (0.00) (0.00)

4. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

5. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00)) .O0) I (o.orn (0.00) (0.00)

6. Miscellaneous 0.00 1 0.00 0.00 0.00 0.00LI A AA I (A lln I (A nm I (AAl I I A

| Total | 0.00 0.00 | 0.00 0.00 | 0.00

I ____________________ _ I U(0.00) 1 (0.00) 1 (0.00) L (0.00) 1 (0.00) 1

NA

ProJect Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

-...IM.;.' PcuremerntiMethod.-

I. Wors . . . . . .- NB. . ~. I ther N.B.F. TaCo

1. Works ~1 0.00 0.00 0.00 J 0.00 1 .00t (0.00) 1 UJU (0.00) (Ov) I (O OUU) I (.00)

. . . . . .N.B

3 . eoros 0.00 0.00 0.00 | 0.00 0.00(0.00) 1 (.00j (0.00) (0.00) (0.00)

2. Mosc 0.00 0.00 0.00 0.00 0.00

~5. Miscellaneous .I (0.00) I (0.00) I (0.00) I (0.00) 0 k.00) 13. Services | °.°° r0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) [ (0.00) J (0.00) (0.00)14. Miscellaneous 1 0.00 1 0.00 0.00 0.00 0.00

I (0-00 (0-0I (0.00) (0.00) (0.00)Is. Miscellaneous 1 0.00 0.00 0.00 0.00 0.00

I~ A (°A° I (°°° I (° °°) Il°O°) I (°°°

I I (°.°°) I (0.00) 1 (0.00)_1 (0.00) 1 _(0.00)_1I To': 1 ~~~~~~0.00 1 .0.00 .0 1 0.00 1 0.00 1

I I ~~~~~~~~~(0.00) 1 (0.00) 1 (0.00) 1 (0.00) 1 (0.00)

NA11Figures in parenthesis are the .Moujis to be fiunanced by the Bank Loan. Aii costs include contingencies.

2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staffof the project management office, taining, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

E1- - - |: ~ | Perntage of ApprissalComponent I Appraisal.Estimate - Actual/Latest Estimate

| . . j Bank Gevt. CoF. Bank Govi CoF.| Bank G1. ov. CoF.

NA

-26 -

Annex 3. Economic Costs and Benefits

N.A.

-27 -

Annex 4. Bank Inputs

(a) Missions:

! Stage of Proiect Cycle ! No. of Persons and Specialty 1 Performance Rating(e.g. 2 Economists, 1 FMS, etc Implementation Development

Month/Year Count i Specialty Progress Obnedive

Identflcation/Prepara1ion'KTove ..- I !99 8 5 I P8pm n fficerq- I Sociologkt s t SS

2 Economist

Appraisal/NegotiationApril, 1999 16 2 Program Officers, 2 | S

Economist, 1 Sociologist, 3Sr. Operation Officers, 8

Supervision 200Consu1tantsJanuary, 2000 29 2 Program Officers, I Sr. S S

Economist, 4 Economists, ISociologist, 4 Sr. OperationOfficers, 1 Sr. DisbursementOfilcer, I1 Promocurmnt.Officer, I FinancialMs-nagemeRnt Spec-RWist- I Operation Officers, 11Consultants

ICROctober, 2001 3 1 Economist, 1 Social Devt. U S

Consultant, I Civil SocietyConsultant

(b) Staff:

Stage of Project Ctycle | Actual/Latest Estinate

I__ _ _ _ _ Nop Staffvweeks -US$ ('001)Identification/Preparation 1 0.03 r 198.312.00

|Appraisal/NegotiationI Supervision 74.42 331,770.18

ICR 3.50 11,446.56

To__ l 77.95 541,528.74

-28 -

Annex 5. Ratings for Achievement of Objectives/Outputs of Components

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

O Macro policies O H O SU O M O N O NAOI SectorPolicies OH OSU*M ON O NAEl Physical O H OSUOM O N * NAO Financial O H O SU O M O N O NAEl Institutional Development 0 H O SU *M 0 N 0 NAO Environmental O H OSUOM O N * NA

SocialLO Poverty Reduction O H O SU O M O N O NAOi Gender OH OSUOM ON ONAL Other (Please specify) OH OSUOM ON * NA

O Private sector development 0 H O SU O M 0 N * NAO Public sector management 0 H O SU O M 0 N * NAOI Other (Please specify) OH OSUOM ON * NA

- 29 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

O] Lending OHS*S Oru OHUO Supervision OHS OS OU O HUOverall OHS OS O U O HU

6.2 Durrower perAurmarie uaing

O Prnanrnt.in OHS S O r O HO Government implementation performance 0 HS 0 S * U O HUM Imnlementation agencv nerformance C) HS 0 S C U O HUi

O Overall OHS OS U O HU

- 30 -

Annex 7. List of Supporting Documents

7.J. C 1.I1.NT F RM TIHE M. 1 E 1 . TNTCT AGENCY

.V7AY. T ~. Y`YA..V%ML A A *Tbd±T1A dnflk sY..-%VQ fl±AsJ .C an1fi A lrt Cat L ar rA Mr

EJr AT RtEPOA'I'1/ KJ T O L ' ' -C'T A T S-FlT ^ fET1' NE1T ^U IT'S

SAFEGUARDING

Introduction

When the economic crisis crashed Indonesia in the end of 1997, many devastated impact cometo arise, including social and political crisis. As the economy was contracted by 13.2% and theinflation rate reached 77.6% in 1998, number of open unemployment increased significantlyfrom 4.3 million (4.9% of total working forces) in 1996 to 5.1 million (5.5%) in 1998 -inaddition to growing number of underemplovnment that reached about 8.6 million DeoDle in thesame year.

The population living below poverty line increased significantly from 22.5 million (11.3% oftouu popuiatiion) in 1996 to 495.J Illiion (24.2%-/o) in 1998. Alulough th.e co,ndition lb gett;ngbetter -latest projection (February 2000) put the number of poor at 33.2 million (17%). Poorhouseholds consumed food of lower quality (and quantity); their children have a high risk ofdropping out from school; and they could not afford basic health services. In short, the crisishad reduced access of the poor to receive reasonable income and, hence, deprived theircapability to obtain necessary services that are necessary to develop themselves.

In addition, the price hike has imnacted to the aualitv of nublic services. A big number of localhealth centers and hospitals could not retain their services due to the high price of medicines.Ai -.tuLj7±flflftO. Tnl the educa.Ulh.o Onsector, jJrIyIo y c aIndJ.RL W'1.rrsAtis cd-*i

not operate at the same level as before the crisis.

The Government's challenge to the above is therefore to respond quickly and pro-actively andconcentrate its efforts on those most affected by the crisis. At the same time, politicaltransformation-reformasi-that is currently dominating people's political life brings us face toface with the need for a more transparent and accountable government, a fact whichencourages us to redouble our efforts.

Hence, Govermment of Indonesia and The World Bank nronosed a Social Safety NetAdjustment Loan (SSNAL) that provide balance of payments and budgetary assistance to theD of Tna *n rf ir..poverr.e n 4.o fcn;on of counTrA - 's scia!- safety net

operations through policy reforms and actions in two areas, improving program design andsafeguarding key safety net programs.

- 31 -

* Financial Aspects

In fiscal year 1998/1999 -the first post-crisis years- as the private sectors were relativelycollapsed, the government increased its development budget significantly to stimulate economicactivities. And, as the poverty incidence was extremely high, the proportion of the budgetallocated for SSN programs -together with other social sectors programs- was also relativelyhivh (1-337%)- In the last two vears; as the qncio-eGnnomi2 cnnditinns were gPtting heif-er itsallocations were also reduced. A more detail description on budget allocated for SSNnrnnrnn.tc .* aI%nnm *n T'nl3 -1yLJ

5JaLn 10 ot , vvav n A atflt,v .

-32 -

Table L Budget Alocation, Implementing Agency, and Source of Funds for SSNProgramsFiscal Year 1998/1999, 1999/2000, and 2000

P rogramllnterventlon Area Budget allocation (billion rupiSh) Implementing Budgat1998u1999 199912000 | 2000 Agency Source

Food Security: 6S3 11

1. |Specuria M ety: Operatlon for Rlce (OPK), p 5 8 BULOG & DDN OD State budgetranar.agnen-,n and safeguarding only I-

2. National Food Security Program through Farmers 633 0 0 M in. of Agriculture State budget

rEmpowerment nPKPN-MfPgMcP) ,,rJB3. Dvopment of Pou:'try Rural Rearing M u:::tp:ioat:o 0 7 0M0n f giulu- JSl

Centre (RRMC)4. Rehabiltation of Brackish Water Shrimp Culture 0JBIC

jEducation: 2.923{ 2.054 | 1.066 I

5. |Scholarship and School Block Grant(5BG) 1.1381 1.2091 6671 DEPDIKNAS I ADB.WB & i

1l. Scholarship for University Students andiSiock Grant 1 338 309 0 0I DEPDIKNAS State budget17. |Operational and Maintanance Funds for Primary 595 5361 3991 DEPDIKNAS, DEPAG, State budget

| Schools IDOP SDtM iI & DDN-ODl8. I Primary School Rehabilltation and Development | 852 DEPDIKNAS, DEPAG. State budget

I I & DDN _ __ _OD_

[Health! 2.270 f 1.682 1.280I

9. ISSNinHealthSector(JPS-BK) 1.0431 1.0301 867| M In. of Health ADB & state

Social Welare (~~-oI I Ill 1| 88* fSca }r budget

I l l l l | BKSN | budgetI SlpemcifiBlockGrantforCommunityHealthCentres 721 0 0 M In. of Health &DN- | State budgetI I I I I I -12. Supplementary Food for Primary School Students 414 550 345 Intemectoral State budget

| (PMT-AS)

Employment Generation: 2.045! 1.000 441 1|13.1 Laborintensive Program to Eradicate Crisis Impacts 5971 01 01 Mn. of Manpower State budget

| IPDKM K) i14. LaborintensiveforTrainedWorkingForces(P3T) I 399 0° 0 Min.of Manpower Statebudget15. ILabor intensive Program in Forestry Sector 491 0° 0° M in. of Forestry State budget

j16. lLabour Intensive Program in Public Works Program 859 8501 3661 M In. of Public Worksi State budget(PKSPU-CK In 1998/1999)/ Urban Labour Intensive DEPKIMPRASWiL(PKP)

i 17.|Special Initiatives for Women Unemployment (SIWU) 18 -'01 751 DEPKIMPRASWIL State budget

_C_muit Enwr ntFunds: 1 1.701 1 792 1 436 1'18. lEmpowerment of the Regions to Overcome the 1 1.7011 7921 4351 DDN-OD State budget

Impact of the Economic Crisis (PDM -DKE) I

Total Development Budget 9.573 5.6456 3.230

lRice Price SubsIdy of OPK program (current budget) 1 5.4501 8.2351 B 32 ULOG State budget

LTotal Budget | 15.023 | 11.880 j 5.462 j j

So&M: sdopted from Irawan, et. al. (2001) with revision on the data drawn from PIN-JPS (2000), Program-Program Jaring Pengaman Sosial(Social Safety Net Programs) and other TKPP-JPS publications.

Nots: - BULOG = Logistics Agency, DDN-vD - Miniisuy of Home Affairs ani Regional Au-tnomy, DnrEDiKAS = Minitiy of NauuouaEducation, DEPAG = Ministry of Religious Affairs, BKSN = National Social Welfare Agency, DEPKIMPRASWIL - Ministry ofSettlement and Regional Infiastructures, JBIC = Japan Ban k for Intemational Cooperation, ADB - Asian Development Bank, WB= World Bank.

- Tbree programs (PKP, PKPP, and PDM-DKE) were not implemented in fiscal year 199V/2000 due to fiscal limitation.- 'hrec programs (Development of RRMC, Rehabilitation of Brackish Water Shrimp Culture, and Scholarships and University Block

Grants) were implemented as a regular program (non-SSN) in fiscal year 2000.

- 33 -

T MplementLU-60BLS Program-1-s

* Food Security

The Special Market Operation for Rice (OPK) has been implemented in all provinces since mid1998. The program provides rice for poor households with subsidized price (Rpl,000/kg). Inits early implementation (July - November 1998), each poor household was eligible for 10 kgof subsidized rice Der month. As the benefit of the subsidy was too small for each household-the quantum of rice per household was increased to 20 kg/month in the period of December1998 - MeArch 2nnn.

--_ __ _ 1 i-T TY-

Based solUIy l L*Ue [rUepLs of uIe 1 PiC1e11enimg agency kDULOJ or nationa logistics agency),1.05 million tons of subsidized rice have been distributed to, on average, 5.3 million HHs and10.0 million MHs in July-November 1998 and December 1998-March 1999, respectively. Infiscal year 1999/2000, about 2.6 million tons of rice have been delivered to 10.9 million HHs(19.9 kg/HH on average).

Until two years implementation, the evaluation on this program shows that only 6 % ofbeneficiaries received full amount of rice. In rural areas ROO% of the heneficiaries did notreceive a full amount of rice (on average only 11 kg/month). Whether in urban areas indicates+1,o+ +o b r (on- a- 13.3 'g of ,4 .._ce _ ).Af- of +lse con&tion

IJW Il~ fl~U'±.~k&.1%OiS%~t V~t kw..UV 1..~ r ML LUt U.Axxw'Ji L _Y. JVLAJot ULt u%OL I JU LUJU

happen basically due to their limited budget to buy rice on the full amount (Rp20,000 for 20 kg.. \per monfla).

In term of the quality of targeting, the program could be considered as fairly targeted,particularly in urban areas where about 72% of the beneficiaries were poor households. Inrural regions, LP3ES study indicates a lower performance: only 63% of the beneficiaries areconsidered as poor HHs. Nonetheless, the same study shows that the program has transferredrelatively significant amount of money, Rp15,400/HH/month, that mostly spent for other foodconsumption and education.

B13 a s eA on +. above-re, 44 in fisca1 ye 00AAA BTJT OG- r.o tk.jJ u.L UJI % CL.. UU I.F V IiI LLL%U%uI. jLOVICUI.diI, auuu1 LU iv yai5 I II.. Avvv iLU UU L %IJ~J IUUJ.1VWY LLL.

mechanism of OPK program to be decentralized to local government. The central levelprogram management only allocates the amount of rice for each province quarterly based onprovincial requests, and the provincial governments determine district level allocation based onlocal conditions. The quantity of rice delivered to each household is determined at local levelbased on the capability of the beneficiaries to pay. However a range of quantum is determined(10-20 kg) at central level to ensure that the subsidy has a major impact on the income of thepoor and to avoid accumulation of rice distribution in one area.

in the npriond of AnrilT.DecerhPr 2000, 1.4 rnillin tnsn of rie. ,xras Air lVn;+.b o+ 9.7 0.1-;In

HHs (monthly provincial average: 15.1 to 16.7 kg/HHlmonth with a standard deviation of'J - A -1 1__ILTL_T/__ tL A-_+ AL L _- L___ t- _._ _J_- _ ._- s__ _- 3.6. t.6 kw1.l/UlUni). ILO iLI IUWtpLLU i1VC UeVLL VtV[iiiVU, L1uCre Ua a bMJAW Wuat LIIC programimplementation in fiscal year 2000 had improved compare to the previous year.

- 34 -

* Social Protection: Education

The program called Scholarships and School Block Grants for Primary and SecondaryEducation was implemented to maintain enrollment rate and quality of services at the primaryand secondary education. It targeted 1 8 million primary schoo1l stlidents (6% of totalstudents), 1.65 junior high school students (17%), and 0.5 million senior high school students

II ) -YSO. U1JL. jii. ~ VL QIUiU LLF.3

UML~ LIUU SI 1JMJL J,&J,J'J,(10%)- -c"hose fa.;lies aepoor-f.o receivWe sCLhU-1 ip -V th c..7'1ofPvl2,00

Rp240,000, and Rp300,000/student/year, respectively. The program also targeted 104,339elementary schools, 18.230 junior secondary schoois, and 9.400 senior secondary schoois (intotal about 60% of total schools -private and public; religious and secular- in Indonesia) toreceive grants of Rp2 millions, Rp4 millions, and RplO millions/school/year, respectively.

The funds were directly channeled to the beneficiaries through post office network in twotranches annually and would be in operation until fiscal year 2003. It is reported that thenumbers of beneficiaries receiving funds in each disbursement phase were always close to100% of the targets. For good management of the progm, the World Bank awarded"President's Award for Excellence" in 2000, as it has effectively maintained the students

paLL.-iciaLfUio atL FJLui.Y and OecordarJY levelJL.

Tne evaluation on scholarship program shows that 72% of scholarships for primary schooiswere targeted accurately to the poorest, although at the secondary level the accuracy becomesless. They predicted the reason for this "inclusion error" was due to the characteristics of thesenior secondary students that generally not the poorest population. A recent study conductedby Nutritional Research and Development Center (NRDC, February 2001) also revealed that22.8% of scholarships recipients were non-poor. CIMU's study also indicates that thescholarships program has successfully targeted towards girls and has a major impact for poorfmiluy innGmF-_.c S.MP-RT fv-oia! muofo-i ".- a." E-Ar. Repoe ....... arit .stab.isd.thm a-trr. sppr

firm the World Bank and funded by seveml donor agencies (AusAID, ASEM, etc.)). (August 2000) also supportsuins a1lrUEliLL, aiLuhuuSL UtIhy luuulLaL LuI , ar LI'LUUIt VI nschuoalNIUpn Is fSUCou;UuY lveVl is less

than adequate.

For school block grant, CIMU survey found that it has major contribution to school incomes,particularly at elementary level (21-23%). At the secondary level its contribution is about10-11% for public schools and 3-6% for private schools. Contradictive findings were indicatedby SMJERU's study (August 2000) that they recommended to increase the amount of grants forprimary schools to Rp6-8 millions each and to reduce the amount for senior high schools toRp5-8 millions. However, both studies recommend that transparency of the grants programneedsA t,o be fos~tered.

* Socia; roucfn:LUU. ealth

Tlhe most important program conducted in this intervention sector is Social Safety Net onHealth Sector (JPS-BK). This multi-year program -fiscal year 1998/1999 to 2001- provides a"health card" to poor households in all provinces that can be used to receive free health

35 -

services from local health centers, village midwives, and local hospitals. In the period ofJanuary-December 2000. Fiscal year 1998/1999 funds were disbursed up to December 1999and the outputs are: 66% of targeted HHs received "health card", 81.4% of "health card"holders rerpived services 610/% of targeted delivering mothers received services fr.m localhealth centers and village midwives, and 69% of targeted poor babies and children receivedsuppI'^ULL oodLaLY LU. ofYJ J14.06 :IU:onLL 1tc. 1 w1 13. .V 'I'IUU Ion 1L "ad L%I VV1U U.iIeLU

card", where 50.7% of the cardholders have been receiving free health services.

It is also reported that in the same period that 81.2%, 69.5%, and 78.5% of the targetedpregnant women, women giving birth, and postpartum mothers have received services fromvillage midwives. For nutritional improvement, about 51.5%, 52.7%, 43.6%, and 68.8% of thetargeted babies (6-11 months), toddlers (12-23 months), children (24-59 months), andpregnant/postpartum mothers received supplementary nutrition, respectively, particularly fromthe "integrated health services post" (POSYANDU).

However, mis-targeting also occurred in JPS-BK program. About 12.3% and 10.5% of health__AU_1 AAA_A_ A p et" w _ 1 : ]]]_ in A n ElN*vA_AA , A4 A 1 .1 44 _ _ _ Tn 1E%r

WlLLUlJlU;:0, ^Wi jJ4LVyVY 11I 1777 U UVVV , W JILUa1y ILVtUV1 1U UJ1, FVuI

2001). This may be resulted from lack of community involvement in targeting at village level,as village nead and the head oI iocal community health center were dominating thedetermination of beneficiaries. In addition, limited information dissemination -even to theprogram-implementing officials at local level- led to lack of community awareness about theirrights to receive free health services, as well as low disbursement of funds due to lack ofunderstanding at local program-implementing officials.

a Employment Generation

In fiscal year 1998/1999, two labor-intensive programs were introduced to generaterapFyI-mulum for Uunu d abuorers, uLose are L"abor M1Wenwive rrugram to Eradicate

Monetary Crisis Impacts and Unemployment" (PDKMK) implemented in more than 200districts, and "Labor Intensive Program in Forestry Sector" (PKK) that was mostly operatedin 155 districts in 19 provinces. PDKMK generated 110% and 88% of the targetedemployment (28 million and 23 million person-working-days) for the two phases ofimplementation, while PKK only created 44.6% of the target of 30.6 millionperson-working-days. For the skilled laborers, the program of "Labor Intensive for TrainedWork Forces" (P3T) was imnlemented in all nrovinces to generate more than 60,000employments.

Another efforts in this fiscal year was reorientation of urban infrastructures development toabsorb more unsilied laborers under the program of "Labor intensive Program in PublicWorks Sector" (PKSPU-CK) that covered 13 provinces in Indonesia. Of the 12.7 millionperson-working-days targeted, only about 50% employment were created.

As indicated by Lewis, et. al. (1999) and URDI (1999), criteria-selection related mis-targetingand male-biased beneficiaries were the most frequent problems found in the implementation ofvarious labor-intensive program. URDI study also indicated that about 30% of the

- 36 -

beneficiaries were not the intended targets (inclusion en-or). In addition, lack of coordinationamong program-implementing agencies at local level (overlapped project and benieficiaries),lack of community involvement in planning, and unproductive activities that did not providenositive externalities (excent cash transfer) were other drawbacks of the programs CTKPP-JPS.November 1999).

Hence, starting in fiscal year 1999/2000 the four labor-intensive programs were merged intotwo programns, 'Labor intensive t..u-rriae urban injrastructures ana Services Program(Urban Labor Intensive or PKP) and "Special Initiatives for Women Unemployment" (PKPP)under the coordination of one line-ministry However, the two programs were notimplemented in fiscal year 1999/2000 due to budget limitation. Political uncertainty andseveral big corruption cases has delayed disbursement of several loans supposedly supportbudget deficit. (For example, the first tranche of Social Safety Net Adiustment Loan (SSNAL)from the World Bank was disbursed in January 2000 while the conditions have been met inAlugust 1999) Finallyv PKP and PKPP were imnlemented in the last nquarter of fical vear 2000(October-December 2000), although the budget was cut to about alf of the 1999/2000UiIL1-LU11

Activities conducted irl PPr program were constructiontrenabiiitaiion oroperations/maintenance of urban infrastructures in 59 districts in all provinces. The latestreport (as of December 2000) shows that 226,321 persons (204,029 of which were eligible toparticipate) were registered at the registration units opened at sub-district level. The programhad absorbed 193,340 persons to work for about 42 days that generated 8.2 millionperson-working-days (101.3% of the target of 8.1 million). 2.0 million employments of whichwere generated for women (24.5% of total employments).

PKPP program was implemented to generate employment for unskilled women unemploymentwhose pm UL4jJOUVoJ Was V.y 11 Lo i ULIV 17701 1777 1CUU1WI;-LlWnAVe pLuro;6ls. The apprluacu la

bottom-up (demand-driven): any organizations in urban areas may submit a proposal on anyactivities (social services, operations and maintenance of infrastructures, and taining) thatwould absorb women unemployment. The report as of December 2000 indicated that 83,800women unemployment (145% of the target or 7.28% of total women unemployment) had beenparticipating in the program conducted in 143 districts/municipalities in 6 provinces.

* Community Empowerment Funds

The . nrna-m nf "Fm,nnwormpnt of the Roo.anHL fto fnP,.-,nmn the Tmn.n7t nf the R,'nAmnic

Crisis" (PDM-DKE) was firstly implemented in the last quarter of fiscal year 1998/1999 as aresponse to Lfe wea-kLuess oite u^1aUr-ni1LVjJive puograim LU iAnaU"UUVUo UU5 LUr u. i Une olca

community and to generate more productive outcomes. The most important aspect of theprogram is that community groups have to plan the program tnemselves with assistant fromfacilitators who help them designing, implementing and monitoring the activities they proposed,which could be labor-intensive type activities or revolving funds for small-scale businesses runby the poor.

- 37 -

Of Rpl.70 trillion allocated (the biggest program -in term of fund allocation- among1998/1999 SSN programs), Rpl.45 trillion were disbursed to about 4 million beneficiaries.However, low capacity of the village community organizations assuming responsibility ofprogram implementation at local level, as well as intervention from village head and localgovernment officials, corruption, and mis-targeting were the major problems occurred in thefret upyr nf iynlpn,mPntntinn (TWPP-TPS Tl, rPmh.-r 1 QQ).

A lUt__s. _____ _f 11L . A _ 3 t _tL___ ___ :_ ___._1nn/n _J-UlUUu,l InipluVVilIvIW U1 VW plUgFliiiLl Uv:iliiU IIoU UVa U Um1rUt iU ll: II.ZiWl ykud 1777YIAUVU -a

PKP and PKPP- the program was not implemented until the last quarter of fiscal year 2000due to lack of fiscal. Several important improvements were on the geographical coverage -notoverlapped with similar regular poverty reduction programs (KDP and UPP, see next section);organization assumed responsibility as 'village implementing team" was determined by thecommunities themselves; and more detail guidelines on village discussions to ensure highercommunity participation.

The report as of December 2000 shows that 72.6% of Rp 450,069 billion allocated weredisbursed and 1.53 r.illion people * u-rban and ri.,1 r ae-s hb-ve beein 1.ne.fiteA 4or.- +a

program. Based on limited "complete reports" received at the central level, participation of theintended beneficiaries and village comlponents (community leader, religious leader, womengroup, youth group, and NGO) in series of village meetings held in the planning stage wererelatively high (about 80% of the viilages implementing programs).

Safeguarding Activities

As previously discussed, limnited time available for program preparation and implementation inthe first year of SSN had led to several problems that generate complaints, critiques andsuggestions, either directly given or reported in the news. In general, the problems of SSN1998/1.0t900 i-mnl-mnta i Yn w.,-Vr tm L ;mintatn -eAl +1t, -im- , were nt ,wl

^SSVI~~~~~~_ *//k_sv[ s.; -s s W s - F-V-Wbk W9ro; V

socialized and implemented; (ii) program implementing agencies and the communities(including beneficiaries) were not ready to implement such a new and quicKly channeiedprograms; (iii) the government was not legitimate at that time and the relationships betweengovernment and civil society were not in good conditions; and (iv) the programs wereimplemented exclusively by the government, with very limnited civil society involvement.

Hence, in the beginning of FY 1999/2000, a "government - civil society consultation meeting"was held in April 1999 to discuss the future direction of SSN programs. About 200noncverrnmentql rc2ani7ntiAnn (!ocA! Amrmmlnitv wnm ̂ n lahnr relicgniim nndl rpespe,h

institutions) and academicians were gathered and agreed on 13 points of recommendationstTKPP-JPS,J Ap.. 1999) Bsed onL se ad-vises, Oas welJl as brvVim .tLSu aidi i e-xiLUiiai

evaluations, the government made some improvements on targeting, implementationmechanism and management, and monitoring of SSN programs in F Y 1999/2000.

Improvements of SSN programs are basically taken through the use of accurate and up-to-datedata in targeting process, establishing program implementation monitoring (safeguarding)activities, program integration, and greater concern on women's participation (TKPP-JPS,

November 1999). In addition, allocation of funds to the lowest level is done atdistrict/municipal level -and in certain instances, even at smaller administrative units- allowsflexibility by accommodating the unregistered poor, and involves more non-governmentalparties.

Tn general, sa-feg-rdng acti'it-es consists improverent of the qalisty and coverage ofinformation dissemination, establishment of complaint resolution mechanism, application ofperfUormanceb-UasbU lrpUltling sysitemll, 1inUdpUndent venrifiCattiOn, Iand enalincemenll;ft O Civill SOCUliety

participation. In order to foster the implementation of those activities (except independentverification), the government formed Coordinating Team for SSN Programs (.KPP-JPS) atcentral, province, and district/municipal level which consists two units: SSN InformationCenter (SSN-IC) and SSN Complaints Resolution Unit (SSN-CRU). SSN Controlling Team(TP GTP-JPS), with members from government officials and nongovernmental organizations,was established mainly to verify the government reports and providing inputs andrecommendations for nolicv makin8.

* Transparency and Information Dissemination

SSN Information Center was established to actively disseminate information on SSN programs,and to ensure that any interested narties have easy access to SSN data and information. Inaddition to customer-based services, SSN-IC at district/municipal level also produced "SSNT-P-;- . 1..-on -od2 hich -on.n- brief Vfi.To about .- AN prg&m-nd +.,' budget

allocation in each administration. The folders were disseminated to NGOs, press, university,and legislative body, all at local level, and all sub-aistict oinces in each jurisuiction. At thenational level, SSN Informnation Clearinghouse also disseminates informnation through severalpublications, bulletin, the web (www.pin-ps.or.id), national newspapers, and television andradio stations.

In addition, each program-implementing agency also disseminated information through severalmodes, such as television and radio stations, newspaper, and local government officials atsuh-district and village level.

* Civil Society Participation

Learning from first year experience, the government supports establishment of "stakeholders'forimn," MPp) in everv distrinctmnnicipnlitv. In the operational stage, all civil societvcomponents and the government may discuss any complaints, issues, and problems in this-ubli sphere T Tp +o this point, not I=s +a- 226 dis;cs,'mipal hav ----- s1 U- Vpuu1iV OFJLL".d - L UF LUL J9JULLI.,, "WI,L I . LUO.LiL Z2.L CUiLIMM..C LUiiICIEU p aa13ine

stakeholders' forum (TKPP-JPS, December 2000).

Citizen participation is not only limited to FLP. Externally, the government encourages NGOsto monitor the implementation of SSN programs. And, to ensure the independency of themonitoring activities, the government does not provide funds for them, but encourages donoragencies to channel their grants directly to any interested organizations. Internally, most of

- 39 -

SSN programs involve civil society representatives in targeting process at local level. Recentobservation shows that this involvement is effectively increase the quality of targeting. Inaddition, several nationwide NGOs were also being consulted in the process of programguidelines preparation and acted as independent evaluators for several programs.

Th_ roles nf eaf h Ot2lAhnder in the imrrin-mPntntinn nf SSN nmornomc rP q1a mmari7tI in Tnhale

2 below.

Table 2. Role of SSNStakeholders

Stakeholder LevelNational Local Village

Government * Determining policy* Determining implementation guidelines* Det"miii-ung- geogrphic allocation* Fostering monitoring and safeguarding (information dissemination, complaint handling and

resolution, and public participation)* Determining local adjustment necessary for technical implementation* Determining village level allocation (with civil society)* Implementing momtonrng and safeguarding* Facilitating establishment of"Stakeholders' Forum"* Tmtn1em~.tenli the r.no,m., cn t1,e fi!

Facilitating community meetings

| Controlling |* Pioviding inputs and recommendation for SSN policyTeam I* Verifying govemment's rSrts

I*_ Conon ling fme overall implementation of SSN programsNGO/ o Giving inputs and recommendation for SSN policy and program guidelines

1'm" ar.g F fh*hetof 1- . Stehol-s :

* Facilitating civil society networking in monitoring SSN programs* Monitoring the program implementation in the field* Establishing 'Stakeholders' Forum" with local govermnent* Verifying local govt's reports* uamnng vuage ievei auocauon twiUn iocai govermment)* Facilitating local communities in planning and implementation* Determinine beneficiaries* Supporting local implementers in program operations* Monitoring the program implementation at grass-root level

Performance-Indicator-Based Reporting and independent Verification

Reporting is a standard procedure in the implementation of any programs. To assess theperformance of SSN programs, the reporting system is designed to be able to measure theperformance based on agreed indicators (such as number of persons employed, number ofstudents receive scholarships) and against the agreed targets for a particular indicator.

Bnased on the rponrt ftnm ear4h imlipemp-ntirina a,pncy andi riewio1nal govtm pv* theCoordinating Team issues SSN Monthly Performance Report that is verified by the controlling

-40 -

A complaint resolution unit (CKU) is established not only within the SSN Coordinating Team,but also embedded into each program-implementing agency at each level (national, province,and local). The unit's main task is receiving and taldng necessary actions to follow-up eachcomplaint within a certain period. Another important characteristic of CRU is that it shouldreport the complainant and general public (through FLP or the press) of the corrective actionshave been taken.

Recent data ificat.es thht 2,222 TV m-1ea-,tm s , kli _eu _been A r iv rPT t.11 levels fr. .1* Wf, ,rn .n...ka JA ,A.A ~J**JMJ hO M _ %v *tel .VV - Vj tt.J- Ut ILLL IS/ -1 *~I

programs implemented in fiscal year 2000; 1,595 cases (71.7%) had been resolved and thereiiining are in the process of invesutgation. For auiminisu-ative problems, corrective actionmay be taken by each program implementing agency or local government themselves.However, some cases that indicated criminal misconduct have been referred to the attomey andpolice to be followed-up by regular law enforcement procedure.

Lessons Learned

* Planning and Delivery Mechanism

Social Safety Net programs are central government's initiative and, hence, have a "top-down"characteristic. However, local governments assumed very important role in local targeting(determining village allocation) and made nereesary adjustment to adopt necifle localconditions in the implementation. And, starting in fiscal year 1999/2000 this responsibility wasfnos'r.

4*)l-ouhlh ifl¶flltflliffl*nenf Inn., cirv;l sciet tof,,* 1'o zn~ ' "nr,.rev.tnv non,,rahl,ng nWfflfcss"

At the village level, local communities were the main actor in the targeting process through themecnanism of- vilage commun- ty mecungs (musdes). Based on these pianning processes, theprograms were directly delivered to the beneficiaries themselves, without going through thestructure of bureaucracy.

We could not say that the system had been nnning well in the implementation stage. In someregions, involvement of local civil society in local tarzeting process indicated more mobilizationof nongovernmental individuals to fulfill the requirement of the program guidelines rather thansupporting public participation to imprTve targeting nsnalitv At the viilac- l'vpl, there were

some evidences that village community meetings were never held. Even if the meetings werehelId,'Se drV of "IILLZcUeII WI ULVUULI% \(e.g. V-ar"ze hLeaU, scLhool LuaaivJU) La U iIIIiIir

beneficiaries was still high. In delivery, although leakage was relatively low, several localcorruption cases were stiun happeined.

Nonetheless, for a national program (cental government initiatives), this innovativemechanism should be utilized and fostered in the future. It is impossible for the centralgovermnent to collect and maintain a detail data of poverty of all regions with several specific

-41 -

local characteristics. What the central government should have is a general -but reliable- dataon poverty that necessary to prepare geographic allocation (at district level). The next processshould be conducted at the local level by the government and civil society to incorporte moredvmrmniG and Snecific needs of its nonulationn

* Decentralization

In the era of regional autonomy that is fully started this year, local governments assume theauthority of most pu blic qervices, and- hence, lo.al initiative social safety net and novertv

reduction programs should be fostered. Uniform and nationwide program should be replacedby specificL Fpro,"^r.^ ul"^t, flen;ble r.oe UVcy c-^U.lvd, and based onW.. nesncharacteristics. However, it is necessary to build awareness of local civil society andcommunity to vanguard the government to be responsive to fulfill the rights of its people todevelopment.

However, there are several preconditions for planning and implementing such local povertyreduction and safety nets programs. First, as previously mentioned, there is a need of availableand reliable poverty data that based on local characteristic. Second, institutional capacitybuilding, particularly to foster community initiatives and participation is very important toincrPwrq the effiectivtemtq nf lnrsl nnvertv rer-bwctinn and safe.tv net. 7hird- lncal RtAkehnidemr

need to mobilize altemative resources for local poverty reduction and safety nets, particularly*UIU LUe jjp1vaLt sctorJi ( -uds) and civl vocie y (eApe..ise). F-ou41,.h, Li, wVoU 'db Ver.; VIkUVe

if community initiative programs, NGO's and private sector activities, and govemment effortsin poverty reduction were integrated.

* Enhancement of Safeguarding Activities

Initiation of three pillars of good govemance -transparency, public participation, andaccountability- tnrough SSN safeguarding mechanism is long-time efforts that needs to besustained, enhanced and widen in the scope of programs. Although it was sometimesconflicting -SSN is a rescue and short-term effort while good governance is an ideal conditionthat could not be reached in such short period, it is the auspicious time to instill the values andto start implementing them, as the country is a transition stage of most aspects of govemance.

However, there are several lessons can be learned from two-year experience of fostering SSNc,of,,,vA -iag oc,Zi4-ps F.Vrst, it is noit on y'i th e'ocapa_it o~f pubici1 ofiil thaAt m,,fterc, bu1 t

-more important- is the awareness and spirit of incorporating public in decision makingprocesses, as well as being transparent and aco-uuntabie. On tuhe ouler hand, capacity of localcivil society -and its independency from local govemment- after the era of centralistic andexclusive govemance needs more facilitation and supports from the civil society themselves.

Second, the quality information dissemination is still widely criticized even until the end of SSNand its safeguarding implementation. Despite its timing that was always behind the programimplementation, SSN information dissemination was also biased by the "paradigm of

-42 -

production" rather than "marketing". Lack of emphasis on what information needed by eachs+e1h_U_eA -an how -n;ol -P-4;n can zeach he +---t grops in aAd;tion +.o th enrtIakehoIUdUr £ILLL LvIU VY 10ikUIIJ.LIUJ CLGi kva%O.J.d U1C LaIr19 r,Vu0 ~I UjJ ILuLa,LU.Lv 1,J U A e JL IU I

manner of dissemination, led to limited understanding and awareness of the stakeholders(particularly the targeted beneficiaries) to participate in the program.

Third, lack of grievance mechanism in the last few decades of development has made it difficultto introduce the new system. Despite relatively high performance of some programs andregions, most of the community and civil society groups were not encouraged to raisecomplaints due to lack of trust to the government. In order to build confidence that eachcomplaint received will be followed up by a corrective action, it is necessary for thenrgr2mm-imnnlpm.tncr no agenci to invnlvp relted inctititinins (siuh s polircei dktrtnt ttArynpv

and the government's internal auditor) in this mechanism.

7.2. COMMEANTIS iFOM THE CIVIL SOCIETY ORGANIZATIONS

The following are comments that the Bank collected during a Focus Group Discussionorganized by SMERU Research Institute in January 2002. The discussion was attended bycivil society organizations from Jabotabek area and Bandung with the following objectives:

* To obtain in-depth feedback, especially from Civil Society representatives/organizations(tcSOs) on t.he f.ve ,r'mnnpnPtnt nf VZNMAT enfpmniarAto irnogrme 1lRr ic 'g.v.n

primarily to programs concerning OPK Beras (subsidized rice distribution), Beasiswa &,-M,-ir% /QQC T T" 1TfC n ICp /~'T -' 1...1A --- -N TITPi rTT..L_. T _1....DDBO (SSN' I-Li eZUducauo se'orI), .'PS-BKs (SSN Hin headlth sec'or), PKP ktUrban Labori

Intensive) and PKPP (Special Initiatives for Women Unemployment), and PDM-DKE.* T o assess opinion of Civil Society Organizations on each component of SSNAL

Safeguarding, and to identify lessons learned from the implementation of safeguardingmeasures in each SSN program mentioned above.

* To share experiences of Civil Society Organizations on the implementation ofsafeguarding measures in each SSN program.

* To collect recommendation and input from Civil Societal Organizations on appropriateimprovement measures to be taken in future implementation of safeguarding, along with

naQrwZ mpamirpe +fr ptneim-p tc cl,,tah<1ihr

iiat uiscussion was iocusedu at 'Ul saicguadiuug aspects VI SSNtuAL iuu an i'usimpleumeLUU

within the SSN programs. Following is a summary of the result of the discussion.

I. Transparency: Information Dissemination and- Public Information Center

* Identified constraints in the field:

o Most targeted nrogram beneficiaries have low levels of education, hence unable toread various printed information such as posters, pamphlets. Beneficiaries live in arem,ote area aray 4fr-om, ;nforvmation center thus hal e aifficuFies in accessinginformation.

-43 -

o Lack of motivation on the part of government officials to disseminate theLuwJ"o..""on, uSSN' Fp.v"u1 cre deme as Mu adiioa b``d

o Health Cards were issued without clear procedures; many hospitals refused to extendvalidity dates, therefore the cards were not valid for fuure use.

O Difficulty in finding accurate data on families living in poverty due to lack ofmotivation on the behalf of village officials to identify poor families.

O There is a broad gap between urban (highly educated) and rural (low educated), orunskilled laborer) community mhembers complicate selection of recipient regions.Difficulty in identifYing criteria of families in poverty, due to nonexistence of povertymapping and accurate data on poverty.

o Pmr.e_s nf proram socinli7ntion deemed ineffectiv.e and not field-test-d.o The government, held responsible for information dissemination, lacked awareness in

execuLn 4 its+ duties, -- I.-el -gotf..a'tis

o Program socialization by central government was carried out only for lower levelgovernment apparatus, such as village officials.

o Information provided only on those related to the project, did not raise awareness ofthe rights and responsibilities of SSN beneficiaries.

S Suggestions for improvement:

o Train Puskesmas personnel to set up customer services units providing adequateinfhrma^tnin nin 4Zro,M nrnamm

O Modify existing mechanism based on increased demand and participation of localcomMUDUU ; *o VraUIiuc sense of' Ow-werbhip dIU responsiUbILy.

O Update information, using simple and easy to understand language.O Disseminate information using "Indonesian approach through various informal

institutions in the community, such as PKK, Kelompencapir (Listening andTelevision Viewing Group, etc.).

o Disseminate information through local people, appoint village-level facilitators, anduse the local dialect to communicate ideas.

o Provide sufficient training for field facilitators to ensure sufficient knowledge andskills.WPT rnu PUW at of11-ran 1oy1art Q f^ nfi f mA;l;o in -"vrty

v, v wvs v m4- 5. -- _W W * -J AWofl.flL%d

o Encourage.dissemination of information in urban areas through direct verbalcontacts.

O Clearly appoint those responsible to distribute information, thus a need to havebetter method of information dissemination, especially to increase awareness ofbeneficiaries regarding their rights and responsibilities.

o Eliminate information units at central, provincial, kabupaten, and kecamatan levels.Emphasis should be given to information units at the village level.

O The need for effective information media at local level; television is considerablyetffective huit ton exnenive.

O Use local field facilitators to communicate information verbally.O T-P-sla;- 7n ---- gener l pb;- shu_1A be A.iffent-+At 4f.-om 4;raunfr pL L"I1JuILOIJIcLLL JwIL 6~u"vi"L jJuuIi.. OJLuW&Ul Vu, %&JI1LL.ILULQL-U L.IUZ ILLL,JILJULUU JAIUL jJiUr'LUM

beneficiaries.

- 44 -

* identified Constraints:

o Provided Complaints Box are nearly always empty.o When someone does file a complaint towards a certain party in the government, they

often feel hopeless and skeptical that the complaint will be processed and respondedproperly, they may even face intimidation from another party.

o Many complaints are left unresolved, discouraging community members to reportmore recent cnmnplaints. Tf r2cnnne nnrn1ninrinteiv this wAs often not

communicated to the public, leaving the public to assume that no complaint has beenijauu1t'u apJJIupiauly.

o Complaint function is still vague as to its purpose, whether it functions as a publicservice or as impiementers of measures against deviants.

o Nonexistence of legal protection and safety protection of the complaint filer maydiscourage a potential criticism to be raised into public discourse.

O UPM (Complaints Resolution Unit) are ineffective in solving reported problems.o UPM is located too far away from poor communities, therefore the transportation

costs to reach UPM beyond their means, compared to the perceived importance ofthe potential complaint to be filed.

o l TPM has suciceeAA in handling vnrinus cnmplaints aboult the program (clarifyingmeasures), but unsuccessful in handling irregular cases.

O Comlnplaj.in sULU IAJU L"sIUy,IL- laLUuvib are aln 4UalL nU AieULt. LVYO%t wpAJV1^i-atUs areI

filed by program providers, for example: complaints that beneficiaries are not livingin poverty, aid for village midwives are iarger tnan aid for midwives helping thepoor.

* Suggestions for improvement:

o In corporation with Pemda and NGOs, establish secretariat for ComplaintsResolution Units, with financial support from Pemda. All complaints should beanp%ropir.afilu riwpnnnA-d.

O Involvement of prominent local figures in complaints resolution is strongly advised.O 'urMiv shoulU 'i--lu UVVIe WLulpaisUL* LU I locaU gLUL,& OUVVLLUUJL, agrrlU%y in orIUe LU

facilitate appropriate response to complaints.o The need for community awareness activities to encourage communities to actively

participates in the form of filing their complaints.o The term "pengaduan (accusation)" has negative connotations, should be changed to

"keluhan" (complain).o Develop complaint mechanism with clear sanctions.O Configure appropriate legal measures to protect those who file their complaints.O Complaint Resolution Units should be located close to the communities, in order to

facilitte commun1ty control and facilitate repnort of complaints or critique.O Presence of complaints units should not provoke community members to focus on

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complaints, but to also focus on finding suitable solutions together.o rei-sence ofl CUIori-ijmpl Resol-ution UUUi UmL h ELIUU1LU IUL UhLI-I'h WIUI VAnIg Uofict

resolution mechanisms in the community.o If a complaint is successfully handled, it is best to inform the public so that similar

complaints elsewhere can be responded to in the same way.o The government is responsible for all complaints. Even so, independent institutions

may be established, limiting their activities to ensure that the government is taldngappropriate measures in response to the complaints.

o Need for public-service-oriented NGOs in rural areas.O Introducing the functions of Complaint Resolution Units prior to program

o Mechanisms of complaint resolution should have been drafted and approved beforeinitiation of p[ograrn.

HI. Roles and Increased Participation of the Community

* Identified constraints:

o Misuse of FLP (Stakeholders' Forum) by various NGOs seeking information ongovernrnent nroiects.

O FLP as a decision making body is dominated by members from government agencies.O Fo...,ation .-A -esVmt.ns.ent o FLP appea.- -t be v .. ent-i;tiated, .-. t 4f.-'JI

and by the community.o Estiablished and funded by the central govermment, FLP had been misusea, abused

and consequently distrusted by the public who claimed that most of the fund hadbeen used for 'projects'.

* Suggestions for improvement:

o Government should not dominate FLP as decision making body.o FLP as an institution should be fiurther developed becaurse it could be the embhrvo for

further dialogue between government and civil society.o Create r.1ecANHSHI for a Ut1jarwarent diaLUU ogUVeWr.1vee gvrUV,1L1VEn and civil society.

o Local government should initiate FLP so that it can work together with thecommunity, therefore encouraging community participation.

o Involvement and participation of community members should be voluntary, notcoerced by a certain party.

IV. Monthly Assessments, Reporting Systems and Independent Verification

* Identified constraints:

o Discrepancy of data between reports at central and regional offices.o P annrtc ,arp nrpraA i- a r.plex forr.a .an b r t n

o Lack of report at village levels as to who received and who did not receive rice.

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o Reports were prepared according to guidelines, but failed to reflect the realconditions in the field.

o Communities found difficulty in obtaining reports from executing program provideror executioner.

* Suggestions for improvement:

o Establish and implement a 'reward and punishment' system for those who wrotereport.

o Provide taining to improve technical skills in report writing.O Simplify report format, include only the most important details for higher efficiency

and to minimize data deviation.o Allowance for some flexibility in reportage, as long as the main goal is achieved.o implement a more effective mechanism in sending data to central office and

government. This requires awareness of responsibility held by corresponding official.o Ch0 ge +n,- -a.nv of C, -o.-Ar fir -rron. ran-r-+q For exomnIa n. PK

o ~~LL% FLu~pLa..nuS&. LL. atf&LA. 0w FAn jJLJ 5 Jflh -AjtLtO f 1fLLAf-- LlAA

Beras, according to the guideline each family is entitled to receive 20kg/month,however, in reality the same amount had been allocated for two faiilies. A-uditorsshould be able to tolerate such local adjustment because the goal of the program isnevertheless achieved.

7.3. SSNAL IN THE BANKS EXTERNAL WEBSITE

PFlhdimArig Are infn%rmnf-nn pnnted in the 1on1r's Peti2rnl wehQitp not 1on,c after the decisinn

was made not to extend the loan closing date.http-uIuwvu IO. JId1U7UOnuLp:t/liiwEu 1O.-Woriuua-L.olr,yeap/eap.riis/ JVVLJvUejl 1a,u7uauoJ

2568a3006f557d/projects?OpenDocument

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I Report No.: 24340TvDe- ICR