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Jakarta Commitment: Indonesia and development partners sign agreement to increase aid effectiveness
22 January 2009
By Bodo Ellmers, Eurodad and Kris Vanslambrouck, 11.11.11
On January 12, 22 donor countries and multilateral agencies signed an agreement with the government of Indonesia to increase effectiveness through the use of development loans and grants. The “Jakarta Commitment” was created as a roadmap to help implement fundamental principles of the aid effectiveness agenda on a national level. As Indonesia became a middle-income country with foreign borrowings accounting for a mere five percent of its total spending, its relationships with its donors shifted from an aid model to a development partnership. The “Jakarta Commitment” is an official recognition of this changing relationship.
By agreeing to this commitment, donors and creditors pledge to better align to government programmes and increasingly use Indonesia’s public financial management and procurement systems. Programme-based approaches will be given higher priority in development cooperation, and while the importance of multi-donor trust funds targeting specific sectors or needs is acknowledged, development partners commit to reduce the number of freestanding trust funds and strengthen their alignment with government systems. (Eurodad has demanded an end to the “tale of too many funds”.)
In return, the Indonesian government will pledge to initiate a regular dialogue mechanism to discuss the development agenda with its development partners, including civil society organisations and the private sector. A strong framework for measuring and monitoring results shall be developed within Indonesia’s new Medium Term Development Plan, under which donors commit to reducing their parallel monitoring efforts. If the Jakarta Commitment is fully implemented, it would be an important step in enhancing the ownership of the Indonesian government over development programmes. Although the Jakarta Commitment has some shortcomings and does not include all demands from local civil society on aid effectiveness groups, it is a step forward and could serve as a source of inspiration for other recipient countries.
Local NGOs consulted by Eurodad’s member 11.11.11, however, expressed some scepticism. Indonesian NGOs gathered at the International Forum on Indonesian Development (INFID) have monitored development loans and grants for decades. In the past, INFID has emphasised the country’s sovereign right to plan its own development projects, warning the government not to get too dependent on foreign funding, which can overburden future generations with debt servicing and shrink national policy space with numerous conditionalities. While realising, as Binny Buchori, ex-INFID director said, that this is only the first step; Indonesia’s National Development Planning Board has done a good job in initiating the Jakarta Commitment.
At the same time, some NGO activists have concerns. Last year, Nadia Hadad from Bank Information Center (BIC) Asia was involved in monitoring a specific ADB co-funded project, the Integrated Citarum River Water Resources Management project. While working on this, she realised that “the government lacks clear mechanisms to ensure the aid effectiveness they claim to pursue. For instance, the lack of coordination amongst government bodies, transparency and public participation are still major weaknesses in our governance system. Until such mechanisms are properly set up, I’m a bit sceptical that it would actually make a difference.”
Another key concern is how far creditors are willing to implement their commitments, and to what extent they are willing to work more efficiently by pooling sectors and untying their aid. For example, while Japan is one of the largest donors to the region, several of their projects still include a good share of tied aid.
New donors also pose challenges to the full implementation of the Jakarta Commitments. One example is China, which has recently emerged as a big banker and so far, it has not joined the party of 22.
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