Impoverished citizens in Medan, North Sumatra, receive financial aid as part of the Family Hope Program (PKH) in this 2015 file photo. (Antara Photo/Irsan Mulyadi)

World Bank Lends $200m to Expand Indonesia's Social Assistance Programs


MAY 10, 2017

Jakarta. The World Bank has approved a $200 million loan to help the Indonesian government expand social assistance programs in an effort to eradicate poverty, according to a statement released on Wednesday (10/05).

Rodrigo A. Chaves, World Bank's country director for Indonesia, said the financing can help the government expand coverage of its conditional cash transfers under the Social Affairs Ministry's Family Hope Program (PKH), which provides access to welfare services for qualifying families.

"By expanding social assistance, Indonesia is taking a step forward to further reduce poverty and inequality; not just in the near term, but also to improve the future of children from poor families through better education and health services," Chaves said.

According to the country's statistics bureau, the number of impoverished citizens — whose spending per capita per month is less than Rp 361,990 ($27) — reached 27.76 million, or 10.7 percent of the total population, in September last year.

The government will aim to provide PKH services to six million families in 2017, as outlined in this year's State Budget. By 2020, the government expects to provide conditional cash transfers to 10 million households, up from just 3.5 million in 2015.

The government allocated a total Rp 11.34 trillion for the PKH program in 2017, or 0.5 percent of the Rp 2,080 trillion the government plans to spend this year.

Pablo Ariel Acosta, a senior economist at the World Bank, said PKH has high impact per dollar spent in terms of poverty and inequality reduction, but has the lowest budget allocation for any major government program.

"With the proposed expansion, all provinces in Indonesia will be covered," Acosta said.

"PKH will become the second largest conditional cash transfer in the world, only behind Brazil, from over 70 countries implementing such programs."

Besides the wider coverage, additional funding for PKH will help improve national nutritional standards, thereby reducing severe stunting among children in vulnerable socioeconomic groups.

The World Bank said the $200 million financing will support the Indonesian government's budget allocation of $5.5 billion over the next five years to improve both the capacity and system to deliver PKH to its most impoverished citizens.

To qualify for PKH assistance, families must meet one of several requirements, including enrolling their children in public school.