World Bank Aids in Indonesian Infrastructure Guarantee Fund
Indonesia’s efforts to establish a market for Public Private Partnerships (PPPs) in infrastructure got another boost as the executive directors of the World Bank approved a new project to support the newly established Indonesia Infrastructure Guarantee Fund (IIGF).
The IIGF – now fully operational and engaged in supporting PPP projects – was established by the Indonesian government to appraise and guarantee all PPP projects requiring government guarantees.
The World Bank project is designed to help the IIGF establish operational norms which meet international standards, and build internal IIGF capacity to screen, appraise and supervise PPP projects. The $4.6 million technical assistance component of the project will also help to enhance the capacity of contracting government agencies to prepare PPPs.
Under the second component of the project the World Bank will make up to $25 million available to IIGF to help finance guarantees, should it require additional capital. The World Bank will appraise the PPP projects which receive IIGF guarantees that are financed by loan, and in the process the World Bank will transfer expertise and operational know-how to IIGF.
“The World Bank has been a key partner of the GOI in the conceptualization, establishment and implementation of the IIGF, and we are delighted that WB will be our partner in the implementation stage as well,” says Sinthya Roesly, President Director of IIGF. “The World Bank’s support will provide IIGF with the necessary technical assistance to establish internal norms and procedures which meet international standards and enhance our capabilities as a single-window service provider to appraise and provide guarantees to PPPs in Indonesia.”
“IIGF is critical to Indonesian efforts to build a market for PPPs in infrastructure, which will in turn help give further boost to Indonesia’s economic growth,” says Stefan Koeberle, World Bank Country Director for Indonesia. “By continuing to help build on the high operational standards of the IIGF, the World Bank is showing its long-term commitment to supporting infrastructure development in Indonesia. We also remain committed to providing international know-how to the national institutions leading the country’s development agenda.”
With the World Bank’s support, IIGF will be able to provide guarantees to leverage private investments in infrastructure projects, including toll roads and toll bridges, railroads; drinking water, irrigation, wastewater infrastructure; telecommunication; and electricity generation, transmission and distribution facilities.
The lack of infrastructure undermines economic growth in Indonesia and remains a key constraint to the improvement of quality of life for its citizens, particularly the poor. The projects supported by IIGF will enhance the economic opportunities of common citizens and improve their quality of life.