Journal Issue

Indonesia: Staff Report for the 2017 Article IV Consultation—Informational Annex

International Monetary Fund. Asia and Pacific Dept
Published Date:
February 2018
  • ShareShare
Show Summary Details

Fund Relations

(As of November 30, 2017)

Membership Status: Joined February 21, 1967; Article VIII

General Resources Account

SDR MillionsPercent of Quota
Fund holdings of currency3,860.5683.05
Reserve tranche position in Fund787.8616.95

SDR Department

SDR MillionsPercent of Allocation
Net cumulative allocation1,980.44100.00

Outstanding Purchases and Loans: None

Financial Arrangements

TypeApproval DateExpiration DateAmount Approved (SDR Millions)Amount Drawn (SDR Millions)
Stand by11/05/9708/25/988,338.243,669.12

Projected Payments to Fund (SDR millions; based on existing use of resources and present holdings of SDRs):


Exchange Arrangements

The rupiah has had a de jure free floating exchange arrangement since August 14, 1997, and the current de facto arrangement is floating. The market exchange rate was Rp 13,560 per U.S. dollar as of October 31, 2017. Indonesia has accepted the obligations of Article VIII, Sections 2, 3, and 4, and maintains an exchange system free of restrictions on payments and transfers for current international transactions.

Article IV Consultation

The last Article IV consultation report (IMF Country Report No. 17/37) was discussed by the Executive Board on January 25, 2017.

Resident Representative

Mr. John Nelmes has been the Senior Resident Representative since September 2016.

World Bank-IMF Collaboration

The working relationship between the IMF and the World Bank in Indonesia is very strong, with joint working programs and close coordination through frequent meetings between resident offices and missions from headquarters, including during the Article IV consultation.

Key Areas with Joint Programs

Budget Reforms

  • The reform agenda for budget and treasury remains a high priority for both institutions. Currently, the World Bank’s support is being provided through the Public Financial Management Multi-Donor Trust Fund (PFM-MDTF) and Support for Enhanced Macro-Economic and Fiscal Programmatic Assistance (SEMEFPA) programs, as well as development policy loans (DPLs), with elements in support of (a) promoting budget efficiency; (b) improving subnational transfers; (c) supporting more strategic management of PFM across units at MoF; (d) public expenditure reviews (a multi-phase PER is ongoing); and (e) improved composition of spending, budget execution and efficiency of spending. Highlights of the engagement includes:

    • In 2015, Indonesia completed rollout of a treasury financial management information system, the Sistem Perbendaharaan dan Anggaran Negara (SPAN), which was financed with a World Bank loan and whose implementation was supported by the PFM-MDTF.

    • A Public Expenditure and Financial Accountability (PEFA) assessment was completed in November 2017. PEFA documents an overall improvement in the core PFM system across the budget cycle and finds Indonesia has a strong legal and regulatory framework, and a PFM system largely aligned with international standards. It also identifies challenges such as the management of contingent liabilities and the reliability of budget projections.

    • An ongoing series of Development Policy Loans on fiscal reforms (“Fiscal DPL series”) supports reforms to enhance the allocative efficiency and effectiveness of public spending.

  • The IMF has complemented this work through recent technical assistance (TA) on developing a medium-term expenditure strategy.

Taxation Issues

  • Revenue (tax and nontax revenue) issues are a priority for the IMF and the World Bank, with broadening the revenue base and increasing revenues an important issue for both macro-fiscal stability and the investment climate. The Fund conducted a mission on tax policy and administration in September 2017 to develop a medium-term revenue strategy (MTRS). The Bank provides tax policy (including international tax) and administration support through trust funded TA to the Fiscal Policy Agency and DG Tax, and the ongoing Fiscal DPL series. The Bank has also been providing analytical support on nontax revenue administration through the Natural Resources for Development program. The next phase of reforms, to be implemented under a government-owned MTRS, envisions changes to tax laws and improvements to tax administration to improve compliance.

Asset-Liability Management

  • The World Bank and IMF have been leading an effort to improve asset-liability management, including at the Treasury and Debt Management Office of the Ministry of Finance and at Bank Indonesia, with continued collaboration envisaged, as needed.

  • The Bank has been providing technical assistance to the middle-office of the DGBFRM under the Government Debt and Risk Management (GDRM) program. The TA has been focused on building cost-risk models for debt management strategy development, improved quantification and analysis of risks related to contingent liabilities related to support to infrastructure development, establishing a framework for government guarantees, and the joint IMF-World Bank support to Sovereign Asset Liability Management (SALM). The program is entering its second phase, and discussions on potential further support are ongoing.

Crisis Preparedness

  • In recent years, the World Bank has focused on supporting the authorities in Indonesia to create a robust crisis prevention and management framework. Most recently, this support has included analysis of the financial sector stability framework through the 2017 FSAP and initial discussions have been held on support to MoF on developing a fiscal crisis monitoring protocol. The IMF has supported work in this area through past TA on reviewing the legal framework underpinning Indonesia’s financial stability architecture and in its current surveillance dialogue with the authorities and exchange of views with the Bank.

Financial Sector

  • The World Bank has a broad technical assistance program covering Financial Sector Stability, Financial Inclusion and Long Term Finance and Risk Management. A FSAP has been completed in 2017 and found the banking system to be profitable, well capitalized and resilient to severe shocks. The existing financial sector advisory activities are being brought together under a Programmatic Approach, Indonesia Financial Sector Technical Assistance (IFSTA), which will form the basis for sector engagement until 2022. The technical assistance program complements existing investment lending operations (concentrated in infrastructure finance) and is intended to serve as a basis for future lending, most immediately an upcoming Development Policy Loan (DPL) which will seek to address further reforms, particularly in the area of financial stability, guided by the FSAP recommendations.


  • The World Bank had a program of capacity building with the statistics agency that was launched in 2011 and closed in 2016. The IMF has focused recent training and TA on government finance statistics, monetary and financial statistics, sectoral accounts and balance sheets, and on measuring natural resources.


  • The IMF continues to take the lead in monetary and exchange rate policies, with the Article IV mission and staff visits, focusing on fiscal, monetary, and exchange rate policies; macro-financial linkages, financial sector reforms, and crisis management, as well as the external position and spillover effects. The Fund also updates the Debt Sustainability Analysis at the time of the Article IV consultation. The Bank has also taken on a larger role, including on macroeconomic monitoring, macroeconomic policy dialogue, fiscal policy analysis and capacity building, with ongoing coordination with the Fund. The Bank continues to assist the Ministry of Finance’s Fiscal Policy Office to improve capacity for macroeconomic monitoring, forecasting, and evidence-based macroeconomic and fiscal policy analysis.

These threads of work are expected to be continued by both institutions, with periodic meetings aimed at keeping each other informed about ongoing work and joint areas of interest. Issues being addressed by the IMF include domestic and external vulnerabilities, exchange rate management, medium-term external and fiscal sustainability, and macro-financial linkages and financial stability risks; and by the Bank the link between macro-fiscal policy and real economic outcomes, including growth and poverty, resource-sector fiscal revenues, and longstanding problems in the implementation and effectiveness of government spending.

Joint Managerial Action Plan, 2016–17

TitleProductsProvisional Timing of MissionsExpected Delivery Date (Tentative)
A. Mutual Information on Relevant Work Programs
Bank work program for next 12 monthsIndonesia Economic Quarterly

Follow up to FSAP

Energy DPL

Fiscal reform DPL

Technical assistance related to developing and implementing Indonesia’s Medium-Term Revenue Strategy
Four issues a year; FY18: October, December (2017); March, June (2018)




IMF work program for next 12 monthsMacroeconomic surveillance

2016 Article IV consultation

2017 staff visit

2017 Article IV consultation

Technical assistance

Financial deepening and market development

Tax policy and revenue administration

Statistical policies

Consolidated supervision (resident advisor)

November 2016

July 2017

November 2017





Board discussion took place in January 2017

Board discussion will take place in January 2018

Periodic visits
B. Request for Work Program Inputs
Fund request to BankAssessment of economic developments and structural policies

Information sharing

Bank request to FundAssessment of macroeconomic developments and policies

Information sharing

C. Agreement on Joint Products and Missions
Joint work programNote on education for Article IVDecember 2017

Relations with the Asian Development Bank

Indonesia is an Asian Development Bank (ADB) founding member since 1966. ADB has approved $32.7 billion in sovereign and nonsovereign loans (excluding cofinancing), and $894.02 million in technical assistance and grants for Indonesia. Cumulative disbursements to Indonesia for lending and grants financed by ordinary capital resources, the Asian Development Fund, and other special funds amount to $26.11 billion. The sectors with the largest shares in cumulative ADB assistance are public sector management (18.8 percent), energy (17.5 percent), agriculture and natural resources (13.2 percent), and finance (13 percent).1

The total indicative lending program for sovereign operations for 2018–2020 amounts to $7.45 billion. About $1.22 billion in cofinancing is anticipated. The lending pipeline will focus on the energy sector (42 percent of total lending); public sector management (18 percent); agriculture, natural resource, and rural development (15 percent); education (13 percent); finance (6 percent); and water and urban services (6 percent). The nonlending program for 2018–2020, which amounts to $43.55 million, consists of a grant and 26 technical assistance (TA) projects, including 12 TA projects with a total value of $7.55 million financed from ADB’s Technical Assistance Special Fund (TASF).

Development Partnership Framework

The ADB’s support to Indonesia is guided by the Country Partnership Strategy, which in turn is aligned to the National Medium-Term Development Plans (RPJMN) and ADB’s Strategy 2020 Midterm Review. The current Country Partnership Strategy (2016-2019) aims to support Indonesia in achieving higher, more inclusive, and environmentally sustainable growth. The CPS focuses on three high-priority areas, as defined by the RPJMN: (i) improved infrastructure services, (ii) better economic governance, and (iii) enhanced human resource development.

On infrastructure ADB is supporting better policies, institutional arrangements, and strategic investment programs. ADB support will complement the government’s rural electrification program, improvements in renewable energy policy and finance investments to extend the reach, reliability, and efficiency of the national electricity grid, and to foster greater use of clean sources of energy. ADB will provide a combination of policy support, rural irrigation and water supply infrastructure investment, and support for development of value-chains and diversification into high-value agricultural commodities. These measures will improve rural productivity and create wider employment and off-farm opportunities for small farmers and landless laborers. ADB will integrate climate mitigation and adaptation into infrastructure projects and introduction of new technology will be prioritized.

On economic governance, ADB will support fiscal reforms to aid government efforts to protect critical public spending and to boost revenue mobilization over the medium to long term. Support will be provided to assist the government strengthen the medium-term expenditure framework, and protect priority public expenditure on infrastructure, health, education, and social protection, in line with the SDGs. To strengthen public sector management and service delivery, ADB support will help strengthen tax administration capacity at the sub-national level, as well as improve efficiency, transparency, and accountability by using information technology.

ADB will continue to assist in deepening the finance sector by improving market infrastructure and encouraging product diversification in the bond market. ADB will support enhanced financial inclusion by addressing regulatory impediments, poor financial literacy, weak consumer protection, and by developing innovative microcredit products to better meet the needs of the poor. ADB will provide advisory, technical, and financial support to small and medium-sized enterprises to enable them to build viable value-chains and integrate into regional and global markets.

On human resources development, ADB support will be focused primarily on improving education quality and skills development. ADB will assist government efforts to improve the quality and relevance of education spending through support for education policy reforms, improved education sector management, and for the design and implementation of key government reform programs.

The Country Partnership Strategy is underpinned by three-year rolling Country Operations Business Plan (COBP). The COBP 2018–2020 reflects efforts to further enhance ADB’s development effectiveness in Indonesia, including: (i) focusing on long-term engagement and a programmatic approach in core sectors; (ii) incorporating knowledge, innovation, and high quality technology in projects; (iii) ensuring project readiness and quality-at-entry to minimize implementation delays; (iv) deepening the partnership with executing and implementing agencies; (v) enhancing the capacity and flexibility to effectively respond to the government’s evolving needs and priorities; and (vi) applying an effective and balanced mix of ADB’s assistance modalities. ADB is also redoubling efforts to maximize synergies between sovereign and nonsovereign operations including the promotion of public-private partnerships in Indonesia.

Figure 1.Relations with the Asian Development Bank

Source: Asian Development Bank.

Table 1.Sovereign Loan Approvals and Disbursements to Indonesia(In millions of U.S. dollars)
Loan approvals785.0580.01,232.81,013.9554.41,375.01,256.9
Loan disbursements1,079.8631.9862.5588.1543.71.401.81,324.6
Source: Asian Development Bank.
Table 2.Cumulative Lending, Grant and Technical Assistance to Indonesia(As of December 2016)
SectorLoans (No.)Amount (US$ millions)Percent 1/
Agriculture, Natural resources and Rural development2754,425.1013.20
Industry and trade401,160.583.46
Public sector management1116,302.6918.80
Water and other urban932,358.257.03
infrastructure and services
Source: Asian Development Bank, Indonesia Fact Sheet 2016.

Statistical Issues

Assessment of Data Adequacy for Surveillance
General: Data provision is broadly adequate for surveillance with some shortcomings in fiscal and external sector statistics.
National accounts: Statistics Indonesia (BPS) disseminates annual and quarterly GDP (QGDP) by economic activity and expenditure components at current prices and in volume terms at 2010 prices regularly. In general, GDP estimates are based on the latest international methodologies following the System of National Accounts 2008. The QGDP estimates are based on a limited set of indirect indicators. Some sectors are influenced strongly by seasonality, with seasonally adjusted data prepared but not published. BPS has been leading the work on developing sectoral accounts and balance sheets jointly with Bank Indonesia (BI) with TA from STA. BPS and BI expect to finalize the provisional data for the years 2010–2014 by the end of 2017. The next TA mission on Sectoral Accounts will be fielded in January 2018.
Price statistics: Price statistics are broadly adequate for surveillance. The base year for PPI is 2010. The base year for CPI is 2012. In October 2013, BPS released the new Producer Price Index (PPI) covering agriculture, mining and quarrying, and manufacturing with 2010 as the base period, and has published the PPI index quarterly. BPS has also expanded the mining sample to include oil and natural gas extraction, coal, and gold, and has started work to further expand PPI coverage to include 15 service industries. Currently PPI for the following service industries are disseminated: electricity, water and gas; passenger transport; hotel and restaurants. There is a need to increase dissemination frequency and update the weights. Bank Indonesia and BPS have jointly begun work to expand the coverage of the residential property price index (RPPI) to include resales (the current RPPI includes only the sales of newly constructed units).
Government finance statistics (GFS): The Ministry of Finance (MOF) is committed to keeping the requirements of fiscal statistics at the forefront of ongoing fiscal reforms, with better statistical monitoring one of the goals of the current efforts. The authorities are continuing their efforts to adopt the GFSM 2001/2014 standards, with assistance from STA as part of a regional GFS project. Significant progress has been made in these areas and, in 2013, Indonesia reported for the first time to STA general government data (including balance sheet data) covering the period 2008 onwards. Aggregated data on the budget of the central government are available with a one-month lag. Annual general government GFS are currently available 12 months after the end of the reference period and these data are published on the GFS website: The timeliness of the annual data will improve once all systems are in place.

In late 2015, the authorities have started to compile quarterly general government data based on estimates of local government data. Quarterly general government GFS (operations statement) are available 6 months after the end of the reference quarter. The quarterly general government data are yet to be published on the GFS website because the authorities are improving these data in terms of coverage of local governments and timeliness with the development of new regional financial information system. Limited quarterly general government GFS data are published in IFS. The coverage and timeliness of public debt statistics are generally adequate.
Monetary and financial statistics (MFS) and financial soundness indicators (FSIs): Good quality monetary statistics are compiled by BI on a timely basis. BI compiles and reports monetary data using the Standardized Report Forms (SRFs), from which an integrated database and alternative presentations of monetary statistics can be drawn to meet the needs of BI and the IMF. Additional challenges include timely revisions of published banking sector data after supervisory verification. With the support of a Fund TA mission in October 2014, BI expanded the coverage of the OFCs survey, which since January 2015 includes finance companies, insurance companies, pension funds, the state-owned pawn shop (PT Pegadaian), and the Indonesian export financing institution (Eximbank); achieving almost full coverage of the subsector. OFC data are reported on a monthly basis. The mission also assisted BI in advancing the production of flow-based monetary statistics and quarterly financial accounts. BI compiles and reports to the Fund all (12) core and 12 encouraged financial soundness indicators (FSIs) for deposit takers, all (two) encouraged FSIs for OFCs, two encouraged FSIs for nonfinancial corporations, one encouraged FSI for households, two encouraged FSIs for market liquidity, and three encouraged FSIs for the real estate sector, which are published quarterly on the Fund’s FSI website.
External sector statistics (ESS): Trade data have been improved in recent years. Import and export transactions of free trade zones and bonded warehouses are captured in goods data of balance of payments (BOP) statistics.

For financial account, the methodological basis for the compilation of direct investment (DI) data needs substantial improvement. Inflows are currently calculated based on loan disbursements to companies that have foreign equity using a fixed ratio to estimate equity inflows. The errors and omissions in BOP has been large and predominantly negative and could be related to the under coverage of imports in current account or assets in the financial account. Financial transactions data are reconciled with changes in the international investment position (IIP), except data on DI.

IIP data are compiled and published annually and quarterly. External debt statistics have improved considerably with the introduction of an External Debt Information System (EDIS) in 2002 and the recent initiative to publish monthly indicators. Also, as a result of the ongoing reconciliation of data conducted by BI, the IIP and external debt data are fully consistent. However, improvements are still needed with respect to components of private corporate sector data, particularly in distinguishing between scheduled and actual debt service, in estimating the accumulation/reduction of private sector payments arrears, and in estimating reschedulings/debt reductions received by the private sector from external creditors.
Data Standards and Quality
Indonesia has subscribed to the Special Data Dissemination Standard (SDDS) since September 1996, observing most of the SDDS requirements. Indonesia uses the SDDS flexibility options for the timeliness of the labor market categories (employment, unemployment, and wages/earnings) and general government operations.Data Reports on the Observance of Standards and Codes (ROSC) was completed in 2005.
Indonesia: Table of Common Indicators Required for Surveillance(As of December 8, 2017)
Date of Latest ObservationDate ReceivedFrequency of Data1Frequency of Reporting1Frequency of Publication1Memorandum Items:
Data Quality—Methodological Soundness2Data Quality—Accuracy and Reliability3
Exchange rates12/8/1712/8/17DDD
International reserve assets and reserve liabilities of the monetary authorities410/1712/17MMM
Reserve/base money10/1712/17W/MW/MW/MO, LO, O, OLO, O, O, LO, O
Broad money10/1712/17MMM
Central bank balance sheet11/1712/17MMM
Consolidated balance sheet of the banking system10/1712/17MMM
Interest rates512/8/1712/8/17DDD
Consumer price index11/1712/17MMM
Revenue, expenditure, balance and composition of financing6—central government9/1711/17MMMid-yearLNO, LNO, LO, LNOLNO, LO, LO, LO, LNO
Stocks of central government and central government–guaranteed debt9/1711/17QQQ
External current account balanceQ3/1711/17QQQLO, LO, LO, LOLO, O, LO, O, O
Exports and imports of goods and servicesQ3/1711/17QQQ
Gross external debt7Q3/1711/17QQQ
International investment position8Q3/1711/17QQQ

Other Resources Citing This Publication