Indonesia has made great progress towards developing its INFF. In January 2020, the UNDP-EU INFF inception mission took place to kick off the INFF process. After completing a DFA Snapshot in 2017, the country is now embarking on a full DFA process with support from UNDP, Asia-Pacific SDG Finance Facility (APFIN) and Australia DFAT.
Many aspects of the INFF building blocks are already in place: financing strategies have been articulated to support Indonesia’s medium-term development plan (RPJMN) and SDG roadmap; monitoring frameworks are in place to track progress toward Indonesia’s sustainable development vision; separate systems to track the investment of public finance and trends in wider resources have been established; and institutional mechanisms have been put in place to coordinate delivery of the RPJMN and SDGs.
Meanwhile, Indonesia has explored some innovative financing instruments, including the issuance of the world’s first sovereign Green Sukuk, leveraging Islamic finance, blended finance, and social impact investments.
The planned SDG Financing Hub within BAPPENAS, the lead ministry for SDGs implementation, will become a key vehicle for implementation of the INFF, as it aims to play a convening, coordination, and coherence-building role. The SDG Financing Hub will bring together various financing policy areas, and the ministries and actors responsible for them, to build a more holistic approach to financing sustainable development and developing innovative financing schemes to mobilise private investments.
The key stakeholders of the INFF are BAPPENAS and the Ministry of Finance (MOF). BAPPENAS has the mandate to coordinate the country’s SDGs implementation, while MOF is responsible for budget preparation and state treasury management. INFF implementation will also involve other relevant governments including the Presidential Staff Office, the Financial Services Authority, and the Coordinating Ministry for Economic Affairs, among others.
A key output of Indonesia’s INFF is the planned integrated and gender responsive financing strategy that will bring together policy, governance approaches and financing instruments across public and private finance. The financing strategy will articulate a more comprehensive, coherent approach to using the tools of public policy across these areas of financing to support national sustainable development objectives.
The financing strategy will also support the government to identify and test opportunities to bring in new models that unlock greater financing or impact in specific areas of financing, including: increasing domestic revenue mobilisation, strengthening the quality of public spending in areas such as performance budgeting and transfers to local government, effective debt management, leveraging of remittances, and unlocking commercial investment and financing in areas that support more inclusive, sustainable business models. In response to COVID19, the financing strategy will ensure that the priorities for financing the SDGs are articulated with a fuller understanding of the socio-economic impacts of COVID-19. In addition, risk management will be integrated to ensure that the future risks of pandemics and other exogenous shocks are better mitigated.