MICROCAPITAL BRIEF: World Bank to Loan $300m to Indonesia for Financial Sector Reform, Including Promoting Long-term Savings, Disaster Microinsurance

The World Bank recently agreed to loan USD 300 million to the government of Indonesia for “financial sector reforms that will help sustain economic growth and achieve the country’s shared prosperity goals.” Planned strategies include increasing the range of available financial products and the extent of financial inclusion. The target products include long-term savings and insurance against disasters. Technology is also a key part of the effort to “improve the efficiency of the financial sector by making financial practices more transparent [and] reliable…to channel savings into the most productive investment opportunities in a less costly, faster and safer way.”

The World Bank country director for Indonesia and Timor-Leste, Satu Kahkonen, stated, “A sound and well-functioning financial sector is critical to sustain Indonesia’s growth and to achieve the government’s economic growth and poverty reduction goals, particularly amid the continued challenging global conditions.”

The World Bank Group is a multilateral organization whose goal is “to end extreme poverty and promote shared prosperity in a sustainable way.” As of 2020, it has 189 member nations. The group encompasses: (1) the International Development Association and the International Bank for Reconstruction and Development, which make up the World Bank; (2) the International Finance Corporation; (3) the Multilateral Investment Guarantee Agency; and (4) the International Centre for Settlement of Investment Disputes. During the year ending June 2019, the World Bank Group disbursed a total of USD 62.3 billion in loans, grants, equity investments, and guarantees to partner countries and private businesses.

By Madigan Ruch, Research Associate

Sources and Additional Resources:

World Bank press release
https://www.worldbank.org/en/news/press-release/2020/03/23/reforms-in-indonesias-financial-sector-open-new-economic-opportunities

World Bank 2019 financials
https://www.worldbank.org/en/about/annual-report/fiscal-year-data

MicroCapital article on World Bank operations in Egypt
https://www.microcapital.org/microcapital-brief-world-bank-lending-200m-to-egypt-in-effort-to-create-jobs-by-investing-in-smes/

More news from MicroCapital on Indonesia
https://www.microcapital.org/?s=indonesia

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