Indonesia Infrastructure and Finance Compact
Indonesia Infrastructure and Finance Compact Signing
On April 13, 2023, U.S. Secretary of the Treasury Janet Yellen and Indonesian Minister of Finance Sri Mulyani Indrawati signed the $649 million Indonesia Infrastructure and Finance Compact – a five-year grant between MCC and the Government of Indonesia.
Indonesia has the largest economy in southeast Asia and has charted impressive economic growth since the 1990s. However, Indonesia’s existing financial structures often prevent small businesses from accessing the finances they need to grow and keep the private sector from investing in infrastructure that would facilitate greater movement of goods and services. This can have big implications across the economy. Indonesia’s micro-, small- and medium-sized enterprises (MSMEs), which account for 99 percent of all active private enterprises in the country, are the focus of economic activity for most Indonesians. MSMEs engage almost 97 percent of the nation’s workforce and contribute about 62 percent of GDP. Similarly, with 17,000 islands, Indonesia has great infrastructure needs, but limited private sector investment, preventing goods from reaching new markets and citizens from participating in the global marketplace.
The compact, which will include a $49 million contribution from the Government of Indonesia in addition to the $649 million of MCC grant funding, seeks to assist the Government of Indonesia in tackling these issues by addressing a binding constraint to the country’s economic growth: costly and underdeveloped financial intermediation—or access to financing. The compact will specifically focus on improving the financing of infrastructure—particularly transport and logistics infrastructure—and increasing access to finance for MSMEs through three projects.
Financials
Compact Budget
Milestones
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Signed:
April 13, 2023
Compact Projects
As of April 13, 2023