ADB Backs Indonesia’s Local Services With $650 Million Program

Subnational governments manage roughly 35%–40% of Indonesia’s total public expenditure, including funding for education, health care and local infrastructure.

Indonesia's efforts to improve schools, health care and local infrastructure have received fresh support through a $650 million equivalent program approved by the Asian Development Bank (ADB). The financing will support changes to how central and local governments manage public money, share financial information and build local revenue, with a focus on improving the services people depend on in their communities.

The Accelerating Decentralization for Improved Local Governance Program, known as ADIL, addresses a challenge with everyday consequences: local governments carry substantial spending responsibilities, but their financial systems and administrative resources differ across regions. Its first subprogram will support closer coordination between levels of government, greater transparency in public finances and digital tools that make fiscal information easier to bring together and report.

Better Local Finances Matter for Everyday Services

Subnational governments manage roughly 35%–40% of Indonesia's total public expenditure, including funding for education, health care and local infrastructure. The ability of provincial and local administrations to plan budgets, collect revenue and manage spending has a direct bearing on the public services available to residents, making stronger financial management an essential part of the country's development plans.

Fragmented systems and uneven administrative capacity can make it harder for governments to coordinate policies, administer taxes and deliver services consistently across regions. ADIL will support efforts to address those weaknesses by strengthening the links between central and local financial management, helping administrations work with more connected systems and develop more sustainable local budgets.

Digital Records and Fairer Tax Valuations

A new national digital platform for integrating and reporting fiscal data is a central part of the program, providing a way to connect financial information currently handled through fragmented systems. Better access to that information can support budget coordination and fiscal transparency, giving governments a clearer basis for decisions about public resources and the services those resources fund.

The program will support fairer property tax valuation to increase local revenue, tying efforts to strengthen budgets to improvements in how taxable property is assessed. Responsive planning and budgeting that protect women and girls, measures addressing civil rights, and the integration of disaster risk are included in the framework, bringing community needs and exposure to emergencies into decisions about public money.

Local Government at the Heart of the 2045 Vision

ADB Country Director for Indonesia Bobur Alimov linked stronger local governance to the country's ambition to reach high-income status by 2045, stressing the importance of development in the provinces, districts and villages where essential services are delivered. "The country's strengthened fiscal and digital architecture enables better services for the society," he said, connecting improvements in government systems to the quality of services people receive.

Built on Indonesia's Law on Financial Relations between the Central and Regional Governments, ADIL supports the National Medium-Term Development Plan for 2025–2029 and the Golden Indonesia Vision 2045. Its reforms connect local financial management with broader priorities for economic growth, poverty and inequality reduction, and environmental sustainability, with better public services forming a practical link between national ambitions and daily life.