Indonesia - Fifth and Sixth Development Policy Loan Project

 Document of The World Bank Report No: ICR00001677 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-76100) ON A SERIES OF LOANS IN THE AMOUNT OF US$1.5 BILLION TO THE REPUBLIC OF INDONESIA FOR DEVELOPMENT POLICY LOANS V AND VI 11 October 2010 Poverty Reduction and Economic Management Unit East Asia and Pacific Region  CURRENCY EQUIVALENTS (Exchange Rate Effective October 11, 2010) Currency Unit = Rupiah (IDR) US$ 1.00 = Rp 8,925 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities ICR Implementation Completion and Results Report ADB Asian Development Bank JICA Japan International Cooperation Agency BOS KITA Bantuan Operasional Sekolah (School KPK Komisi Pemberantasan Korupsi (Corruption Operational Assistance – Knowledge Eradication Commission) Improvement for Transparency and Accountability) BKPM Indonesia Investment Coordinating Board LKPP Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah (National Public Procurement Office) CMEA Coordinating Ministry for Economic M&E Monitoring and Evaluation Affairs CPS Country Partnership Strategy MOF Ministry of FInance DG Directorate General MenPAN Kementrian Negara Pendayagunaan Aparatur Negara (State Ministry of State Apparatus) DNI Daftar Negatif Investasi (Investment MSME Micro, Small and Medium Enterprises Negative List) DPL Development Policy Loan OPCS World Bank Operations Policy and Country Services Unit DPL-DDO Development Policy Loan – Deferred PBB Performance Based Budgeting Drawdown Option FDI Foreign Direct Investment PDO Program Development Objectives FSSF Financial System Stability Forum PFM Public Finance Management GDP Gross Domestic Product PNPM Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment) GFMRAP Government Financial Management and RPJMN Rencana Pembangunan Jangka Menengah Revenue Administration Project Nasional (National Medium Term Development Plan) GOI Government of Indonesia SPAN Sistem Perbendaharaan dan Anggaran Negara (State Treasury and Budget System) IFMIS Integrated Financial Management TA Technical Assistance Information System Inpres Instruksi Presiden (Presidential TSA Treasury Single Account Instruction) INSW Indonesia National Single Window Vice President: James W. Adams Country Director: Stefan G. Koeberle Sector Director: Vikram Nehru Lead Economist: Shubham Chaudhuri Task Team Leader: Enrique Blanco-Armas ICR Primary Author: Dara Lengkong  INDONESIA DEVELOPMENT POLICY LOANS V AND VI IMPLEMENTATION COMPLETION AND RESULTS REPORT CONTENTS Data Sheet  A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring Main Document  1.  Program Context, Development Objectives and Design ........................................................... 1  2.  Key Factors Affecting Implementation and Outcomes ............................................................. 3  3.  Assessment of Outcomes............................................................................................................... 7  4.  Assessment of Risk to Development Outcome .......................................................................... 15  5.  Assessment of Bank and Borrower Performance .................................................................... 16  6.  Lessons Learned .......................................................................................................................... 17  7.  Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 19  Annex 1 Bank Lending and Implementation Support/Supervision Processes..................... 20  Annex 2. Beneficiary Survey Results .................................................................................. 22  Annex 3. Stakeholder Workshop Report and Results.......................................................... 22  Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ............................ 22  Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders .............................. 23  Annex 6. List of Supporting Documents ............................................................................. 24  MAP     A. Basic Information Program 1 Fifth Development Country Indonesia Program Name Policy Loan Program ID P110191 L/C/TF Number(s) IBRD-76100 ICR Date 11/09/2010 ICR Type Core ICR REPUBLIC OF Lending Instrument DPL Borrower INDONESIA Original Total USD 750.00M Disbursed Amount USD 750.00M Commitment Implementing Agencies Coordinating Ministry for Economic Affairs Cofinanciers and Other External Partners Asian Development Bank JICA Program 2 Indonesia Sixth Country Indonesia Program Name Development Policy Loan Program ID P113638 L/C/TF Number(s) IBRD-77840 ICR Date 11/09/2010 ICR Type Core ICR GOVERNMENT OF Lending Instrument DPL Borrower INDONESIA Original Total USD 750.00M Disbursed Amount USD 750.00M Commitment Implementing Agencies Coordinating Ministry for Economic Affairs Cofinanciers and Other External Partners JICA Asian Development Bank B. Key Dates   Fifth Development Policy Loan - P110191 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/18/2008 Effectiveness: 12/22/2008 12/22/2008 Appraisal: 10/21/2008 Restructuring(s): Approval: 12/09/2008 Mid-term Review: Closing: 03/31/2009 03/31/2010 i Indonesia Sixth Development Policy Loan - P113638 Revised / Actual Process Date Process Original Date Date(s) Concept Review: 05/19/2009 Effectiveness: 10/15/2009 10/15/2009 Appraisal: 07/23/2009 Restructuring(s): Approval: 09/24/2009 Mid-term Review: Closing: 03/31/2010 03/31/2010 C. Ratings Summary   C.1 Performance Rating by ICR Overall Program Rating Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Satisfactory Borrower Performance Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Highly Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance Performance C.3 Quality at Entry and Implementation Performance Indicators Fifth Development Policy Loan - P110191 Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA) DO rating before Closing/Inactive status ii  Indonesia Sixth Development Policy Loan - P113638 Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Quality at Entry Program at any time No None (QEA) (Yes/No): Problem Program at any Quality of Supervision No None time (Yes/No): (QSA) DO rating before Closing/Inactive status D. Sector and Theme Codes   Fifth Development Policy Loan - P110191 Original Actual Sector Code (as % of total Bank financing) Central government administration 50 50 General finance sector 7 7 General industry and trade sector 22 22 Micro- and SME finance 7 7 Other social services 14 14 Theme Code (as % of total Bank financing) Administrative and civil service reform 7 7 Micro, Small and Medium Enterprise support 7 7 Public expenditure, financial management and procurement 43 43 Regulation and competition policy 29 29 Social safety nets 14 14 Indonesia Sixth Development Policy Loan - P113638 Original Actual Sector Code (as % of total Bank financing) General public administration sector 73 73 Micro- and SME finance 9 9 Other domestic and international trade 9 9 Other social services 9 9 Theme Code (as % of total Bank financing) Export development and competitiveness 13 13 Poverty strategy, analysis and monitoring 13 13 Public expenditure, financial management and procurement 36 36 Regulation and competition policy 19 19 iii Tax policy and administration 19 19 E. Bank Staff   Fifth Development Policy Loan - P110191 Positions At ICR At Approval Vice President: James W. Adams James W. Adams Country Director: Stefan G. Koeberle Joachim von Amsberg Sector Manager: Shubham Chaudhuri William E. Wallace Task Team Leader: Enrique Blanco Armas Shubham Chaudhuri ICR Team Leader: Enrique Blanco Armas ICR Primary Author: Dara Lengkong Fifth Development Policy Loan - P110191 Positions At ICR At Approval Vice President: James W. Adams James W. Adams Country Director: Stefan G. Koeberle Joachim von Amsberg Sector Manager: Shubham Chaudhuri William E. Wallace Task Team Leader: Enrique Blanco Armas Shubham Chaudhuri ICR Team Leader: Enrique Blanco Armas ICR Primary Author: Dara Lengkong F. Results Framework Analysis   Program Development Objectives (from Program Document) The overall goal of the DPL program is to help the Government of Indonesia (GoI) achieve its medium-term growth and poverty reduction objectives. The proposed DPL5 supports the GoI's reform efforts in the following objectives: (i) improve the investment climate; (ii) enhance public financial management and governance; and (iii) improve service delivery to the poor. Revised Program Development Objectives (as approved by original approving authority) N/A. (a) PDO Indicator(s) iv Fifth Development Policy Loan - P110191 Original Target Actual Value Formally Baseline Values (from Achieved at Indicator Revised Value approval Completion or Target Values documents) Target Years Indicator 1 : GDP Growth Value (quantitative or 6.2% 4.2% Qualitative) Date achieved 09/30/2008 09/30/2009 Comments Real GDP growth declined, mainly due to the ramifications and contagion effects (incl. % of the 2008/09 global financial turmoil. achievement) Indicator 2 : % of people living below the national poverty line Value (quantitative or 15.4% 14.2% Qualitative) Date achieved 12/31/2008 12/31/2009 Comments Despite the financial turmoil, poverty declined. This is attributed to a mild crisis in (incl. % Indonesia and the response of the go vernment, in the form of unconditional cash achievement) transfer program (BLT) and scaling up of PNPM, to minimize impact on poor Indonesia Sixth Development Policy Loan - P113638 Original Target Actual Value Formally Baseline Values (from Achieved at Indicator Revised Value approval Completion or Target Values documents) Target Years Indicator 1 : GDP Growth Value (quantitative or 4.2% 6.2% Qualitative) Date achieved 09/30/2009 06/30/2010 Comments By mid 2010, Indonesia has emerged from the global crisis as one of the fastest (incl. % growing economies in the G20. achievement) Indicator 2 : % of people living below the national poverty line Value (quantitative or 14.2% 13.3% Qualitative) Date achieved 12/31/2009 06/30/2010 Comments Poverty rate continued to decline. This is attributed to both the economic growth (incl. % recovery and the expansion of national pov erty reduction programs, e.g. BLT and achievement) PNPM Mandiri. (b) Intermediate Outcome Indicator(s) v Fifth Development Policy Loan - P110191 Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Investment to GDP ratio Value (quantitative or 26% 23.4% Qualitative) Date achieved 06/30/2008 12/31/2009 Comments Investments declined, mainly due to the global economic downturn. (incl. % achievement) Indicator 2 : FDI net inflows Value USD9.32 (quantitative or USD4.88 billion billion Qualitative) Date achieved 12/31/2008 12/31/2009 Comments FDI declined substantially by about 48%, mainly due to the global (incl. % achievement) economic downturn. Indicator 3 : Number of days to start a business Value (quantitative or 105 days 76 days Qualitative) Date achieved 12/31/2007 12/31/2008 Comments The number of days required to start a business declined substantially (incl. % achievement) by 28%. Indicator 4 : Number of procedures to start a business Value (quantitative or 12 11 Qualitative) Date achieved 12/31/2007 12/31/2008 Comments The number of procedures required to start a business declined by (incl. % achievement) 8%. Indicator 5 : Year on year growth in value of non-oil exports Value (quantitative or 13.3% -11.6% Qualitative) Date achieved 06/30/2008 12/31/2009 Comments Non-oil exports declined, mainly due to weak global demand. (incl. % achievement) Indicator 6 : Domestic non-oil and gas tax revenues to GDP Value (quantitative or 5.1% 4.8% Qualitative) Date achieved 12/31/2008 12/31/2009 Comments Domestic non-oil and gas tax revenues to GDP declined, mainly due (incl. % achievement) to weak global demand. vi Indicator 7 : Non performing loans Value (quantitative or 3.2% 3.3% Qualitative) Date achieved 12/31/2008 12/31/2009 Comments Non performing loans increased slightly, but still far below the (incl. % achievement) previous years' rate of 4.07% in 2007 and 6.07% in 200 6. Indicator 8 : MSME Loans to total banking loans Value (quantitative or 50.4% 51.28% Qualitative) Date achieved 06/30/2008 12/31/2009 Comments Despite the economic slowdown, which tend to hurt MSMEs the (incl. % achievement) most, MSME loans to total banking loans increased. Indicator 9 : Percentage of total capital expenditure disbursed on by end of Q2 Value (quantitative or 16.3% 27.2% Qualitative) Date achieved 06/30/2008 06/30/2009 Given the need to ensure effective and timely fiscal stimulus package Comments during the global slowdown, and the continuing PFM ref orms, (incl. % achievement) midyear capex disbursements were significantly accelerated. Number of line ministries receiving qualified opinions on their Indicator 10 : financial statements Value (quantitative or 30 26 Qualitative) Date achieved 12/31/2008 12/31/2009 In line with the extensive PFM reform program undertaken by the Comments Government, the number of line ministries receiving qualifie d (incl. % achievement) opinions on their financial statements declined substantially by 13%. Indicator 11 : Establishment of National Public Procurement Office (LKPP) Value LKPP established LKPP did (quantitative or and made not exist Qualitative) operational Date achieved 12/31/2007 12/31/2008 The LKPP was established and made operational, and became Comments responsible for planning and development of strategies/policies/re (incl. % achievement) gulations for public procurement. Indicator 12 : Household targeted expenditures to total public spending Value (quantitative or 2.3% 4.5% Qualitative) Date achieved 12/31/2007 12/31/2008 Comments Household targeted expenditures to total public spending almost (incl. % achievement) doubled. vii Indicator 13 : Community targeted (PNPM) expenditures to total public spending Value (quantitative or 0.6% 0.9% Qualitative) Date achieved 12/31/2007 12/31/2008 Comments Community targeted expenditures to total public spending increased (incl. % achievement) by 50%, in line with the scaling up of the PNPM program. Average size of PNPM community block grant (BLM) for the poor Indicator 14 : sub-districts Value Rp.1.4 (quantitative or Rp.1.7 billion billion Qualitative) Date achieved 12/31/2008 12/31/2009 The PNPM program was scaled up, with the average size of Comments community block grant for the poor sub-districts substantially insc (incl. % achievement) reased by 19%. Indonesia Sixth Development Policy Loan - P113638 Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Investment to GDP ratio Value (quantitative or 23.4% 23.4% Qualitative) Date achieved 12/31/2009 06/30/2010 As Indonesia continued to recover from the global slowdown, Comments investments at midyear 2010 already reached the previous year 's (incl. % achievement) level. Indicator 2 : FDI net inflows Value USD4.88 (quantitative or USD4.87 billion billion Qualitative) Date achieved 12/31/2009 06/30/2010 Comments As Indonesia continued to recover from the global slowdown, FDI (incl. % achievement) inflows at midyear 2010 already reached the previous year 's level. Indicator 3 : Number of days to start a business Value (quantitative or 76 days 60 days Qualitative) Date achieved 12/31/2008 12/31/2009 Comments The number of days to start a business continued to decline (incl. % achievement) substantially by 21%. Indicator 4 : Number of procedures to start a business Value (quantitative or 11 9 Qualitative) Date achieved 12/31/2008 12/31/2009 Comments The number of procedures to start a business continued to decline (incl. % achievement) substantially by 18%. viii Indicator 5 : Year on year growth in value of non-oil exports Value (quantitative or -11.6% 38.4% Qualitative) Date achieved 12/31/2009 06/30/2010 Comments As growth across Indonesia's major trading partners rebounded, (incl. % achievement) growth in non-oil exports accelerated substantially. Indicator 6 : Domestic non-oil and gas tax revenues to GDP Value (quantitative or 4.8% 5.1% Qualitative) Date achieved 12/31/2009 06/30/2010 As growth across Indonesia's major trading partners rebounded, the Comments revised budget's domestic non-oil and gas tax r evenues to GDP were (incl. % achievement) increased. Indicator 7 : Non performing loans Value (quantitative or 3.3% 2.98% Qualitative) Date achieved 12/31/2009 06/30/2010 Comments The health of the banking sector overall remained sound, with (incl. % achievement) declining nonperforming loans. Indicator 8 : MSME Loans to total banking loans Value (quantitative or 51.28% 52.68% Qualitative) Date achieved 12/31/2009 06/30/2010 Comments As Indonesia continued to recover from the global slowdown, MSME (incl. % achievement) loans to total banking loans increased. Indicator 9 : Percentage of total capital expenditure disbursed on by end of Q2 Value (quantitative or 27.2% 25% Qualitative) Date achieved 06/30/2009 06/30/2010 Comments Capex disbursement somewhat slowed, but still well above that of the (incl. % achievement) previous year (16.3% in Q2 2008) Number of line ministries receiving qualified opinions on their Indicator 10 : financial statements Value (quantitative or 26 21 Qualitative) Date achieved 06/30/2010 06/30/2010 The number of line ministries receiving qualified opinions on their Comments financial statements reclined more rapidly than in the p revious year, (incl. % achievement) by 19%. Indicator 11 : Household targeted expenditures to total public spending Value (quantitative or 4.5% 3.8% Qualitative) Date achieved 12/31/2008 12/31/2009 Comments Household targeted expenditures declined, given the completion of ix (incl. % achievement) the BLT program in 2008. Indicator 12 : Community targeted (PNPM) expenditures to total public spending Value (quantitative or 0.9% 1.4% Qualitative) Date achieved 12/31/2008 12/31/2009 Comments The PNPM expenditures were increased in line with the scaling up of (incl. % achievement) the program. Average size of PNPM community block grant (BLM) for the poor Indicator 13 : sub-districts Value Rp.1.7 (quantitative or Rp.2.4 billion billion Qualitative) Date achieved 12/31/2009 06/30/2010 The PNPM program was scaled up, with the average size of Comments community block grant for the poor sub-districts significantly incr (incl. % achievement) eased by 45%. G. Ratings of Program Performance in ISRs  N/A H. Restructuring (if any)   N/A x 1. Program Context, Development Objectives and Design 1.1. Context at Appraisal The second programmatic DPL series was presented at a critical juncture for Indonesia, as it was facing the ramifications and contagion effects of the global financial turmoil in late 2008. However, Indonesia entered into the crisis in a relatively strong position. Real GDP growth had accelerated to a ten-year high in the previous year, despite unstable global financial markets and a slowing world economy. The budget deficit had been maintained at relatively low levels, 1.3 percent of GDP in 2007, and the debt-to-GDP ratio had also declined significantly from 55 percent in 2004 to 34.9 percent in 2007. These improvements in Indonesia’s public finances reflected strong fiscal discipline, and a significant reduction in fuel subsidies that relieved a substantial budgetary burden from soaring oil prices. Indonesia coped with the global financial turmoil relatively well, given its record of prudent fiscal management, as well as its size, robust economic demand and diverse exports. Nevertheless, because of its relatively open capital account, the significant foreign presence in its stock and bond markets, and the legacy of the 1998 crisis (which left Indonesian investors sensitive to exchange rate movements and prone to capital flight), Indonesia was more exposed to externally mobile capital than other countries in East Asia. Recognizing this vulnerability, the Government took a number of precautionary and proactive measures. These included clarifying the roles, responsibilities and procedures for different agencies in the event of failure within the financial system, raising the deposit insurance limit and submitting to Parliament a revised budget that corresponded to the global downturn. In addition, to alleviate financing constraints in the event that global liquidity conditions would not ease, the Government requested contingent financing from the World Bank and other development partners in the form of an additional DPL with a Deferred Drawdown Option (DPL-DDO). Altogether, these measures, coming on top of Indonesia’s record of prudent fiscal management, previous macroeconomic performance, and ongoing commitment to the longer-term institutional reform agenda, provided the requisite stability that warranted continued support for Indonesia’s structural and institutional reform efforts through the second DPL series. The second programmatic Indonesia DPL series was anchored to the FY09-12 Country Partnership Strategy (CPS) that was approved by the Board in September 2008. The CPS proposed that the DPL continued to be at the center of the WBG support in strengthening Indonesia’s central government institutions and systems, a key cross-sectoral engagement theme under the CPS. The second DPL series was originally envisaged to consist of three annual single-tranche loans (DPLs 5-7), which in substantive terms is a continuation of the first DPL series (DPLs 1-4), though focusing more on the medium-term institutional and policy reforms in the areas of investment climate, public finance management and poverty alleviation and service delivery. However, with the newly elected Government’s strategies and priorities in place, it was realized that there was a renewed opportunity to better realign the DPL program with those strategies and priorities. Hence, following agreement with the Government, and endorsement by the World Bank regional management, the second DPL series was closed one year earlier than envisaged and DPL 7 is being represented as the beginning of a new series. This ICR therefore covers only DPLs 5-6. 1.2. Original Program Development Objectives The overall goal of the DPL program is to help the Government of Indonesia achieve its medium term growth and poverty reduction objectives. The program is a continuation of the first DPL program surrounding three core policy areas: (i) Improve the investment climate. Under this policy area, the objective was to focus on reforms to help make Indonesia a more attractive place to invest overall, through reducing the uncertainties for investors by strengthening investment service institutions and improving investment regulations; reducing the time needed for, and the cost of, importing and exporting; reducing compliance costs, enhancing taxpayer services and improving the 1  efficiency and equity of the tax administration; reducing the vulnerability of the financial system; and improving MSMEs’ access to credit. (ii) Strengthen public financial management. The DPL program sought to contribute to a more efficient, transparent and accountable management of public resources. It is expected to do so through improving budget and cash management within the central Government; improving the results orientation in the budget process; streamlining budget execution and management of budget authority; improving government accounting and audit functions; improving public procurement; and enhancing bureaucratic effectiveness. (iii) Enhance poverty alleviation and service delivery efforts. The objective under this policy area is to improve efficiency and equity in the use of public resources by better targeting of the poor and through improvements in sub-national spending. This is expected to be achieved by strengthening the monitoring and evaluation of public expenditures and programs; enhancing the pro-poor impact of social protection and human development programs by improving their targeting; and raising the quality of public service delivery, specifically education. 1.3. Revised PDO Overall, the PDO and reform policy areas remained consistent throughout the series. 1.4. Original Policy Areas Supported by the Program (as approved) 1. Investment Climate. Business surveys suggested that an improved perception of macroeconomic stability and economic reform may have contributed to some recovery in investment. Investment growth accelerated in 2007 by 9.2 percent, from just 2.5 percent in the previous year, accounting for one-third of total economic growth. As a share of GDP, investment was back up to 25 percent, a major improvement from less than 20 percent during the early post-East Asian crisis years of 2000-03, although still not a full recovery to pre-crisis levels of nearly 30 percent of GDP. However, much remained to be done, as the overall investment climate was still characterized by high transaction costs for business overall, which was attributed to cumbersome business licensing and approval systems, and tax and customs complications. The DPL series continued to support reform actions aimed towards addressing these gaps in order to promote a more conducive investment climate. 2. Public Finance Management. Following the adoption of a new regulatory framework in 2003- 04, the Government embarked on the implementation of ambitious public financial management (PFM) reforms as legislated. These efforts were part of a broader agenda to improve governance and enhance service delivery. Pursuant to the new legal framework, progress has been achieved in the way public finances are managed and in increasing transparency and independent oversight. In particular, the role of parliament, the Ministry of Finance and its spending agencies have been reformed and the budget formulation process has been substantially streamlined as articulated in new PFM laws. The DPL series continued to support these efforts by improving the way in which public finances are managed, increasing transparency and reliability of accounting and reporting, and creating an enabling framework for more effective public institutions. 3. Poverty Alleviation and Service Delivery. Improving the delivery of public service and enhancing the pro-poor impact of public expenditures continued to be critical for Indonesia. While Indonesia has made significant progress in poverty alleviation and service delivery, there are still causes for concern with the pace of poverty reduction and the extent of vulnerability. Many households were clustered just above the national poverty line, making them highly vulnerable to expenditure shocks, with the potential to drive them into poverty. Lagging human development indicators such as low continuation rates from primary to secondary school also need to be tackled by improving the quality of education services. The DPL series supported the 2  increase in funding for poverty programs, and improvements in the targeting of such programs, as well as enhancing the quality of professional development and training for teachers. 1.5. Revised Policy Areas (if applicable) N/A. 1.6. Other significant changes Building on the pillars that were the focus of the first DPL series 1 to 4, the second DPL series was originally anticipated as the second programmatic series of DPLs anchored to the FY09-12 CPS, consisting of three annual single-tranche DPLs 5 to 7. Yet because the legislative and presidential elections were scheduled for 2009, and the 2010-14 national plan would not be finalized until late 2009, the team had anticipated that DPL 7 would be negotiated with the newly elected Government in late 2010. Hence, a much more indicative set of triggers for DPL 7 was developed. Indeed, this was indicated in the Government’s Letter of Development Policy for DPL 6, which stated that although major reform areas of the DPL program were expected to continue, it would be the new Government that would work with the development partners to bring future DPLs into alignment with the new RPJMN 2010-2014, new annual government action plans (RKP) and other reform programs. At the time DPL 7 was prepared, the newly-elected Government had already embarked on a robust and comprehensive reform agenda. Shortly after taking office, the new Government had issued the 100-day action plan, Inpres No.1/2010, and the RPJMN 2010-2014 containing specific outputs, target dates and responsible authorities. As such, there was a renewed opportunity to better align the DPL program with the new Government’s development strategies and priorities. Therefore, the second DPL series was terminated earlier than originally anticipated, with the DPL 7 now representing the beginning of a new, third DPL series (DPLs 7 to 9), although still anchored under the FY09-12 CPS. 2. Key Factors Affecting Implementation and Outcomes 2.1. Program Performance The second DPL series continued to be delivered annually and on a timely basis. DPL 6 in particular was delivered in September 2009, two months earlier than the previous DPLs’ usual delivery. This early processing was requested by the Government at the time, who wanted to secure financing prior to the imminent transition in Government, given that the presidential election was scheduled in July 2009 and the new government was expected to take office in October 2009. The strong dialogue between the Government and the Bank helped in ensuring that the reforms are “owned