The Indonesia Financial Sector Strengthening Program (IFSSP II) supports the Government of Indonesia (GoI) to achieve its medium-term growth and poverty reduction objectives through a stable financial system. Aligned with the GoI's strategy, the IFSSP II aims to 1) strengthen financial sector stability in order to enhance crisis preparedness, improve the legal and regulatory framework of supervision and 2) promote the development of an inclusive financial sector, in particular by supporting the GoI in implementing its National Strategy for Financial Inclusion (NSFI).

The overarching goal of IFSSP II is to support the development of a resilient and inclusive financial sector. At the impact level, the Program aims at contributing to 1) financial sector stability maintained, and 2) better access to finance for individuals and MSMEs, leading to economic growth and job creation.

Pillar I, Financial Sector Stability: (i) strengthened capacity of Financial Institutions to regulate, supervise and mitigate crisis, (ii) improved capacity of the Indonesia Deposit Insurance Corporation (LPS) to exercise resolution tools, (iii) strengthened crisis prevention and management protocol system and improved capacity of the Financial System Stability Committee to assume the coordination role among financial sector authorities and (iv) improved regulatory and supervisory framework for the FinTech Industry.

Pillar II, Financial Inclusion: (i) strengthened coordination and implementation of the NSFI, (ii) Improved environment for the development of innovative payment mechanism, (iii) enhanced institutional, regulatory and supervisory environment for the SME finance and credit reporting system and (iv) improved regulatory and oversights system of other deposit-taking institutions, a strengthened financial consumer protection regime and improved financial literacy.

Results from previous phases:  

IFSSP Phase I provided substantial support for the drafting of the Financial Sector Crisis Prevention and Mitigation Law, which became effective in April 2016. It further supported the development of an Early Warning System (EWS), crisis management guidelines, bank resolution tools and the revision of the Insurance Law. The previous phase of the Program further supported the drafting of the NSFI 2016-2020, adopted in September 2016 and provided specific policy inputs into the National Medium-Term Development Plan (RPJMN) 2015-2019. In the field of financial diversification, it supported drafting the micro-insurance regulation and provided recommendations for developing the corporate bond market for infrastructure financing.

Phase 2 01.10.2017 - 30.09.2021   (Completed)