World Bank to assist Indonesia’s guarantee fund

The Indonesia Infrastructure Guarantee Fund (IIGF), which provides government guarantees for PPP projects, is to receive technical assistance and funding.

The World Bank, the Washington DC-based provider of finance and technical knowledge to developing countries, has pledged assistance to the Indonesia Infrastructure Guarantee Fund, an enterprise established by the Indonesian government in December 2009 to provide guarantees for public-private partnership (PPP) projects.

The World Bank has said it will help the IIGF establish operational norms which meet international standards, and will build capacity at the fund to “screen, appraise and supervise” PPP projects. In a statement, it said $4.6 million would go towards helping contracting government agencies to prepare PPPs. In addition, up to $25 million will be made available to help finance guarantees should the IIGF require additional capital.

“IIGF is critical to Indonesian efforts to build a market for PPPs in infrastructure, which will in turn help give a further boost to Indonesia’s economic growth,” said Stefan Koeberle, World Bank country director for Indonesia, in a statement.

The IIGF is aiming to provide guarantees to leverage private sector investment in infrastructure projects in areas such as toll roads, railroads, water, telecoms and electricity.

In a survey of 100 global infrastructure and energy firms conducted by law firm Norton Rose last year, more than three-quarters (79 percent) thought that the IIGF and Indonesia Infrastructure Fund have an important role to play in the future development of Indonesian projects.