Evaluation of climate loans to Indonesia

Through its climate policy loans, AFD seeks to encourage interministerial dialogue at a high level, in order to back up the design and implementation of an ambitious policy to fight climate change in the country concerned. Indonesia was the first country to benefit from it (three policy loans from AFD, in 2008, 2009 and 2010, amounting to a total of €800 million), in partnership with JICA (which lent an equivalent amount). The evaluation dealt with the “package” of inputs offered by the partners of the climate budget support program to Indonesia. The package included budget support loans, technical assistance programs, and policy dialogue.

For AFD, the evaluation was innovative in three respects, in terms of: its purpose (the Climate Change Program Loan – CCPL, a pioneer in new forms of financing the fight against climate change); its partnership (first joint evaluation with JICA); and its method, whose goal was to test, through adaptation, the methodological approach for the evaluation of budget support promoted by the DAC. The end goal of the evaluation was to assess the extent to which the support provided by AFD and JICA helped the Indonesian government effectively develop and implement a strategy that responds to the challenges faced by the country due to climate change. The evaluation was carried out by a team of researchers: Marc Raffinot (LEDa-DIAL), Anda David (LEDa-DIAL), and Masumi Shimamura (Mitsubishi UFJ).

The CCPL intervention logic helped to define and implement a national climate policy. The CCPL made it possible to strengthen institutions, develop frameworks suitable for policy dialogue, and improve the national information system through the setting up of a monitoring process based on a matrix of indicators. The new list of public expenditures explicitly takes into account the expenditures related to climate change, and the new technical assistance programs respond better to the government’s priorities and strategies. The governmental strategy supported by the CCPL led to better integration of the fight against climate change in national policies, better coordination of stakeholders, greater involvement by local administrations on these themes, and, finally, immediate results via targeted actions taken up as part of a matrix of policies, in particular in the energy and forest sectors (establishment of forest development plans in concessions).

However, at this stage, it is difficult to evaluate the impact of this strategy on greenhouse gas emissions, given the lack of hindsight and the uncertainty to which these effects can be attributed to the CCPL. The causal link between the setting up of the CCPL and the outcomes obtained through the national climate strategy has been established. Indeed, the CCPL was found to have made a strong contribution to better intersectoral integration. Its contribution was judged to be moderate in terms of the management of public finances,; rather strong in the forest and energy sector, moderate in the transport sector, and significant in the sectors related to adaptation.

The evaluation recommends (i) drawing up a more operational logical framework ex ante, (ii) planning an exit strategy beforehand, (iii) creating and maintaining policy dialogue at a high level, and (iv) resolving the short-term/medium-term tension inherent to the “package,” which includes an annual financial loan and a multi-year technical assistance contract.

Contact : Karen Rousseau, evaluation officer (rousseauk@afd.fr)