INDONESIA —Indonesia is advancing a broad climate resilience reform programme with coordinated financial and technical support from the Asian Infrastructure Investment Bank (AIIB) and Germany’s KfW Development Bank. The two institutions have signed a memorandum of understanding establishing a framework for cooperation with the Indonesian government under the first sub-programme of the Climate Adaptation and Green Resilient Program, known as CARE CPBF.
The financing commitments underpinning Sub-Program 1 comprise USD 500 million in policy-based financing from AIIB and a planned EUR 300 million contribution from KfW. The institutions intend to align their engagement with government-led reforms, using policy dialogue, technical assistance and coordinated financing to support implementation. Indonesia’s Ministry of National Development Planning, known as Bappenas, coordinates the programme, while the government retains responsibility for designing and implementing the reforms.
The initiative covers several areas of climate and environmental policy. These include climate-smart agriculture, irrigation management, village-level financing and social forestry, alongside mangrove conservation, environmental management and ecosystem services. The agenda also addresses climate-resilient financing at subnational level, solid waste management and water supply. Together, these areas link climate adaptation with the delivery of public services and the protection of natural assets.
The agreement was signed by AIIB Vice President for Policy and Strategy Ludger Schuknecht and KfW Executive Board member Brigitte Réthier during the 2026 IMF and World Bank Group Annual Meetings in Bangkok. It creates a basis for the two development banks to coordinate their work with Indonesian authorities rather than pursue separate, unaligned reform-support activities.
For Indonesia, the programme could help establish policy and institutional conditions needed to attract investment in climate-resilient infrastructure and ecosystem protection. Improved irrigation and agricultural practices may support adaptation in rural communities, while stronger local financing mechanisms, waste services and water systems address vulnerabilities in municipalities. Mangrove and forest protection also connects climate policy with ecosystem management.
For investors and project developers, coordinated development-bank engagement can provide a clearer policy framework for future climate-related projects. However, the announced financing is policy-based support for reforms and should not be interpreted as a direct allocation of the full amounts to individual infrastructure projects. The scale and timing of downstream investment will depend on reform implementation and subsequent financing decisions.
AIIB is a multilateral development bank headquartered in Beijing that finances sustainable infrastructure and related development across its member economies. KfW is Germany’s development finance institution, supporting public policy and investment programmes in Germany and internationally. Their cooperation brings together institutional financing and technical experience in support of Indonesia’s climate adaptation and sustainable development priorities.
