The rationale for Australian cooperation in economic governance is the clear link between sound macro-economic management and stability and poverty reduction. Poverty continues to affect the lives of millions of Indonesian men, women and children. Effective national economic management is one of many factors which contribute to poverty reduction over time. In simple terms, sound management provides a basis for increasing national and international investment which leads to increased employment and thus increased household income.
 

Sound macroeconomic management also increases the fiscal space for governments to improve delivery of essential services. For example, improvements in tax collection and management in Indonesia have substantially increased revenue and added to the national budget, thereby improving the Government of Indonesia’s ability to fund essential services, either through fiscal transfers or directly. At the micro level, increased household income helps families to break the cycles of chronic poverty which are characterized by lack of opportunity, vulnerability to events such as accidents and poor health, and inability to maximize participation in development processes.