Jakarta – A record-breaking increase in revenue has failed to alleviate high levels of poverty in Nanggroe Aceh Darussalam, according to a new report.

The joint study was carried out by the World Bank and leading universities in Aceh with support from the Indonesian government. It found that despite a sixfold increase in revenue since 1999, as well as rich natural resources, Aceh remains the fourth-poorest province in the nation.

The Aceh Expenditure Analysis for 2006 examines revenues and expenditures, as well as the financial management capabilities of Aceh's provincial and local governments.

"We now have a comprehensive picture of existing and near-future financial resources for Aceh for the first time," said Joel Hellman, World Bank coordinator for Aceh reconstruction.

Decentralization, the granting of special autonomy status in 2001 and a large influx of post-tsunami aid account for the increase in revenue. As of June 2006, US$4.9 billion worth of reconstruction was underway in Aceh, out of some US$8 billion in total pledges.

The creation of a special autonomy fund in the new Aceh governance law will further increase revenues starting in 2008 to some Rp 13 trillion (US$1.4 billion) per year, more than compensating for a decline in oil and gas production in the province.

Yet Aceh's poverty rate, which measured 28.5% before the tsunami, is likely to have increased since then.

"Local government capacity to manage public funds is still very weak and increased spending on salaries and facilities is a very worrying trend," said Ayha Ihsan, the Acehnese co-author of the report.

"For us Acehnese, one of the most critical reforms is capacity building for these officials and reforming the incentives and sanctions regime governing their activities."