The Indonesia Economic Quarterly (IEQ) has two main aims. First, it reports on the key developments over the past three months in Indonesia's economy, and places these in a longer-term and global context. Based on these developments and on policy changes over the period, the IEQ regularly updates the outlook for Indonesia's economy and social welfare. Second, the IEQ provides a more in-depth examination of selected economic and policy issues, and analysis of Indonesia's medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia's evolving economy. A key component of the reform process has been the devolution of responsibility for basic education services to local governments and schools, and improvements in local governance can thus play a vital role in raising the quality of basic education and ensuring children leave school with adequate skills. Indeed, the Indonesian Local Education Governance (ILEG) surveys, conducted in 2009 and 2012, suggest that the quality of local governance is important for improving district education performance, making it important to continue to address key governance constraints, and to better coordinate and integrate central government financing in local education planning.