The objective of the Urban Sector Development and Reform Project for Indonesia is to improve urban services in the participating urban local governments (ULGs). The restructuring will: (a) cancel US$6.565 million of the International Bank for Reconstruction and Development (IBRD) loan amount, and (b) reallocate proceeds between disbursement categories. The restructuring does not affect project co-financing from the Policy and Human Resources Development (PHRD) Grant. The borrower requested the partial cancellation because plans to include three additional urban local governments (ULGs) as new participants in the project were dropped when it became apparent that the subsidiary loan agreements will not be finalized in time for the subprojects to be completed before the project closing date. The reason for the reallocation is to: (a) reflect the partial cancellation, and (b) reallocate US$1 million in previously unallocated proceeds to the category of consultants' services, training and workshops, which mainly supports the project's local governance and reform activities and overall project management