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p. 18 of 21 BACK | NEXT Executive Summary I. Background II. Overview of Development Issues III. External Development Assistance IV. Priority Sectors for ADB's Future Operations V. ADB Strategy in Operation A. Issues Cutting Across Priority Area Interventions B. Absorptive Capacity C. Modalities of ADB Operations D. Risk Factors for ADB Operations E. Performance Indicators for ADB Operations

Country Operational Strategy - Cambodia : V. ADB Strategy in Operation

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B. Absorptive Capacity

149. Because of the prolonged period of conflict and associated disintegration of institutions, the ability of the Cambodian Government to effectively absorb and channel foreign developmental assistance is limited by lack of human resources and institutional mechanisms. Moreover, many of the implementation problems experienced in current ADB projects and programs are rooted in inexperience because of the youth of the program. There are several implications for ADB operations. First, ADB, together with other aid agencies, must ensure that the magnitude of aid flows is optimal to move the country forward without undermining the integrity of the emerging democratic institutions. Second, ADB must find innovative ways in which to maximize the use of existing government resources through, for example, fostering partnerships between ADB, the Government, and NGOs.

150. Third, ADB must make a commitment to long-term capacity building, particularly in those sectors in which it proposes to play a strong facilitative role. Fourth, while recognizing that the use of international consultants will be necessary for some time to come, it is nevertheless essential that ADB ensure that knowledge transfer is an integral component of every capacity-building TA. ADB should continue to devote TA and workshop resources to the efforts to deepen executing agency familiarity with ADB procedures. Additionally, it should take great care to protect executing agencies against the corrosive effects of weak governance in Cambodia. Finally, ADB should explore ways in which to expand the capacity of the Government in the short term through, for example, the use of long-term advisers and support for secondment programs.

151. In addition to human resource and institutional constraints, Cambodia has tremendous financial resource constraints that may affect the ability of the Government to sustain operations originally begun with foreign assistance, to provide counterpart funding, and to service debt. Thus, ADB should carefully monitor fiscal developments and assist in developing the capacity of the Government to mobilize revenues more effectively and to manage public expenditures efficiently. It will also be useful to undertake some in-depth analysis of the problems and solutions associated with limited absorptive capacity in Cambodia.

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