Cambodia: Decentralized Public Service and Financial Management Sector Development Program (Subprogram 2)

Sovereign Project | 41392-023 Status: Approved

Summary

In 2012, the ADB Board granted approval of the Decentralized Public Service and Financial Management (DPSFM) Sector Development Program, including a project loan for $13.5 million and a $24 million policy-based loan for subprogram 1 of the programmatic approach. The DPSFM aims to assist improved access to and coverage of basic public services. This will be achieved through an efficient system of intergovernmental fiscal relations.

The DPSFM is structured along a series of policy actions in seven major reform areas:

a. Development and regular update of a gender-sensitive policy and regulatory framework for decentralization.

b. Establishment of institutions for efficient coordination of sub-national democratic development policies.

c. Definition of clear service delivery responsibilities of Sub-national Administrations (SNAs).

d. Assignment of efficient tax and non-tax revenue sources to SNAs.

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Project Name Decentralized Public Service and Financial Management Sector Development Program (Subprogram 2)
Project Number 41392-023
Country Cambodia
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3414-CAM: Decentralized Public Service and Financial Management Sector Development Program (Subprogram 2) (Project Loan)
Asian Development Fund US$ 20.00 million
Loan 3415-CAM: Decentralized Public Service and Financial Management Sector Development Program (Subprogram 2) (Policy-Based Loan)
Asian Development Fund US$ 15.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Sector / Subsector

Public sector management - Decentralization - Public expenditure and fiscal management

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

In 2012, the ADB Board granted approval of the Decentralized Public Service and Financial Management (DPSFM) Sector Development Program, including a project loan for $13.5 million and a $24 million policy-based loan for subprogram 1 of the programmatic approach. The DPSFM aims to assist improved access to and coverage of basic public services. This will be achieved through an efficient system of intergovernmental fiscal relations.

The DPSFM is structured along a series of policy actions in seven major reform areas:

a. Development and regular update of a gender-sensitive policy and regulatory framework for decentralization.

b. Establishment of institutions for efficient coordination of sub-national democratic development policies.

c. Definition of clear service delivery responsibilities of Sub-national Administrations (SNAs).

d. Assignment of efficient tax and non-tax revenue sources to SNAs.

e. Implementation of fiscal transfers that ensure comparable levels of service delivery across SNAs.

f. Development of capacities for efficient decentralized public financial management.

g. Design and implementation of accountability mechanisms for SNAs to their constituencies.

Submission to the ADB Board of the second subprogram of the Decentralized Public Service and Financial Management reform subprogram 2 (Loan 2886) is expected in September 2015. The second subprogram, for a total amound of $35 million will equally include a policy-based loan and a project loan. The project loan component will aim to assist the establishment of the Sub-national Investment Fund, a grant mechanism for local infrastructure projects.

A recent mid-term review mission concluded that good reform progress has been achieved. Looking forward, further progress on functional decentralization, on expanding local revenue bases (with the assignment of tax-powers for Sub-national Administrations in particular) and overall capacity development of sub-national administrations (including the implementation of social accountability mechanisms) rank as the top reform priorities.

Project Rationale and Linkage to Country/Regional Strategy The Decentralized Public Service and Financial Management program aims to improve access to and coverage of basic services across Cambodia, by assisting the development of an efficient system of inter-governmental fiscal relations. The latter include aspects relative to the policy and regulatory framework for decentralization, institutional and policy coordination mechanism, expenditure and revenue assignments, transfers and public financial management systems, and reforms aimed at fostering accountability between local administrations and their constituencies.
Impact Access to and coverage of basic services across the country improved.

Project Outcome

Description of Outcome An efficient system of intergovernmental fiscal relations that assists service delivery by subnational administrations
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Program outputs 1-7: completed by July 2016

1. Institutions for efficient coordination of subnational democratic development policies established.

2. A gender-sensitive policy and regulatory framework for decentralization developed and regularly updated.

3. Clear service delivery responsibilities of d subnational administrations defined.

4. Efficient tax and nontax revenue sources to subnational administrations assigned.

5. Fiscal transfers that ensure comparable levels of service delivery across SNAs implemented.

6. Capacities in support of efficient decentralized public financial management developed.

7. Accountability mechanisms for subnational administrations to their constituencies designed and implemented.

Project output

Sub-National Investment Fund established and operations started.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location

Safeguard Categories

Environment B
Involuntary Resettlement C
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects The proposed Decentralized Public Service and Financial Management Cluster Sector Development Program (DPSFM II) seeks to assist improved local public service delivery by supporting the development of sub-national administrations accountable to their citizens, through the implementation of the Royal Government of Cambodia's (the Government) Decentralization and De-concentration (D&D) reforms. The proposed second subprogram, for the DPSFM program will include a policy loan and a project loan. Under the proposed subprogram 2 (DPSFM I) will provide eligible rural Districts with grants for local investment projects. The project location is selected based on the criteria that no environmentally and culturally sensitive areas will be affected. There may be minimal and temporary environmental impacts from the construction of the proposed rural district offices, due to the small scale of the proposed buildings, and these will be minimized by appropriate mitigation measures adopted during construction. A site assessment (based on at least three potential sites), will be conducted to establish physical site conditions and vulnerability of proposed sites to natural disasters. Project design will also ensure application of appropriate building codes to ensure for safety and mitigation of disaster risk such as flood mitigation. The project will ensure compliance with appropriate national environment laws and building by-laws.
Involuntary Resettlement nder the proposed Decentralized Public Service and Financial Management Sector Development Program, Subprogram 2 (DPSFM I) the Sub-national Investment Fund will provide eligible rural Districts with grants for local investment projects. The project location is selected based on the criteria that there will be no private land acquisition and the available public land is free from any kind of encumbrances. This will be included as a loan covenant as part of the loan agreement. All land to be used will have clear titles and are free of all encumbrances. These lands are not occupied or productively used. The subproject selection criteria ensures that any proposed subproject with any involuntary resettlement will not be included as part of the project. Thus, no land acquisition will be involved and the project will not trigger any involuntary resettlement.
Indigenous Peoples The proposed Decentralized Public Service and Financial Management Cluster Sector Development Program (DPSFM II) seeks to assist improved local public service delivery by supporting the development of sub-national administrations accountable to their citizens, through the implementation of the Royal Government of Cambodia's (the Government) Decentralization and De-concentration (D&D) reforms. The proposed second subprogram, for the DPSFM program will include a policy loan and a project loan. Under the proposed subprogram 2 (DPSFM I) will provide eligible rural Districts with grants for local investment projects. The subproject selection criteria ensures that any proposed subproject with any indigenous peoples impacts will not be included as part of the project.
Stakeholder Communication, Participation, and Consultation
During Project Design

The design included several rounds of consultations to a broad range of civisl society organizations. Drafts of the concept paper and policy matrix were shared and feedback from CSOs sought. The draft Sector Assessment on Public Sectot Management reforms was presented to CSO representatives.

A large number of Government agencies participated in the design and implementation of the program, including the Ministry of Interior, Ministry of Economy and Finance, the National Committee on Sub-national Democratic development ,etc. District and municipal administrations are consulted regularly on all aspects of project implementation. Procurement and contract management of the 35 district offices to be built under Output 1 of the DPSFM project will be led by District administrations.

During Project Implementation

Responsible Staff

Responsible ADB Officer Hiroyuki Aoki
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SERD
Executing Agencies
National Committee for Democratic Development at Subnational Level
[email protected]
Ministry of Interior Norodom Blvd,Sangkat Tonle Bassac,Khan
Chamcar Mon, Phnom Penh

Timetable

Concept Clearance 05 Mar 2012
Fact Finding 27 Apr 2015 to 05 May 2015
MRM 16 Jun 2015
Approval 18 Aug 2016
Last Review Mission -
Last PDS Update 18 Aug 2016

Loan 3414-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Aug 2016 - - 30 Jun 2022 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 30.70 Cumulative Contract Awards
ADB 20.00 18 Aug 2016 0.00 0.00 0%
Counterpart 10.70 Cumulative Disbursements
Cofinancing 0.00 18 Aug 2016 0.00 0.00 0%

Loan 3415-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Aug 2016 - - 30 Jun 2017 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 15.00 Cumulative Contract Awards
ADB 15.00 18 Aug 2016 0.00 0.00 0%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 18 Aug 2016 0.00 0.00 0%

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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