fbpx 49041-002: Strengthening Public Financial Management Program, Subprogram 1 | Asian Development Bank

Cambodia: Strengthening Public Financial Management Program, Subprogram 1

Sovereign (Public) Project | 49041-002 Status: Active

The Asian Development Bank is working with Cambodia to improve public services with a focus on the poor and vulnerable groups. The project is strengthening oversight of public expenditures with a focus on public debt management, program budgeting, financial management, and internal audits.

Project Details

Project Officer
Chamroen Ouch Southeast Asia Department Request for information
Country
  • Cambodia
Modality
  • Loan
Sector
  • Public sector management
 
Project Name Strengthening Public Financial Management Program, Subprogram 1
Project Number 49041-002
Country Cambodia
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3428-CAM: Strengthening Public Financial Management Program
concessional ordinary capital resources lending / Asian Development Fund US$ 26.50 million
Loan 3429-CAM: Strengthening Public Financial Management Program
concessional ordinary capital resources lending / Asian Development Fund US$ 3.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Public sector management / Public expenditure and fiscal management

Gender Equity and Mainstreaming Some gender elements
Description The programmatic approach seeks to increase the availability and efficiency of public services in Cambodia, including services for poor and vulnerable groups, by strengthening public expenditure and revenue management. In support of stage 3 of the government's four-stage Public Financial Management Reform Program (PFMRP), the proposed program will finance actions and initiatives to strengthen (i) the policy and regulatory framework for expenditure and revenue management, (ii) the procedures and capacities of select line ministries to implement budgeting and expenditure management reforms, and (iii) the capacity of the external audit function. The proposed program is included in the country operations business plan, 2016 2018 for Cambodia of the Asian Development Bank (ADB).
Project Rationale and Linkage to Country/Regional Strategy The government's Rectangular Strategy III, which sets out medium-term policies and priorities, identifies governance, including PFM, as a binding constraint to improving the availability and quality of public services. The public expenditure and financial accountability framework and other assessments, including diagnostics prepared for this program, identify three continuing weaknesses in the PFM system, which will be addressed under the program and are in line with objectives of stage 3 of the PFMRP. Other broader constraints include: low human capacities after decades of conflict, highly centralized public service delivery arrangements; and inadequate infrastructure. These are being addressed by other ADB interventions.
Impact Effective and efficient public service delivery and inclusive growth (Public Financial Management Reform Program, 2005 -2025)
Project Outcome
Description of Outcome The efficiency, effectiveness, and accountability of public expenditure and revenue management enhanced.
Progress Toward Outcome The government has commenced implementation of stage 3 (aiming to improve budget policy-linkages) of the PFMRP.
Implementation Progress
Description of Project Outputs

Policy and regulatory framework for expenditure and revenue management strengthened.

Capacity of selected line ministries to implement budgeting and expenditure management reforms improved.

Capacity of the external audit function improved.

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

Output 1:

- An amendment to Law on State Budget System (2008) to institutionalize PFM reforms including a provision for the National Assembly to pass the annual budget in a program budgeting format (2018). According to the new budget reform system strategy 2018-2025, the proposed amendment is scheduled for consideration by the National Assembly by 2020. Work on the proposed amendment has started in the General Department of Budget (MEF) by reviewing reform options, including drafting of provisions on performance budgeting. The amendment is expected to address the respective roles of financial controllers, the General Department of National Treasury as public sector accountant, and procurement arrangements. Working groups, led by the Secretary General of the General Secretariat of PFM Reform Steering Committee, have been established to work on the proposed amendment.

- Adoption of a government-wide medium-term expenditure framework (MTEF) (2017). The budget reform system strategy and discussions with MEF indicate that a medium-term fiscal framework (MTFF) and medium-term budget framework (MTBF) will be prepared instead of MTEF and that the combination of MTFF and MTBF is considered to be equivalent to MTEF. The MTFF aims to improve the quality and reliability of macro-economic forecasting to improve multi-year projections of revenues and expenditures; maintain aggregate fiscal discipline; and efficient use of resources by creating more stable and predictable budget allocations. It will also provide the basis for preparation of a MTBF for budget allocations with firm budget ceilings prepared by sector/line ministry level as indicated in the annual budget circular. A concept note of MTFF 2019-2021 has been finalized by the General Department of Policy (MEF). The General Department of Budget (MEF) has prepared a draft MTBF, including an integrated medium-term framework for capital and maintenance expenditure framework. It is anticipated that MTFF and MTBF will be prepared in early 2019 and operational for the 2020-2022 budgets.

- Adoption of a comprehensive financial management manual for government budgeting, and used for budget preparation, execution, and financial and performance reporting (2019). The mission notes that preparation of a comprehensive financial management manual for budget management has commenced under the leadership of the General Secretariat of the PFM Reform Steering Committee. The mission was informed that a local consulting firm would be engaged, using government resources, to carry out gap analysis and to then draft the financial management manual in Khmer. The manual would provide the basis for line ministries to prepare customized financial manuals for use by each ministry.

- It is requited that FMIS implementation be fully operationalized in MEF and 25 provincial treasuries (stage 1), including with International Public Sector Accounting Standards (IPSAS)-cash based financial statements; and that implementation be started for expanding system functionality and coverage to line ministries (stage 2). Phase 1 of FMIS implementation is essentially completed with the General Department of National Treasury having fully implemented FMIS which is capable of producing IPSAS standard cash reports at central ministry level. Stage 2 of FMIS implementation with additional functionality started in 2017 in the first batch of 10 ministries. The mission noted that three of the initial batch target ministries (Ministry of Agriculture, Forestry and Fisheries; Ministry of Education, Youth and Sport; and the Ministry of Labour and Vocational Training) have implemented FMIS. Three other ministries: the Ministry of Rural Development; Ministry of Public Works and Transport and Ministry of Water Resources and Meteorology have been included in the second batch of target ministries that have started implementing FMIS in 2018 with support of the MEF IT Department .

- Adoption of a government-wide internal audit manual based on international standards, including policy on principles for internal control of information and communication technology (ICT). An internal audit manual was approved in December 2016. Guidelines, including policy on principles for ICT internal controls with focus on FMIS are available in a draft version.

Output 2:

- Budget strategic plans (BSPs) are annually updated, and poverty and gender issues included by at least the six line ministries. The BSPs provide three-year estimates that are annually updated and prepared by all government line ministries to include all sources of revenue and all planned expenditures. The BSPs are the main tool by which government can link budget to sector/ministry policy objectives that are consistent with the overall poverty reduction objectives, including consideration of gender equity measures, of the five-year National Strategic Development Plan 2014-2018. All six ministries are producing BSPs that include some coverage of poverty reduction objectives in their policy frameworks and inclusion of some funded activities on gender and poverty reduction. The terms of reference of the international public sector planning and budget specialist includes a comprehensive review of BSP formats and procedures for the six ministries in addition to further strengthening and comprehensive coverage of poverty and gender matters. The BSPs for 2019-2021 will be further reviewed in early 2019.

- Program budgeting with integrated capital and recurrent budgets fully implemented and gender and poverty issues included by at least six line ministries. All six ministries are already producing program budgets (which are based on the BSPs) with some coverage of poverty in policy frameworks and objectives and, in most cases, some activities for poverty and gender specifically funded. There has been some integration of capital and recurrent budgets (mainly for the government funded budget only) in all six ministries, however further integration based on more detailed guidelines developed by MEF is required.

- Customized financial management manuals for budget preparation, execution, and financial and performance reporting prepared in at least six line ministries. There are currently basic manuals in place based on consolidation of past MEF guidelines and instructions for the six ministries. These are not currently comprehensive in nature and in user friendly formats. The General Department of Budget (MEF) will lead the preparation of the customized financial management manuals in close coordination with the General Secretariat of PFM Reform Steering Committee working alongside with the PFM working groups in the six line ministries.

- Annual financial and performance reports prepared and published by at least the six line ministries. All six ministries currently produce monthly, quarterly and annual financial reports and six-monthly and annual performance reports for MEF, based on program budget structures. Further work is needed to improve reporting formats and quality of reporting and publish the reports on websites of the ministries.

- Performance audits and audits of the ICT environment included in internal audit plans and implemented in at least the six line ministries. Performance audit is important to improve performance accountability. However, that most internal audit departments have not undertaken major performance-based audits although three have undertaken preliminary ones. Audits of the ICT environment is also important as FMIS is being implemented across all government ministries. None of the six ministries, however, have yet undertaken any substantial work on ICT audits.

Output 3:

- Tangible results have included application of 2015 regulation to guide implementation of the audit law; and timeliness in the completion of annual audits. The guidelines on financial, compliance, and performance audits are being updated; and work on preparation of the audit manual for sub-national administrations is in progress. In addition, the NAA is conducting audit of 6 districts for 2018. The NAA would seek higher management consideration to post the NAA's strategic development plan 2017-2021; and the 2018 annual progress report and subsequent annual progress reports on the NAA's website. NAA has prepared the 2016 annual audit report on public financial management which includes the budget settlement report which is now published on the NAA's website in February 2018.

Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Nongovernment organizations (NGOs) such as the NGO Forum (which has the NGO coordinating role on budget transparency); Transparency International (Cambodia); and NGOs active in agriculture, education, rural development, and water utilization were consulted during project design on the inputs, appropriateness, and relevance of the proposed program.
During Project Implementation
Business Opportunities
Consulting Services The TA loan will provide for an estimated 6 international consultants for a total of 59 person months and 10 national consultants for 216 person months. Consultants will possess qualifications and expertise in public financial management, economics, finance, commerce, accountancy, financial management information systems, external audit, internal audit or other closely relevant fields. The consultants will be hired as individual consultants in accordance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).
Procurement Not applicable
Responsible ADB Officer Chamroen Ouch
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Cambodia Resident Mission
Executing Agencies
Ministry of Economy and Finance
[email protected]
Street 92, Sangkat Wat Phnom
Khan Daun Penh, Phnom Penh City
Cambodia
Timetable
Concept Clearance 14 Jan 2016
Fact Finding 25 Apr 2016 to 09 May 2016
MRM 20 Jun 2016
Approval 26 Sep 2016
Last Review Mission -
Last PDS Update 02 Oct 2018

Loan 3428-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2016 06 Oct 2016 08 Dec 2016 30 Jun 2017 - 24 Apr 2017
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 26.50 Cumulative Contract Awards
ADB 26.50 26 Sep 2016 25.78 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 26 Sep 2016 25.78 0.00 100%

Loan 3429-CAM

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
26 Sep 2016 06 Oct 2016 25 Jan 2017 31 Mar 2020 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 4.30 Cumulative Contract Awards
ADB 3.50 26 Sep 2016 0.69 0.00 20%
Counterpart 0.80 Cumulative Disbursements
Cofinancing 0.00 26 Sep 2016 0.60 0.00 17%

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Related Publications

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Tenders

Tender Title Type Status Posting Date Deadline
National Public Sector Planning and Budget Specialist Individual - Consulting Closed 19 Apr 2019 25 Apr 2019
International Public Sector Finance and Accounting Specialist Individual - Consulting Closed 21 Nov 2018 27 Nov 2018
National Internal Audit Specialist Individual - Consulting Closed 27 Sep 2018 03 Oct 2018
International Public Sector Planning and Budget Specialist and Team Leader Individual - Consulting Closed 16 Aug 2018 22 Aug 2018
International Internal Audit Specialist Individual - Consulting Closed 08 Jun 2018 14 Jun 2018
International FMIS Business Process Individual - Consulting Closed 30 Nov 2017 06 Dec 2017

Contracts Awarded

Contract Title Approval Number Contract Date Contractor Contractor Address Executing Agency Contract Description Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
INTERNATIONAL FMIS SPECIALIST Loan 3429 16 Nov 2018 BRUCE POLLOCK CHIFLEY, ACT2606 AUSTRALIA Ministry of Economy and Finance Consulting Services 239,850.00 239,850.00