Cambodia - PFM Modernization Project - Implementation ... · Web view2017/11/13 · Furthermore, peer learning evolved, as more advanced users (i.e. Koh Kong treasury) supported

Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: ICR00004016

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(Grant No.: TF015434)

ON A

GRANT

IN THE AMOUNT OF US$ 18.35 MILLION EQUIVALENT

TO THE

KINGDOM OF CAMBODIA

FOR THE

PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT

November 9, 2017

Governance Global PracticeEast Asia And Pacific Region

CURRENCY EQUIVALENTS(Exchange Rate Effective July, 2017)

Currency Unit = Cambodian Riel (KHR) KHR 0.00025 = US$1 US$0.0000 = 4062.97 Riel

FISCAL YEARJanuary 1 – December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankBD Budget DepartmentCAS Country Assistance StrategyCEN Country Engagement NoteCOA Chart of AccountEAP External Advisory PanelEU European UnionFAD Fiscal Affairs DepartmentFMIS Financial Management Information SystemFMWG FMIS Management Working GroupGDNT General Department of the National TreasuryIBRD International Bank for Reconstruction and DevelopmentIFAPER Integrated Fiduciary Assessment and Public Expenditure ReviewIPSAS International Public Sector Accounting StandardsITD Information Technology DepartmentMDTF Multi Donor Trust FundMEF Ministry of Economy and FinancePAD Project Appraisal DocumentPDO Project Development ObjectivePEFA Public Expenditure and Financial AccountabilityPFM Public Financial ManagementPFMRP Public Financial Management Reform ProgramPFMTF Public Financial Management Trust FundPFMAP Public Financial Management and Accountability ProjectRGC Royal Government of CambodiaSCS Steering Committee SecretariatSWAp Sector Wide ApproachIDA International Development Association

Vice President: Victoria KwakwaCountry Director: Ellen A. GoldsteinSenior Global Practice Director: Deborah L. WetzelPractice Manager: Robert R. TaliercioTask Team Leaders: Sokbunthoeun So, Leah AprilICR Main Contributors: Khuram Farooq, Sati Achath

TABLE OF CONTENTS

DATA SHEET.........................................................................................................................I

ABSTRACT...........................................................................................................................1

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES....................................2A. Context at Appraisal 2

B. Significant Changes during Implementation 6

II. OUTCOME.....................................................................................................................8A. Relevance of PDOs 8

B. Achievement of PDOs (Efficacy) 9

C. Efficiency 11

D. Justification of Overall Outcome Rating 12

E. Other Outcomes and Impacts (if any) 13

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME.........15A. Key Factors during Preparation 15

B. Key Factors during Implementation 16

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME..........................................................................................................................17

A. Quality of Monitoring and Evaluation (M&E) 17

B. Environmental, Social and Fiduciary Compliance 18

C. Bank Performance 18

D. Risk to Development Outcome 19

V. LESSONS AND RECOMMENDATIONS.....................................................................20

ANNEX 1: RESULTS FRAMEWORK AND KEY OUTPUTS...........................................22

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION....32

ANNEX 3. PROJECT COST BY COMPONENT...............................................................34

ANNEX 4. EFFICIENCY ANALYSIS.................................................................................35ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS.......................................................................................................................37

ANNEX 6. SUPPORTING DOCUMENTS..........................................................................55

ANNEX 7. FREQUENCY DISTRIBUTION OF TRANSACTIONS..................................56

ANNEX 8. MAP OF CAMBODIA......................................................................................62

Page of

The World BankCambodia PFM Modernization Project (P143774)

DATA SHEET

BASIC INFORMATION

Product InformationProject ID Project Name

P143774 CAMBODIA PFM MODERNIZATION PROJECT

Country Financing Instrument

Cambodia Investment Project Financing

Original EA Category Revised EA Category

Not Required (C) Not Required (C)

Related Projects

Relationship Project Approval Product Line

Additional Financing P151984-Cambodia PFMMP-Additional Financing P151984

17-Apr-2015 Recipient Executed Activities

Organizations

Borrower Implementing Agency

Ministry of Economy and Finance Ministry of Economy and Finance, Royal Government of Cambodia

Project Development Objective (PDO)

Original PDOThe project development objective was to enhance public financial management by strengthening: (a) revenue mobilization; and (b) budget execution processes through the implementation of the Financial Management Information System (FMIS).

i


FINANCING

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)World Bank Financing

TF-15434 5,903,013 18,796,197 18,349,597

Total 5,903,0131 18349597 18,349,597Non-World Bank FinancingBorrower 0 0 0

Total 11806026 37145794 36699194Total Project Cost 5,903,013 18,796,197 18,349,597

KEY DATES

Approval Effectiveness MTR Review Original Closing Actual Closing

06-Nov-2013 04-Dec-20132 20-Jul-2015 14-May-2016 14-May-2017

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions

17-April-2015 Additional Financing04-May-2016 9.92 Change in Results Framework

Change in Loan Closing Date(s)Change in Implementation Schedule

KEY RATINGS

Outcome Bank Performance M&E Quality

Satisfactory Satisfactory Substantial

1 The original project was appraised for $12 million; however, grant agreement was initially signed for $5.9 million to reflect the available cash on hand at the time. The grant agreement was revised a few times to bring the amount of project fund to the level of appraised amount. The Additional Financing’s (AF) project paper suggested the AF was $7.5 million and this bring the total project amount up to $19.5 million. However, due to exchange rate fluctuation and following the Administration Agreement with the Trust Fund donors, which clearly split exact percentage between BETF and RETF, available resource for the RETF project was $18.79 million.2 The project grant agreement was approved and became effective on November 06, 2013. However, the system recorded effectiveness date as ’04-Dec-2013’.

ii


RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP RatingActual

Disbursements (US$M)

01 24-Mar-2014 Moderately Satisfactory Moderately Satisfactory 0

02 15-Nov-2014 Satisfactory Satisfactory 1.58

03 19-May-2015 Satisfactory Satisfactory 3.25

04 09-Oct-2015 Satisfactory Satisfactory 4.99

05 25-May-2016 Satisfactory Satisfactory 10.86

06 22-Nov-2016 Satisfactory Satisfactory 15.50

07 30-Mar-2017 Satisfactory Satisfactory 17.45

SECTORS AND THEMES

SectorsMajor Sector/Sector (%)

Public Administration 100Central Government (Central Agencies) 100

ThemesMajor Theme/ Theme (Level 2)/ Theme (Level 3) (%)Economic Policy 10

Fiscal Policy 10

Tax policy 10

iii


Public Sector Management 91Public Finance Management 30

Public Expenditure Management 20

Domestic Revenue Administration 10

Rule of Law 21Judicial and other Dispute Resolution Mechanisms 7

Legal Institutions for a Market Economy 7

Personal and Property Rights 7

Public Administration 40

Administrative and Civil Service Reform 20

Transparency, Accountability and Good Governance 20

ADM STAFF

Role At Approval At ICR

Regional Vice President: Axel van Trotsenburg Victoria Kwakwa

Country Director: Ulrich Zachau Ellen A. Goldstein

Senior Global Practice Director: Sudhir Shetty Deborah L. Wetzel

Practice Manager: Mathew A. Verghis Robert R. Taliercio

Task Team Leader(s): Leah April Sokbunthoeun So, Leah April

ICR Contributing Author(s): Khuram Farooq, Sati Achath

iv

The World BankCambodia PFM Modernization Project ( P143774 )

Abstract

Public Financial Management Modernization Project (2013-2017) aimed to enhance public financial management by strengthening the revenue mobilization, and budget execution processes through the implementation of Financial Management Information System (FMIS). The project was completed in 4 years at the total cost of $18.349 million. This included one year’s extension and $7.5 million additional financing.

It was conceived that improved revenue mobilization and effective budget execution controls are critical to strengthening public financial management. Strengthened budget execution controls through the implementation of FMIS would ensure enhanced compliance with budget, a basic pre-requisite to achieving planned fiscal deficit targets and macro-fiscal stability in the long term.

The Project is rated ‘Satisfactory’ as it has met or likely to meet all its targets. This is derived from ‘High’ rating for Relevance of objectives, and ‘Substantial’ rating for efficacy and efficiency.

The revenue mobilization activities have been completed successfully. Non-tax revenue has increased by 181 per cent during the project period. Revenues from property and custom taxes also saw a substantial increase. Though it can be attributed to the impressive economic growth of around 7 per cent during these years, the Revenue Mobilization Strategy, its proper monitoring, and activities to improve tax payer services and compliance management financed under this project were key to leveraging this economic growth for enhanced revenue outcomes.

FMIS implementation – PeopleSoft-based - in key departments of the MEF, including the Capital Treasury and 24 Provincial Treasuries (PTs), has been completed as targeted. It has enabled the government to enhance budget execution controls, improve timeliness of financial reporting, and achieve noteworthy compliance with IPSAS cash standards. The financial reports for analysis and decision-making can be produced within a few minutes as planned. Annual Financial Statements for FY 2016 were finalized 6 months after the close of the fiscal year, against the targeted 4 months. Unified budget classification and chart of accounts, consistent with international standards, has been largely implemented as planned. The government is now in a better position to control and report on its budget execution through a comprehensive, country-wide transaction processing system for commitments, payments, accounting, and reporting. This has laid down the basis for transparency and accountability of budget management, a fundamental pre-requisite for institutional development and good governance in public financial management.

A few lessons were re-validated during this operation. Multi-stakeholder engagement, realistic scope focused on the ‘basics’, and effective leadership in driving the change management strategies are key to success.

1


I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES

A. Context at Appraisal

Context

1. The Royal Government of Cambodia (RGC) has made substantial progress in economic reconstruction since the 1993 election, which helped return peace to the war- ravaged country. Economic growth averaged seven percent a year for two decades, bringing per-capita income from $400 in 2004 to $830 in 2011 despite the global economic crisis. This sustained economic growth was accompanied by a reduction in poverty rate from 53.2% in 2004 to 20.5% in 2011.

2. During these years, the RGC has made progress in establishing public institutions, particularly in public financial management area. The Government improved the mechanisms for planning, budgeting, spending, and accounting of public funds. Oversight and regulatory institutions were established. These institutions were vested with formal powers to resolve conflicts, monitor compliance, and hold government agencies and individuals accountable for failure to comply with rules. The RGC continued to improve the overall structure of government, establishing a decentralized system of government to improve services and take decisions at the local level.

3. In December 2004, the RGC adopted the Public Financial Management Reform Program (PFMRP), which was a long-term program based on the Platform Approach. It aimed to address overarching and systemic public financial issues. Since its inception, the PFMRP has enabled Cambodia to achieve significant progress in reforming public expenditure policy and public finance. The tax revenue administration was strengthened. Budget preparation and management, macro-fiscal discipline, and debt management has improved. Commitments and payment processes were streamlined. The use of cash in revenue and expenditure transactions decreased. Unauthorized bank accounts were closed. The Treasury Single Account was strengthened. As assessed by the External Advisory Panel (EAP) in January 2010, most PFMRP performance indicators under the PFM Platform-one were met.

4. Despite the slower-than-anticipated initial progress under Stage/Platform-two (which began in 2009), efforts were stepped-up significantly to increase financial accountability. Much of the work focused on Financial Management Information System (FMIS) implementation. The FMIS was first supported under the Public Financial Management and Accountability Project (PFMAP) through a Multi-Donor Trust Fund (MDTF) and an International Development Association (IDA) grant between 2006-2013. During this time, much of the focus was placed on foundational conditions for the system. A comprehensive six-segment uniform budget classification and chart of accounts structure was developed. This structure unifies the budget and accounting functions into a single structure, complies with Classification of the Functions of the Government (COFOG) under Government Financial Statistics Manual (2001), and enables compilation of financial statements under the Cash-based International Public Sector Accounting Standards (IPSAS). Internal audit was strengthened with the establishment of internal audit departments in 28 ministries. 3 The use of commercial banks for collections and payments continued to expand across the country. A new Public Procurement Law was put in place. The Debt Management and Financial Analysis System (DMFAS) implementation started. The debt management legal framework was under preparation. The PFMMP supported the implementation of the FMIS and revenue mobilization under the PFMRP starting from November 2013.

3 2016 Annual Performance Report on PFMRP-Stage 3, GSC-MEF, p. 9.2


5. The PFMRP followed a sector-wide approach. In addition to the support through the MDTF, the PFMRP also received direct technical and financial support from several donors including the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA), the US Treasury, and the International Monetary Fund (IMF). During the 2012 annual retreat, development partners and the MEF jointly agreed with the External Advisory Panel’s assessment that the PFMRP was on the right track and the strategy remained valid.

6. Despite this progress, the gains remained insufficient to reach efficiency and transparency levels compared to similarly transforming countries in the region. One of the key findings of an Integrated Fiduciary Assessment and Public Expenditure Review, published in 2011, was the need to increase the scope of reforms to improve revenue collection and expenditure policy. Increasing fiscal space through reducing tax exemptions, tightening collection, and restructuring existing spending could offer additional fiscal space for larger allocations to areas crucial for sustaining strong and inclusive growth. However, there were challenges to be addressed at many levels. Insufficient sectoral coordination, high institutional fragmentation, and weak capacity continued to affect the pace of reforms. Legislative oversight required further strengthening. Service delivery at the local level was weak due to lack of devolution. To address these challenges, devolution to sub-national administrations and service delivery units was gradually carried out, together with the greater alignment of the government strategic goals, budget priorities, and donors’ support. In this context, PFMMP was conceived and launched in 2013.

7. The project contributed to the country’s higher-level objectives under the Country Assistance Strategy (CAS) and subsequent Country Engagement Note (CEN) in addressing governance issues, the primary obstacle to poverty reduction by improving the management of public finance. Specifically, the project addressed public sector governance and contributed to improving the efficiency and effectiveness of public financial management (PFM), one of the key areas under the CAS. It was also consistent with the RGC’s rectangular strategy, which had good governance and improving the management of public finances as its core.

8. By supporting the improvement of PFM, the project contributes to improving the efficiency and effectiveness of public service delivery and ensuring sustainable economic growth.

Theory of Change (Results Chain)

9. The key objective of the project was to enhance PFM by strengthening revenue mobilization and budget execution. Strengthened revenue mobilization through a well-designed Revenue Mobilization Strategy (RMS), implemented and monitored effectively, together with improved tax payer services, would allow the Government to generate more resources to finance infrastructure development and improve public services. High level Steering Committees would ensure rigorous monitoring of the RMS. Budget execution, on the other hand, would be improved through the implementation of FMIS that would enable the implementation of a comprehensive budget classification and chart of accounts, effective ex-ante budget control, and timely financial reports. Improved budget execution would ensure enhanced compliance with budget, a basic pre-requisite to achieving planned fiscal deficit targets and macro-fiscal stability in the long term. This in turn is necessary for improved service delivery. The logic of this results chain was valid and prudential. Consequently, a Result Framework was prepared, which articulated project’s pathway from planned interventions to the intended outcomes. See diagram below:

Theory of Change

3

Outputs PDO/OutcomesActivities


Project Development Objectives (PDOs)

11. The original project development objective was to enhance public financial management by strengthening: (a) revenue mobilization and (b) budget execution processes through the implementation of FMIS. These objectives were designed to be measured through five indicators, that were later revised, as given below:

Key Expected Outcomes and Outcome Indicators

Project Development Objective Indicators

Indicator Name Unit ofMeasure Baseline

End Target Outcome

Improving budget execution processes through the

Number of treasuries at the national and provincial levels implementing FMIS

Procurement process in progress 24 (fully operational FMIS,

4

Underlying Assumptions: Policy and political level commitment to implement these reforms

- Non-tax revenue sources diversified

- More revenues (e.g. non-tax and property taxes)

- Revenue Mobilization Strategy developed, implemented and monitored through monitoring reports

- Preparation of a Revenue Mobilization Strategy by the Policy Department of MEF

- Coordination and monitoring of PFMRP

- Improved budget classification

- Financial statements with disclosures of standards

- IFMIS implementation at MEF and Provincial Treasuries, including

- Budget control and execution modules

Improved timeliness of:

- Locating financial reports on budget execution;

- Payment processing

- Closure of financial accounts

- Acquisition and implementation of IFMIS to support budget execution controls at GDNT and 25 provincial treasuries

- Implementation of a comprehensive chart of accounts

- Capacity building to oversee and monitor IFMIS project

- Change management

Rev

enu

e M

obili

zat

ion

F MI S

Underlying Assumptions: Supervisory consultants to mitigate the capacity challenges of MEF in supervising the implementation; project design is focused on basics.


implementation of FMIS

treasury centric module)

Enhanced revenue mobilization as measured by tax and non-tax revenue collection

Revenue to-GDP ratio 13.0% 15.0%

Improve budget classification through the implementation of the uniform account code structure

# of budget classification segments Implemented

Six budget classification codes developed:Function Classification (FC);Admin. Classification (AC);Economic Classification (EC); Program Classification (PC); Geographic Classification (GC); and Source of Fund Classification (SFC).

EC, AC, GC

Revenue mobilization action plans developed and its implementation monitored

Scheduled progress:(i) finalize and approve strategy and action plans;(ii) prepare sequenced and prioritized action plans;(iii) monitor implementation;(iv) interim monitoring Report

Revenue mobilization strategy (2013-2018) developed and being finalized.

Interim monitoring reports developed

The MEF increases the number of female staff participating in training events.

Percentage of women participate in training

No Baseline 20.0%

Components

Component 1: Mobilization of Revenue and Steering Committee Secretariat Operations Support (Estimated cost: $2 million; actual accumulative cost $3.07 million)

12. Sub-component A: Mobilization of Revenue, which would facilitate the preparation of a credible and sequenced revenue mobilization strategy for the RGC. Support provided to the Department of Economic and Public Finance Policy (Policy Department) of the MEF included the review and refinement of the Revenue Mobilization Strategy, development of sequenced and prioritized implementation action plans, and monitoring the implementation of the action plans.

13. Sub-component B: This sub-component supported the Steering Committee Secretariat (SCS), tasked with managing, implementing, and coordinating the government’s PFMRP. Financing was provided to support staffing, operating costs, and fiduciary obligations of the SCS to: (i) ensure that resources for the project are managed in a strategic, transparent, and effective manner; and (ii) support the overall progress and implementation of the project.4

4 The Steering Committee Secretariat (SCS) was later renamed as General Secretariat of PFM Reform Steering Committee (GSC).

5


Component 2: Improving budget execution processes through the implementation of FMIS (Estimated cost $16.80 million; actual accumulative cost $15.28 million).

14. Sub-component A: This component aimed to strengthen the budget execution processes through the implementation of an FMIS. The scope was conceived around building a core budget and treasury system supporting all budget execution functions, from commitment to the payment stages. The key departments involving in the budget execution processes covered by the FMIS included Budget, Financial Affairs, Investment and Cooperation, Local Finance, and the General Department of the National Treasury (GDNT) which included the capital and 23 provincial treasuries.5 The sub-component would also support implementation of the newly developed uniform budget classification and accounting code structure across all budget entities. It would also support the Treasury to compile financial statements of the government on cash basis IPSAS.

15. Sub–component B: Implementation support for the FMIS included: (i) building the capacity of the GDNT and the FMIS Project Management Working Group (FMWG) to oversee and monitor the FMIS implementation; and (ii) financing change management activities to support the transition of organizations and staff within the newly automated environment.

B. Significant Changes during Implementation

Revised PDOs and Outcome Targets

16. Revision of Result Framework: During the Mid-Term-Review (MTR) in July 2015, the Results Framework (RF) was revised to further clarify the scope, and better reflect the results chain and actual progress. While the original PDO was still relevant and remained unchanged, the team clarified that “strengthening revenue mobilization,” meant improved revenue administration capacity including improved compliance of tax obligations and more non-tax revenue sources, which contribute to the overall improvement in revenue collection.

17. The revised RF was improved in two main areas: (1) PDO indicators for revenue mobilization - to reflect the limited resources available for that component and (2) the result chain between the intermediate outcome indicators and PDO indicators.

Revised PDO Indicators

18. The Result Framework and monitoring were revised and updated as below:

Project Development Objective IndicatorsIndicator Name Unit of Measure Baseline End target

(2017)Improved timeliness to locate financial data and report

Time spent to locate financial data and report

It took up to two days to locate specific data

Less than 30 minutes

Improved timeliness in the payment processing at GDNT

Time spent on processing payment at GDNT

Payment process could take between 15 to 30 days in 2013

10-15 working days

5 Additional province, Tbaung Khmum, was created after the project became effective.6


More timely closure of financial accounts at end of fiscal year

# of months after each fiscal year

9 to 10 months delay in financial account closure

3 – 4 months

More non-tax revenue sources

Number of new and revised inter-ministerial Prakases

24 37 (22 revised)

Revenues from property and customs tax increased

Revenue in KHR billion

Revenue from property tax KHR 62.7 billion (2013)

Revenue from customs tax KHR 4,056 billion (2013)

85

6,648

Intermediate Results IndicatorsImprove budget classification through the implementation of uniform account code structure

# of budget classification segments implemented

Seven budget classification codes developed [Function Classification (FC), Administrative Classification (AC), Economic Classification (EC), Program Classification (PC), Geographic Classification (GC), Source of Fund Classification (SFC)], and Project Classification

EC, AC, GC, PC, FC

Financial Statements presented with disclosure of accounting standards used as the basis for their preparation and accounting policies

Yes/No Preparation of IPSAS cash basis in progress

Partial IPSAS cash basis report produced

FMIS implemented at MEF/Provincial Treasury

Number of treasury offices at the national and provincial levels implementing FMIS

Procurement process in progress MEF and all PTs

Budget control and execution modules implemented

Number of FMIS modules implemented

0 BA; GL, AR; AP; CM; and PO


Scheduled progress: (1) approve strategy & action plans, (2) prepare sequenced and prioritized action plans, (3) monitor implementation, (4) interim report)

Revenue mobilization strategy developed (2013-2018) and being finalized.


Revised Components:

19. The components were not revised during implementation.

Other Changes7


20. Additional Financing (AF): In April 2015, the project was restructured at the request of RGC, which involved additional financing of $7.5 million. The AF was to fill the financing gap and scale up support in key activities under the two components. Specifically, under the first component, the AF funded capacity building and implementation of the revenue mobilization strategy. Under the second component, the AF funded the preparation of FMIS roll out to other ministries, capacity building, program-based budgeting, internal audit strengthening, implementation of the new chart of account for broader coverage, improvement of budget strategic plans in ten ministries, and the financing gap for the FMIS implementation support. The original project (PFMMP) became effective on December 4, 2013, and was financed by a Public Financial Management Trust Fund (PFMTF) in the amount of $5,903,013, which was the available contribution at the time, although the project was appraised for $12 million.6 At the time the project was appraised, additional contribution from the EU was expected to be made available to the existing PFMTF. However, this additional amount was only mentioned but not programmed in the PAD, (paragraph 20, page 14), which covered only the resources already officially committed at the time, covering a narrow set of activities. This was because the project operated on cash received basis and only funding that have been committed by donors were programmed.

21. Extension of Project Closing Date: The Bank extended the project in July 2015 by one year – closing date extended from May 14, 2016 to May 14, 2017. This was done on the request of the government to complete the key project activities, including the implementation of FMIS, strengthening of the program based budgeting, and implementation of the revenue mobilization strategy. 22. Increase in Disbursement Ceiling: While the overall disbursement arrangements remained unchanged, the disbursement estimates were updated to reflect the actual progress. The Designated Account ceiling was increased from US$ 100,000 to US$ 500,000, effective August 2015.

Implication on the Original Theory of Change

23. The AF does not have any major implication on the theory of change; however, it provided additional resources that contribute to more effective linkage in the result chains.

II. OUTCOME

A. Relevance of PDOs

24. Relevance of PDO is rated as High. The PDO was relevant to the Government priorities, World Bank Group’s goals, and donor supported reform objectives. The PDO reflected the key priorities of the Government as given in its PFMRP. The PFMRP was aligned with the Government’s National Strategic Development Plan (2014-18), and Rectangular Strategy, which considers improved governance as critical to enhancing service delivery to meet the aspirations of the people.

6 With the contributions from the European Union (EU), Swedish International Development Agency (SIDA), and the Australian Department of Foreign Affairs and Trade (DFAT)

8


25. The objective remains highly relevant to the Country’s Engagement Note, for the period 2016-2017,7 which continues to identify governance issues as fundamental constraints to development. The project contributes to strengthening institutional capacity and PFM systems, which facilitate service delivery, one of the key objectives of the CEN.8 26. The project represented a continuation of support from the Bank and donor partners in PFM. The project was built on the then ongoing PFMAP, which focused on improving financial accountability and effective management of public finance.

27. The objective, vis-à-vis Project design, was realistic as it was focused on the ‘basics first’ approach, providing support to the implementation of the PFMRP. Similarly, the implementation arrangements were adequate as all planned activities were accomplished satisfactorily, and within budget. The project also included activities that contributed to the strengthening of institutional capacity in PFM.

B. Achievement of PDOs (Efficacy)

Assessment of Achievement of Each Objective/Outcome:

28. The overall Efficacy is rated as Substantial. The project has achieved or is likely to achieve its objectives. In a few areas, it has exceeded its target. The project has laid down solid foundations for enhanced PFM systems in the government. It has built sufficient momentum to warrant positive likelihood of achieving its remaining few objectives soon.

29. The Efficacy vis-à-vis “Strengthening Revenue Mobilization” is rated as ‘substantial’, as non-tax revenues were increased by 181% and revenues from property and custom taxes were also in line with or exceeded their targets. This could also be attributed to the robust economic growth during the implementation period. Nevertheless, the Revenue Mobilization Strategy, its proper monitoring, and activities to improve tax payer service and compliance management financed under this Project were key to leveraging the economic growth for enhanced revenue outcomes.

30. The Efficacy, vis-à-vis “Strengthening Budget Execution Controls” is also rated as ‘substantial’. Through the successful implementation of FMIS, the government is now in a better position to control and report on its budget execution through a comprehensive, countrywide transaction processing system for commitments, payments, accounting, and reporting. This has also laid down the basis for transparency and accountability of budget management, a fundamental pre-requisite for institutional development and good governance in public financial management.

31. Progress against key performance indicators and targets is summarized as follows:

7 Report No. 104843 – KH8 The overarching objectives of the CEN are to: (i) support Cambodia’s export driven economy in improving its business climate and addressing competitiveness bottlenecks; (ii) improve service delivery to (a) address vulnerability which concerns an increased share of the population, and (b) generate opportunities for the poorest to build assets and develop income earning opportunities; and (iii) deepen the WBG knowledge base, including through a SCD, for the future engagement in Cambodia.

9


32. Improved timeliness to locate financial data and reports has exceeded its end target. Before the project, it took up to two days to locate financial data and reports, but now, on average, a standard report can be produced within a few minutes, which is far quicker than targeted thirty minutes. The financial reports can be extracted from the FMIS at Provincial Treasuries, as well as from the central offices of the MEF (Annex 7).

33. Improved timeliness in the payment processing at GDNT has been achieved, and in some cases exceeded the end target. Payment process (without corrections) is completed, on average, within 10-15 working days as targeted, against the baseline of 15-30 days in 2013. This also facilitated monthly salary payment, which is now paid timely at the last day of each month via bank accounts. Going forward, this timeliness could potentially be further enhanced.

34. The objective of more timely closure of financial accounts at the end of fiscal year is partially achieved. It took 6 months to close the financial accounts for FY 2016, against the targeted 4 months. The baseline was 9-10 months. The delays are mainly due to initial difficulties in the introduction of program budgeting reforms and continued usage of the legacy system at a few places. With the introduction of full program budget for 10 line ministries since 2015 and continued expansion of program budget to other ministries, a few Provincial Finance Departments could not provide detailed budget break-down on programs, sub-programs and activities. Since FMIS would check budget availability at that level of detail as per the procedures, the Treasury staff at these provinces could not process payment transactions through FMIS, and had to resort to legacy system for payment processing. Besides, a few Provincial Treasuries delayed cutting-off the parallel use of the legacy system due to change management and training issues. These treasuries continued to process payment transactions primarily through the legacy system, necessitating duplication of work, as the same transactions were required to be punched into FMIS, ex-post, for accounting and compilation of financial statements. Furthermore, all line ministries did not start to implement full program budgeting at the same time; as the result the new budget entities were slow spending in the early year and affected on financial account closure. Nevertheless, the timelines in closure of financial accounts has improved significantly compared to previous years.

35. The objective of improved non-tax revenues sources has been achieved. Both the sources of non-tax revenues as well as the actual collections have improved remarkably, increasing from 24 (baseline) to 38, against the end target of 37. The non-tax revenue collection has also increased by 181% - from US$ 173 million in 2013 to US$ 314 million in 2016. This remarkable increase is attributed largely to the robust economic growth and sound business environment, maintaining at around 7%. However, the Revenue Mobilization Strategy (RMS) 2014-2018, developed, implemented and monitored under the project, was key to galvanizing the efforts of the revenue collection agencies, which capitalized on the impressive economic growth by implementing the Strategy. The Government established two Steering Committees to monitor and evaluate the tax and non-tax revenues. The main role of these committees was to guide, coordinate and monitor the implementation of the RMS through strong support at the senior levels. The Secretariat of the Committees produced mid-year and annual monitoring reports. The rigorous monitoring was key to achieving the targets. The General Department of State Property and Non-Tax revenues, responsible for coordinating and monitoring non-tax revenues, worked with the line ministries to develop inter-ministerial agreements (Prakas) to make sure targeted revenue are collected and reported transparently. On the other hand, the General Department of Taxation improved and modernized its services to facilitate tax payments at the commercial banks or tax branches.

10


36. Revenues from property tax has increased as targeted. The Revenue from property tax steadily increased. The collections were Cambodian Riel (KHR) 62.7 billion in 2013, KHR 68.8 billion in 2014; KHR 89.7 billion in 2015; and KHR 86.7 billion in 2016 - slightly higher than targeted.

37. Revenue from customs tax has increased. Customs tax collected by General Department of Customs and Excise was KHR 3,885 billion in 2013; KHR 5,156 billion in 2014; KHR 6,166 billion in 2015; and KHR 6,863 billion in 2016 – slightly higher than the government’s target of KHR 6,648 billion.

38. The objective of improve budget classification through the implementation of uniform account code structure has been partially achieved. In 2013, seven budget classification codes were developed but needed a uniform coding structure. Since 2016, all seven budget classifications structures have been uniformly configured in FMIS, revised, updated and issued as Prakases for the implementation at all national and sub-national administrations. However, not all the segments are in use, as is summarized below:

Classification code Implementation (live use) status1 Program classification

(PC)Implemented. Prakas was finalized and issued in October 2017.

2 Project Classification Prakas was finalized and issued on September 7, 2017.3 Economic Classification

(EC)Implemented. Prakas was finalized and issued on May 9, 2017.

4 Administrative Classification (AC)

Implemented. Prakas was finalized and issued on August 3, 2017.

5 Functional Classification (FC)

Not implemented. Prakas was finalized and issued on October 11, 2017.

6 Source of Funds (SFC) Prakas was finalized and issued on July 14, 2017.7 Geographic

Classification (GC)Not fully implemented; some geographic information, e.g. provincial departments under the Ministry, can be derived from Administrative Classification. Additional codes for GC was added and revised Prakas was issued on May 22, 2017.

C. Efficiency

Assessment of Efficiency and Rating

39. The Efficiency is rated as Substantial. Implementation of the project was efficient. All the planned activities were completed within budget and there was no cost overrun. The project was 100% trust funded, prepared, and appraised based on available resources from Trust Fund (USD12 million) with the understanding that additional Trust Fund resources (about USD7.5 million) would become available at a later stage of the project. This was also reflected in PAD. AF was prepared as the additional Trust Fund resources became available. The one year extension was at no cost with the goal to implement the revenue component and to the support the FMIS users adjust to changes due to the new automated system. Only one TTL managed the project for most of the project period.

11


40. The actual IFMIS implementation contract also conformed to the estimated cost of USD10 million at appraisal. This was a huge improvement on the USD28-35 million bids received and abandoned during the earlier project. Additionally, the cost of FMIS implementation under Component 2, which constituted 88 per cent of the project cost, is largely in line with comparable implementations. Comparison of 10 World Bank financed IFMIS projects that involved implementation of COTS suggested an average cost of USD15,000 per user.9 The cost of implementation contract under this project largely conformed to this benchmark. This is because the current IT infrastructure can potentially support 700-800 users, for which the benchmarked estimate would be USD10.5 - 12.0 million, compared to the actual implementation contract of around USD 11 million. The scale up from current user base of around 400 users to the 700 – 800 users would involve marginal cost increase of around USD 0.3 – 0.4 million, for the procurement of additional licenses.

41. Capacity that has been built under the project also has the potential for substantial saving in the future. The MEF FMWG team’s capacity has been substantially strengthened and is capable of further implementing the system to line ministries by themselves. This substantially saves future cost for implementing the FMIS, which would contribute to overall efficiency in PFM systems and more value for money from budget execution and public investment due to better handling of public fund that feeds back into Cambodian economy. Similarly, the General Department of Economic and Public Finance Policy, which plays a key role as the RMS M&E secretariat, also sees stronger capacity and is equipped with better institutional guidelines and framework, analytical skill and professionalism through a few funded training programs on taxation real practice from both neighboring countries and advanced economies under the project.

42. Beyond cost effectiveness, the project also contributed to broader economic benefits. It has contributed to the improvements in the mobilization of revenues and the overall improvement of budget execution at MEF. The improved revenue, reaching about 18.5% of GDP in 2015 and 2016 (a level higher than countries of similar level of economic development), can be attributed to better revenue administration reforms such as clear strategy, improved M&E for implementation of the strategy, and better taxpayer education and taxpayer service, which were supported under the project. This resulted in improved allocation to social sectors and credible compensation reform of the Cambodia civil service. This together with a fully functioning FMIS, which is capable of providing important financial data for management and policy making purpose, can be translated to the overall improvement in public services that can benefit all Cambodian people although this benefit is not quantified (see additional analysis in Annex IV).

D. Justification of Overall Outcome Rating

43. The overall outcome is rated as Satisfactory. The rating takes into consideration both the original and the revised outcome targets, and is made based on individual High rating of Relevance, and Substantial ratings for Efficacy, and Substantial rating for Efficiency. A split rating has not been used in the assessment of the overall outcome rating.

Relevance ofObjectives

Efficacy Efficiency Overall OutcomeObjective 1 Objective 2

High Substantial Substantial Substantial Satisfactory

9 Costing estimate per user was used as a proxy for the complexity and size, which varied from country to country. See Hashim, Ali. 2014. A Handbook on Financial Management Information Systems for Government.

12


E. Other Outcomes and Impacts (if any)

Gender

44. The Project complied with the Government’s policy of reducing gender gap. It supported women by employing and providing them with necessary training at the Budget Departments. Anecdotal evidence gathered during the ICR mission showed that the project also has an indirect positive impact on gender equity through prioritization of public service programs and service delivery to common citizens.

Institutional Strengthening

45. The Project contributed substantially to the institutional strengthening within various government agencies, as demonstrated by the following achievements:

i. The government has enhanced its capacity to formulate tax policy and monitor revenue collections.

ii. The government is now in a better position to control and report on its budget execution through a comprehensive, country-wide transaction processing system for commitments, payments, accounting, and reporting. This has laid down the basis for transparency and accountability of budget management, a fundamental pre-requisite for institutional development and good governance in public financial management. The institutional development is at a stage where the government is committed to build on these gains and deepen the reforms.

iii. Domestic and international training were provided to more than 2000 staff of MEF on procurement, budget execution, budget formulation, FMIS, taxes, customs, procurement, policies, leadership, and management. Thus, institutional capacity has been strengthened, particularly in the MEF, the main executing agency, and other ministries. The capacities of key officials10 have improved in terms of governance, collaborative problem solving, project management, and operations. Further, capacity of the treasury staff to understand the financial procedures and operate the new system has been strengthened. Likewise, training given by ITD to provincial staff has resulted in their improved capacity to operate, use and accept the system. Having skilled staff within the key departments will improve the maturity level of the organizations over time as they further enhance the system usage and functionalities.

Mobilizing Private Sector Financing (Not applicable)

Poverty Reduction and Shared Prosperity

46. Efficient and accountable public institutions are critical in driving growth to tackle the challenges of extreme poverty and shared prosperity. Improved revenue mobilization and effective

10 Including the Economic and Finance Committee; the MEF Reform Committee; Reform Secretariat; Reform Working Group in line ministries; and several PFM sub-technical working groups that benefited from the policy and technical advice, trainings, and study visits during project implementation.

13


expenditure control are fundamental to enhancing good governance in these institutions responsible for public financial management in the government. The Project contributed towards the increase in revenue collection, and therefore, enhanced budget resources, which could potentially enhance allocation to priority sectors such as health and education, other public services, and salaries to public servants. In the long run, the project would benefit the poor people with the improved public finance performance and investment in social sectors.

Other Unintended Outcomes and Impacts

47. Increased collaboration between stakeholders - the General Department of Budget, the National Treasury and the other departments - in managing the budget execution through a common system has enhanced trust and willingness to share information and to work together. Furthermore, peer learning evolved, as more advanced users (i.e. Koh Kong treasury) supported the users struggling at other provincial treasuries. Revenue collecting bodies, GDT and GDCE, have improved service to taxpayers and regularly report revenue collecting data to GDEPFP. This contributes to the reliability of revenue collection monitoring process, which continues well beyond the project’s closure.

14


III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME

15


16


A. Key Factors during Preparation

48. In the context of weak public sector governance, the project preparation team recognized the challenges of implementation and prepared the project design with sound background analysis and comprehensive assessment of the Government’s commitment. Lessons learned during the PFM operations in other jurisdictions as well as the ongoing PFMAP at the time were considered to assess potential risks and mitigation measures.

Positive Factors

49. Project Design was anchored on realistic sequencing order: The project design focused on the ‘basics first’ approach, and was realistic. This approach was based on the lessons learned from the previous project, designed to provide continued support to the implementation of the RGC’s platform-based Public Financial Management Reform Program. The largest component of the project was the acquisition of the FMIS to implement budget execution controls. During appraisal, the uniform account code structure (six–segment classification code), a key prerequisite for the preparation of FMIS implementation, had been finalized and approved. The Chart of Accounts was already adopted and the implementation roadmap was well underway. All the pre-requisites were in place to help ensure a successful FMIS procurement and implementation. The only shortcoming was that the design could have focused a bit more on institutional arrangements for sustainable technical support for FMIS.

50. The Project was structured to be fully consistent with the Government’s PFMRP and developed based on the Bank's Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER). The project was designed to ensure maximum ownership by the Government and understanding by key donors. The PFMRP provided a broad vision, a sequenced strategy, and details on each department’s responsibility. The project thus rested on a solid foundation.

51. Lessons Learned during project preparation: The project design was built on the lessons drawn from the failure of the FMIS procurement in the then ongoing PFMAP, which, nonetheless, paved the way for smooth and successful implementation under the new project. The PFMAP’s key contribution include strengthening of institutional capacity and putting in place key functional prerequisites necessary for successful FMIS implementation under the PFMMP. The IT department was also established under PFMAP and has taken on a key role in facilitating FMIS implementation. Many MEF officials were also trained under the PFMAP and are now playing some important roles in the PFMRP. Chart of accounts and budget classification, which are key functional prerequisites for the FMIS, were designed and approved under the PFMAP. Key lessons from the PFMAP include:

i. More realistic sequencing, focus on basics, less ambitious deployment strategy, and allows sufficient preparation. The scope of the FMIS modules was clearly defined, with sequencing to focus on core treasury modules in the first phases. The deployment strategy was focused on budget execution controls at the Treasury level only.

ii. Greater effort was made to engage the key functional departments. These included the Budget Department, the GDNT, Fiscal Affairs Department, Local Finance Department, and Department for Investment Cooperation. They were involved in the re-design, scoping and acquisition of the system. As these departments were the owners and users of the system, their involvement enhanced a greater understanding and acceptance of the changes that occurred once this system was operational.

iii. More significant technical engagement and support (enhanced implementation support). This

17


included: (i) capacity building of the Government FMIS team consisting of all key functional departments and Information Technology Department, to prepare them for FMIS implementation; (ii) sustained and close monitoring and engagement at the technical level; and (iii) hands-on training and technical support for FMIS procurement and bid evaluation. This level of detailed technical support and guidance at every step of the FMIS acquisition and implementation immensely contributed towards the success.

52. Risks and Risk Mitigation Measures: During project preparation, the Bank task team identified key risks and adopted mitigation measures timely. Efforts were made to link up with international training institutions for capacity building. The project coordinated with the Development Partners and the Government training institutions to improve the quality of training. The ‘Substantial’ risk rating for the project design was primarily linked to the procurement and implementation of the FMIS. To mitigate these risks, a dedicated sub-component was designed for the project implementation support to supervise the delivery of the outputs produced by the FMIS implementation partner, monitor progress, and manage contracts.

53. Adequacy of government commitment: The government demonstrated ownership and strong commitment to the project. Since the start of the PFMRP in 2004, strong ownership and high-level commitment was consistently demonstrated by the MEF. Initiatives such as human resource management interventions (under the Merit – Based Pay Initiative or MBPI) and capacity development programs - through linking up with external training institutes such as Chinese Asia Pacific Finance and Development Center and Korean Development Institute introduced earlier under the PFMAP - were fully institutionalized and sustained. The FMIS was designed to ensure sustainability and scalability for future expansion to pave way for de-concentration and decentralization efforts committed by the government.

Negative Factors

54. The Bank’s operations in Cambodia were suspended for four years from 2011 to 2016, because of unresolved inspection panel case related to one of the Bank-financed projects. Thus, only limited resources from the trust fund were available to manage project preparation process.

B. Key Factors during Implementation

Positive Factors

55. The Government’s ownership of PFM reform program was noteworthy. It openly promoted the PFM reform agenda. For instance, the Minister of Economy and Finance announced at the National Assembly that FMIS was the backbone of PFMRP and that the Government will support this agenda with all its might; furthermore, MEF’s institutional and technical capacity has improved a lot and the FMWG team has been working to expand the FMIS system to line ministries.

Negative Factors

56. The project faced the following challenges:

i. In the early stages, there was lack of cooperation among stakeholders. The reasons for this behavior included lack of understanding of FMIS, concerns of losing jobs, and skepticism about the success of the project itself. There were pockets of resistance to reforms within the

18


middle levels of the bureaucracy. The Change Management (CM) team focused on attempting to bring together middle managers to discuss the reforms with senior leaders in power lunches and networking events. However, this was difficult given the hierarchical nature of Cambodian society. FMWG members, comprised of managers from different departments who were not used to working together or to negotiate decisions amongst themselves. To facilitate this coordination, the CM team organized study tours and events that improved the personal relations between the working group members. Provincial treasuries were relatively more positive, although they were concerned about their technical capacity. Once FMIS was rolled out, and provincial treasuries started using the system, enthusiasm at provincial level improved.

ii. Lack of capacity: Initially, the Treasury staff, both at the center and the provinces, members of the functional and the IT teams, and some of the consultants were not familiar with ‘PeopleSoft’. This was further compounded by inadequate computer skills, and weak accounting knowledge of the government staff. The Bank provided enhanced implementation support to help resolve these issues.

iii. Delays in recruitments: Implementing units such as ITD, the General Department of the National Treasury (GDNT) Treasury Department, and Fiscal Policy Unit were frustrated with the reform coordinating secretariat because of the delays in approving the TORs of their consultants, which in turn, hampered the pace of implementation.

iv. Working with the legacy system and FMIS at the same time during the initial phase of FMIS implementation was challenging, especially because of limited human resources, weak computer skills, inadequate English skills -documents and screens were mostly in English - and difficult user interface.

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME

A. Quality of Monitoring and Evaluation (M&E)

57. M&E Design: The project’s RF was prepared per Bank’s guidelines. The PDO indicators and target were compatible with the Government’s approach, donor inputs, and overall PFM reforms agenda. Such an approach ensured that the M&E framework was grounded in evolving realities during the reform process. Additional changes in the RF were later introduced through project restructurings to enhance results monitoring. See Section I. B for details.

58. M&E Implementation: The project was subject to ten implementation support/supervision missions that monitored detailed progress and provided extensive support. The progress and the guidance was recorded in the Implementation Status Reports (ISRs) and Aide Memoires. The task team regularly collected detailed data, updated current progress against the baseline, and highlighted issues for the Bank management’s attention. To stay on track, regular external reviews of the project and overall PFMRP progress reviews were also conducted. In addition, several reports, including quarterly and annual progress reports, monthly fiscal reports, External Advisory Panel (EAP)’s reports, Public Expenditure and Financial Accountability (PEFA), Public Expenditure Tracking Surveys (PETS), and other reports, prepared by the trust fund donors, were used to monitor the project’s outcome and results indicators.

59. M&E Utilization: Appropriate data collected from the progress reports of indicators was evaluated and used to inform decision-making on certain activities. For example, the data was used for

19


reaching an agreement on additional resources needed for training and capacity building, as well as for supporting FMIS implementation. Likewise, based on the data and information collected from the MTR, the Bank and the government decided to restructure the project and extend the closing date.

Justification of Overall Rating of Quality of M&E

60. The overall quality of M&E is considered Substantial. The M&E design was flexible, because of which the Project team could restructure the project and adequately adjust the indictors and target values during implementation. M&E reports were prepared timely to keep track of project status at any given time. The moderately satisfactory rating for M&E in the ISR does not reflect the Bank’s M&E processes. Rather, it reflects the contribution by the implementing agency and the delays in delivering timely progress reports.

B. Environmental, Social and Fiduciary Compliance

61. Environmental and social safeguards compliance: The project was classified under category C, as it did not involve any activities that impacted environmental or social safeguards.

62. Fiduciary Compliance: The project complied with all fiduciary covenants during implementation. Internal control arrangements were put in place, and adequate financial management, procurement, and disbursement systems were maintained.

63. Financial Management: The financial management performance rating of PFMMP is ‘Satisfactory’. The FM Manual incorporated necessary internal control guidelines using country finance system. The internal controls of the project worked as intended. All key project staff attended a training workshop to fully understand the approved Manual. The quarterly interim unaudited financial reports were submitted to the Bank on time. The final audit for the project was carried out by an internationally affiliated firm, in full compliance with the international standards. The auditors expressed ‘unqualified audit opinion’ on the financial statements of recent years.

64. Procurement: The procurement performance for the project is rated Satisfactory. All procurement packages were completed as per the approved procurement plan. All the prerequisites were also in place to help ensure a successful FMIS procurement and implementation. The implementing agency, GSC, had good understanding of procurement procedures, satisfactorily implemented project procurement using competitive methods. All procurement contracts were awarded during the project period in line with the Bank’s procurement guidelines. Procurement delays were mainly due to communication challenges between GSC and other concerned General Departments to get all technical inputs on time to start the procurement work. However, the overall procurement performance was satisfactory.

C. Bank Performance

Quality at Entry

65. The overall quality of Bank performance in ensuring quality at entry was Satisfactory. The identification team focused on the gaps and opportunities for interventions in Cambodia’s public sector to reach efficiency and transparency targets of similar transforming countries in the region. During project preparation and appraisal, the Bank considered the adequacy of project design and all major

20


relevant aspects, such as technical, financial, economic, institutional, and procurement. Major risk factors and lessons learned from earlier projects were also considered and incorporated into the design. The project was well grounded in the realities of Cambodia, its problems in the public sector, and was well-focused on the implementation of the ‘basics’. An experienced and committed task team was constituted to provide technical support to the project, which was critically important, given that FMIS implementation in any country is complex and challenging.

Quality of Supervision

66. The quality of supervision was Highly Satisfactory. The Bank’s full team included the TTL, technical experts, FM and procurement specialists, and consultants who consistently engaged closely with the counterparts, particularly with the MEF and the Steering Committee Secretariat. The task team responded appropriately and timely to the RGC’s requests. The Bank’s team, including FM and procurements teams, provided regular support, which resulted in, among others, timely adjustments, including project restructuring, additional financing, and extension. The Task Team also provided extensive sector expertise, including detailed, high-value technical guidance through FMIS procurement, indispensable to the success of the project, and accounting expertise for transition to IPSAS. The task team conducted regular supervision missions, on average every six months, to take stock of progress. ISRs were candid, detailed, and well targeted to outline important events, and formulate clear and complete picture. The supervision team also produced clear and detailed aide-memoires.

Justification of Overall Rating of Bank Performance

Rating: Satisfactory

67. Based on Satisfactory ratings for Quality at Entry and Highly Satisfactory rating for Quality of Supervision, the overall rating of the Bank Performance is considered Satisfactory.

D. Risk to Development Outcome 68. The FMIS system will be the mission critical system of the government for financial management, and is therefore, highly likely to sustain. The system has become cardinal for producing financial reports and tracking budget.

69. The commitment from the Government will likely continue to be strong. The Government has pledged to make adequate budget provision for the sustainability of FMIS. It is expected that Phase 2 would be designed to deepen the reforms. Specifically, the Government has committed to extending the system to all line ministries and several sub-national-level, and implement additional modules for budget preparation, procurement and asset management. The ITD has enhanced its project management capacity to manage the follow-on project.

70. One of the major value propositions of the Bank in these projects is the convening power of the Bank. Through this, the Bank brings together stakeholders from across the institutional divide to work collaboratively to find solutions suited to the context. These solutions benefit from global experience of the Bank. After the project closure, the Government would need to provide such a suitable platform for collaborative problem solving.

21


71. In addition, the technical support for FMIS through PeopleSoft expertise is still weak, and considerably dependent on consultants for more advanced functionalities. A sustainable mechanism for such support is needed to ensure sustainability of the system.

72. The current revenue mobilization strategy 2014-2018 focuses on strengthening revenue administration. The MEF has made reform in tax administration by improving capacity and performance of tax officers and M&E in revenue collection. Once all the low hanging fruit has been picked, further improvement in revenue as a percentage of GDP may slow down. The government is fully aware of this. To support sustained revenue growth, the government’s next phase of revenue mobilization strategy 2019-2023 will focus on tax policies and additional revenue sources.

V. LESSONS AND RECOMMENDATIONS

Lessons

73. The project offers several important lessons, some specific to Cambodia and others that are broader and generally applicable. These are summarized below:

i. Addressing change management as early as possible: It is useful to secure strong commitments from the key leaders in the ministry at the outset to fully support the reforms, to overcome change management and communication issues. In Cambodia, multiplicity of actors at the middle management level, with inadequate lines of communication, divergent perspectives and competing interests could muddle the future reforms. The MEF successfully mitigated this resistance through top leadership, who made consistent statements, repeated frequently to demonstrate their unwavering support for the reforms. The leadership also framed the reforms appropriately, by articulating the interventions as budget management reforms, rather than implementation of an accounting software. This created an environment to engage all key stakeholders. In addition, opportunities should also be explored to involve civil society and media in raising issues and putting pressure on the political elite through what is called as the ‘short route of accountability’. However, a careful assessment should be made to tailor this approach to the context, as in some jurisdictions, it has led to irksome response from the government counterparts. At some jurisdictions, such an approach would be more effective at the local levels, where the interests of the political elite at the national levels may not directly clash, and in some instances, may be advanced, with the intended reform actions. Civil society and media was not involved in the project due to specific context.

ii. The sequencing order of reforms in low capacity countries should be carefully designed. Initial focus should be on the ‘basics’. For a PFM project, the basics include initial focus on improved budget execution and financial reporting, and improved collections. Key ingredients of these broad themes include a uniform and harmonized budget classification and chart of accounts, a functioning FMIS to enable ex-ante budget execution controls and financial reporting, strengthened payroll controls, compliance of financial statements with IPSAS Cash standards, and efficiency of revenue collections and monitoring. The project focused on the basics and was, therefore, successful. Advanced reforms like accrual accounting, performance based budgeting, and asset accounting should be done only once the basics have been laid down . However, country priorities and context should take precedence over technical sequencing order. If reforms on performance budgeting, for example, are to be initiated to support country priorities, a simplified version of program budgeting should be supported.

iii. Lessons pertaining to FMIS design, procurement, and implementation: Many important aspects of the FMIS implementation reaffirmed the lessons learned in the previous project. In

22


addition, FMIS procurement and contract management is critical to success. In this regard, a detailed eligibility criteria in tender documents was established – the ICB for FMIS procurements under this project could be considered as one of the model documents. Indicating resource availability in the bid is important to set the expectations of the bidders in terms of the resource envelop. The setting up and staffing of the FMIS technical support organization is also critical for the sustainability of the system.

Recommendations

74. A change management strategy with an effective communication plan should be prepared early. The technical change management team will be effective only if appropriate support from the higher levels is consistently demonstrated. 75. Sequencing focus should be on the basics first. Going forward, this would include enhancing FMIS coverage in terms of functionality and organizations. It would include rollout of system to large ministries and spending units, including high-spending sub-national levels to strengthen budget execution controls. Additional licenses may also need to be procured to support this scale up, as current licenses (400) are sufficient only for the existing users. Implementation of the remaining segments of the budget classification and chart of accounts, including the spending unit level codes under the administrative segment should be given immediate priority. During this enhancement, consideration should be given to eliminating ‘activities’ element from the budget classification, as it results in complexity and over-work. Most of the activities represent spending units, projects or economic categories, the information on which can be captured using the other segments of the classification. The budget allocation should also be made at spending unit level, instead of activities, once the budget has been approved at the program/sub-program levels. In addition, performance orientation should also be strengthened as part of the program budgeting reforms. IPSAS cash based financial statements should be enhanced with additional disclosures, before moving to accrual accounting. Any such move should remain a long-term vision, necessitating a phased approach. External oversight by the legislature through strengthening of the Supreme Audit Institution should also be considered as key priority to enhance accountability.

76. The Treasury should strengthen the FMIS governance and technical support organization with appropriate staffing on market based salaries. This will be critical for sustainability of the system.

77. For the follow-on project, detailed scope, financing and collaboration platforms need to be agreed upon and approved by the relevant stakeholders, especially GSC, General Department of International Cooperation, and Debt Management Department. User community should be involved in every step of the implementation to acquire their insights and buy-in.

23


ANNEX 1: RESULTS FRAMEWORK AND KEY OUTPUTS

RESULTS INDICATORS

A.1 PDO Indicators

The original project development objective was to enhance public financial management by strengthening: (a) revenue mobilization and (b) budget execution processes through the implementation of Finance

Indicator Name Unit of Measure Baseline Original Target

Formally RevisedTarget

Actual Achieved at Completion

Improved timeliness to locate financial data and reports

Text It took up to two days to locate specific data

Less than 30 minutes Less than 30 minutes Less than 10 minutes

31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): The financial report can be extracted from FMIS system at Provincial Treasuries and at central offices of MEF. Depending on report types (Annex 7), a standard report can be produced quickly from the system in a few minutes or less, while a complex report might take a little longer. However, it does not take longer than 10 minutes.





Text Payment process could take between 15 to 30 days in 2013

10-15 working days 10 -15 working days 10-15 working days

24


31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): The payment process takes an average of 10-15 working days. Usually, the spending process takes a little long starting from October to December. Payment processing at GDNT for many payments (without corrections) are completed within 10-15 working days. Salary payment process, usually processed during the fourth week of the month, takes less than 5 working days. In 2016, per the report of payment processing by GDNT, there is no payment due over 15 working days.




More timely closure of financial accounts at the end of the fiscal year

Text 9 to 10 months delay in financial account closure

3 to 4 months 3 to 4 months 6 months

31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): The time to close the financial accounts is around 6 months. This is due to continued use of the legacy system in 2016 at a few PTs, requiring duplicate ex-post data entry in FMIS. Due to huge backlog of this data entry at these PTs, the accounts could not be closed timely, and the compilation of financial statements was slowed. GDNT has informed that for the next fiscal year, the legacy systems will be cut-off completely, and the accounts will be closed within the targeted time.

- For 2015 fiscal year, GDNT stopped receiving payment mandates by end of March 2016, closed the accounts by end of May 2016, and finalized budget settlement law by June 2016. It was for the first time that the MEF could submit 2015 budget settlement law together with draft 2017 budget law at the Council of Ministers’ meeting and National Assembly’s meeting at the same time. For 2016 fiscal year, GDNT stopped receiving 2016 payment mandates in late February, closed the accounts at the end of May 2017.




More non-tax revenue sources Text 24 inter-ministerial Prakases (2013)

37

(22 revised)

37 inter-ministerial Prakases (22 revised)

38 inter-ministerial Prakases

25


31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): 38 inter-ministerial Prakases have been signed between MEF and LMs on the collection of non-tax revenue as of May 2017. Non-tax revenue collection, through the implementation of these inter-ministerial Prakases with 22 line ministries, has increased from USD 173 million in 2013 to USD 313 million in 2016, 181 percent increase over the course of four years.




Revenues from property and customs tax increased

Text Revenue from property tax KHR 62.7 billion (2013)Revenue from customs tax KHR 4,056 billion (2013)

KHR 85 billion

KHR 6,648 billion

KHR 85 billion

KHR 6,648 billion

KHR 86.7 billion for 2016 (property tax)

KHR 6,863 billion for 2016 (customs tax)

31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): Revenue from property tax is increasing over the course of 4 years, and expected to keep growing.

Revenue from property taxes collected by the General Department of Taxation was KHR 62.7 billion in 2013, KHR 68.8 billion in 2014, KHR 89.7 billion in 2015, and KHR 86.7 billion in 2016, slightly higher than the amount set in the result indicators.Revenue from customs tax collected by General Department of Customs and Excise was KHR 3,885 billion in 2013; KHR 5,156 billion in 2014; KHR 6,166 billion in 2015; and KHR 6,863 billion in 2016, slightly higher than the target.

26


A.2 Intermediate Results Indicators

1. Mobilization of Revenue and Steering Committee Secretariat Operations Support





Text Revenue mobilization strategy developed and (2013-2018) being finalized



2014-2015 M&E Report; 2016 M&E Report.

31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets):Secretariat of Revenue Mobilization Strategy (RMS) Steering Committee has produced the monitoring report twice per year (mid-year and annual). It collected progress reports from General Department of Tax (GDT) and General Department of Customs and Excise (GDCE) against the 10 prioritized action plans, and consolidated the information into monitoring report. These reports provide detailed information on achievements and challenges against RMS indicators, implemented by GDT and GDCE.

The General Department of Economic and Public Finance Policy is developing Tax Policy System Reform Framework (2019-2023) which will look beyond tax administration to include tax policy in order to ensure healthy revenue mobilization in the long term.

2. Improving budget execution processes through the implementation of FMIS




Improve budget classification through the implementation of the uniform account code structure

Text Seven budget classification codes developed [Function Classification (FC), Administrative

EC, AC, GC, PC, FC EC, AC, GC, PC, FC All seven budget classification codes and structures have been configured and designed in FMIS System.

27


Classification (AC), Economic Classification (EC), Program Classification (PC), Geographic Classification (GC), Source of Fund Classification (SFC)],and Project Classification

Prakases for all seven budget classifications were completed and issued for implementation at all national and sub-national administrations.

31-Dec-2013 14-May-2017 14-May-2017 11-Oct-2017

Comments (achievements against targets): All seven budget classification codes and structures have been configured and designed in FMIS System.

MEF has completed all seven budget classifications and issued as Prakases for implementation at all national and sub-national administrations.

Details:- PC: Prakas was finalized and issued for implementation in October 2017.- EC: was updated and issued as Prakas on May 9, 2017.- AC: Prakas was finalized and issued on August 3, 2017.- GC: Code and Prakas for GC was issued since 2015. Additional codes for GC was added and issued through a Prakas on May 22, 2017- FC: Prakas was finalized and issued on October 11, 2017.- SFC: Prakas was finalized and issued on July 14, 2017.- Project Classification: Prakas was finalized and issued on September 7, 2017.




Financial Statements presented with disclosure of the accounting standards used as the basis for their preparation and accounting

Text Preparation of IPSAS cash basis in progress



IPSAS cash basis reports (R29, R30, R09) were produced

31-Dec-2013 14-May-2017 14-May-2017 29-Sept-2017

28


policies followed

Comments (achievements against targets):- IPSAS Budget Income (R29) is 100% completed.- IPSAS Budget Expenditure (R30) is 100% completed.- IPSAS Cash Flow Statement (R09) is 90% completed. Specification, Development and Unit Testing of R09 are done, while waiting for User

Acceptance Test by GDNT as final acceptance.




FMIS implemented at MEF and Provincial Treasury (PTs)

Text Procurement process in progress

MEF and all PTs MEF and all PTs MEF and all 25 PTs

31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): The FMIS is operational at MEF and all 25 provincial treasuries (PTs). Starting from January 2017, FMIS is the only system used by PTs and central offices of MEF to process financial transactions.

Central offices of MEF using FMIS are: GBD, GDNT, GDPP, GDSNAF, GDICDM, GDIA, GID and ITD.





Text 0 module implemented BA; GL, AR; AP; CM; and PO

Budget Allocation (BA); General Ledger (GL); Account Receivable (AR); Account Payable (AP); Cash Management (CM); and Purchase Order (PO)

Budget Allocation (BA); General Ledger (GL); Account Receivable (AR); Account Payable (AP); Cash Management (CM); and Purchase Order (PO)

29


31-Dec-2013 14-May-2017 14-May-2017 14-May-2017

Comments (achievements against targets): There are 6 modules in FMIS: (1) Budget Allocation, (2) Purchase Order, (3) Account Payable, (4) Account receivable, (5) Cash Management and (6) General Ledger. The 6 modules started to be used since January 2016.

The FMIS is interfaced with Core Banking System including National Bank of Cambodia, ACLEDA Bank Plc., CANADIA Bank, ASYCUDA of the General Department of Customs and Excise, and DMFAS System of the General Department of International Cooperation and Debt Management.

30


B. KEY OUTPUTS BY COMPONENTObjective/Outcome: To enhance Public Financial Management by strengthening: (a) revenue mobilization; and (b) budget execution processes through the implementation of the Financial Management Information System

Outcome Indicators

1. Improved timeliness to locate financial data and report2. Improved timeliness in the payment processing at GDNT3. More timely closure of financial accounts at the end of fiscal year4. More non-tax revenue sources5. Revenues from property tax increased

Intermediate Results Indicators

1. Improve budget classification through the implementation of uniform account code structure2. Financial Statements presented with disclosure of the accounting standards used as the basis for their preparation

and accounting policies followed3. FMIS implemented at MEF and Provincial Treasury (PTs)4. Budget control and execution modules implemented5. Revenue mobilization action plans developed and its implementation monitored

Key Outputs by Components

Component 1: Mobilization of Revenue and Steering Committee Secretariat Operations SupportSub-component 1A: Revenue Mobilization

1. A Medium-Term Revenue Mobilization Strategy (RMS) 2014-2018 was prepared2. Two Steering Committees were established, i.e.: (i) Committee for M&E of Tax Revenue; (ii) Committee for

M&E of Non-Tax Revenue.3. Thirty-eight (38) Prakas were prepared and revised4. Following overseas and domestic training programs and workshops were carried out:

Monitoring and Evaluation of RMS 2014-2018 TOFE/GFS Revenue expenditure and forecasting - sharing knowledge on the implication of Macro-Economic Model MEF info Database Tax Analysis and Revenue Forecasting; Comparative Tax Policy and Administration, Global VAT Skill Development in Malaysia and Tax Administration and Policy Reform in Thailand Formulating MTEF, including the processes, successes, challenges and possible recommendations Study visit on “Capital Gain Tax”. Dissemination workshops on “Medium-Term Revenue Mobilization Strategy 2014-2018”

31


Dissemination workshops on “Tax Culture and other Taxes” in all provinces

Sub-component 1B: Support the GSC in Project management

1. CAP 2 New and CAP 3 were developed.2. The PEFA Report 2015 was widely published on the GSC’s website: www.pfm.gov.kh.3. Financial Management Database was created using Peachtree Accounting.4. Supplementary Financial Management Manual was developed.5. Following workshop/annual review/internal annual retreats were carried out:

Annual review 2014-2016 and internal annual retreat Procurement Clinic and SFMM Dissemination Workshop Public Forum on Macro Economy and Budget Plan 2016 Awareness raising workshop for top managements from the line ministries Public Awareness Workshop for Union of Youth Federations Workshop on Awareness PFMRP

6. PFM Publication (available on the GSC’s website): PFM Newsletter No. 1 and 2 for Years 2015-2016 Concept Note on Cambodian Budget Reform Strategy 2013-2020 Vision & Strategy of PFMRP Stage-3 developed and published

7. Capacity building: Training on Reform Communication: Leadership, Strategy and Stakeholder Alignment in Singapore,

Hungary and Philippines

Component 2: Improvement of Budget Execution ProcessSub-component 2 A: Strengthening Budget Execution Process and Core Budget and Treasury System

Key Outputs:Following are the main outputs for supporting FMIS project:1. FMWG developed ‘as is’ Business Process and Project Management Plan including Master Plan, Gantt Chart,

Change Management, Training Plan, and Risk Management;2. Main Data Center-MDC, Disaster Recovery Center-DRC and training rooms;3. A website, “fmis.mef.gov.kh”, was created to publish FMIS System to relevant stakeholders as well the public;4. FMWG published the Newsletter No.1-No11, available on the website of FMWG: www.fmis.mef.gov.kh;5. Wall point built and computer, printer, and scanner setup. On-site support and on-the-job training, support

helpdesk, remote assistance and computer, printer and scanner maintenance provided.

32

http://www.pfm.gov.kh/


Sub-component B: Provision of implementation support for the FMIS:All the five major phases were completely achieved.

Description Major Activities Status

1. Interception Phase FMIS Project Plan 100%

2. Elaboration Phase To be Business Process 100%

3. Construction Phase System development and configuration 100%

4. Transition Phase Training and testing 100%5. Production Phase Pilot and roll-out (system go-live) 100%

33

The World Bank

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION

A. TASK TEAM MEMBERS

Name Role

Preparation

Supervision/ICR

Leah April (TTL) Sr Public Sector Mgnt Specialist

Sokbunthoeun So (TTL) Public Sector SpecialistErwin Ariadharma Senior Public Sector Specialist

Ronald Points FMIS Advisor (consultant)

Ali Hashim FMIS Advisor (consultant)

Robert Taliercio Practice Manager

Sodeth Ly Senior Country Economist

Minh Van Nguyen, Senior Economist

Sophear Khiev Financial Management Analyst

Reaksmey Sok Keo Financial Management Specialist

Khuram Farooq Sr. Financial Management Specialist

Latharo Lor Procurement Specialist

Tariq Said FMIS System Security Advisor

Philippe Vizer PeopleSoft Financials (Consultant)

Pisith Phlong Change Management (Consultant)

Linna Ky Team Assistant

Than Lwin IMF Advisor

34

The World Bank

B. STAFF TIME AND COST

Stage of Project CycleStaff Time and Cost

No. of staff weeks US$ (including travel and consultant costs)

Preparation

Total 0 0

Supervision/ICR

FY14 0 21,604.62

FY16 9.441 98,867.36

FY17 16.135 41,897.94

Total 25.58 162369.92

ANNEX 3. PROJECT COST BY COMPONENT

Components Amount at Approval(US$M)

Actual at Project Closing (US$M)

Percentage of Approval (US$M)

Mobilization of Revenue and Project Management Functions of the GSC

0.50 3.07 614

Improving budget execution processes through the implementation of the Financial Management Information System (FMIS)

11.50 15.28 133

Total 12 18.35 153

35

ANNEX 4. EFFICIENCY ANALYSIS

1. The project’s implementation was efficient both in term of cost of implementation and the potential economic benefits that have been generated. A reliable economic or financial analysis using tools like NPV or ERR is difficult for such PFM reforms projects. The projected benefits at the time of appraisal were thus qualitative and it has realized almost all those benefits.

2. Cambodia has travelled far in its public financial management reform journey, albeit from a very low base in 2004. At the time, Cambodia was beset by poorly designed budgetary systems and inadequate domestic revenue. Budget formulation and execution was weak and an inefficient cash-based PFM system. Chronic cash shortage led to payment arrears reaching a quarter of the domestically financed budget in 2004. To fund public spending, Cambodia was heavily dependent on external finances which accounted for almost a third of total outlays. 3. The Cambodia PFM systems today have been substantially strengthened particularly at the central level and greatly differ from the very low base in 2004 when the government’s Public Financial Management Reform Program (PFMRP) was first introduced. Payment arrears situation has been substantially improved; chronic cash shortage is no longer an issue; and budget system also saw an improvement with smooth implementation of the budget processes, thanks to the contribution by the predecessor project, Public Financial Management and Accountability Project (PFMAP). This project (PFMMP) helped to sustain improvement in PFM systems by contributing to continued revenue growth and a fully operational Financial Information Management System (FMIS) at central offices of the Ministry of Economy and Finance (MEF) and all provincial treasuries.

4. Strong revenue growth well beyond the target of 0.5% of GDP increase per annum laid out the medium-term Revenue Mobilization Strategy (RMS) 2014-2018 contributes to improved budget allocation for key social sectors that are critical to the live of all Cambodian people. However, this economic benefits cannot be quantified.

5. The FMIS has greatly helped with the timeliness of payments and the accuracy of financial reports. The FMIS can provide government finance managers a wealth of information to manage and deploy government financial resources across various programs, projects and line ministries. Because the system now operates at both the MEF and all provincial treasuries, information can be retrieved directly from the system on the budgeted amounts, revised budgets, expenditure, receipts, available balances. The actual number and value of various transaction types processed through FMIS, at the center and the provinces, classified by line ministry, economic classification, program and sub-program, is also readily available (Annex 7).

6. Through the FMIS, a comprehensive expenditure transaction processing layer has been established across the government. This enables budget compliance using ex-ante commitment control, through the implementation of all the steps involved in the Procure to Pay (P2P) cycle. Most of the stand-alone systems and fragmented processes involved in payment processing have been discontinued. It improved timeliness of financial information for management purpose, payment processes at GDNT, and audit cycle for improved external oversight and anti-corruption deterrence. These functions provide robust foundations for accountability and transparency in public finances.

7. The improved timeliness in payment processing and accuracy of financial data as a result of the FMIS has important implication for positive economic gain in the future. Cost of delivery of specific contracts by private sector firm suppliers can be reduced due to more predictability and certainty in dealing with the government. This could leave potential savings for further investment human capital and other public goods that can feed back into the country’s economy. To the citizen, improved availability of accurate financial data suggests that the government can commit to more fiscal transparency, which is important for stable state society relations that contribute to sustained economic growth in Cambodia. While more remains to be done, the future prospect is very positive.

36

37

ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS

38

Implementation Completion Report of Public Financial Management Modernization Project (PFMMP) 2014-2017

MINISTRY OF ECONOMY AND FINANCEGENERAL SECRETARIAT OF PUBLIC FINANCIAL MANAGEMENT REFORM STEERING COMMITTEE

Contents

I. OVERVIEW OF PUBLIC FINANCIAL MANAGEMENT REFORM PROGRAM...............37

II. PROGRESS ACTIVITIES..............................................................................................................37

Component 1: Mobilization of Revenue and Project Management Functions of the GSC................38

Component 2: Improvement of Budget Execution Processes.........................................................42

III. LESSONS LEARNT.........................................................................................................................43

ANNEX A: RESULT FRAMEWORK AND MONITORING..........................................................44

ANNEX B: LIST OF MAIN WORKSHOPS/TRAININGS...............................................................50

39

CAMBODIA

PUBLIC FINANCIAL MANAGEMENT MODERNIZATION PROJECT

2014-2017

I. Overview of Public Financial Management Reform Program

The Public Financial Management Reform Program (PFMRP) is one of the priorities of “Rectangular Strategy”. It has commenced since December 2004 with its objective to transform the Public Financial Management System of the Royal Government of Cambodia towards international standards by 2025. The PFMRP is designed as four platforms which have been implemented stage by stage to achieve objectives: (1) increasing budget credibility, (2) increasing financial accountability to enhance the internal review and accountability of budget manager, (3) increasing budget and policy linkages, and (4) increasing performance accountability of manager. The action plans have been developed to achieve the strategic objective of each stage; relevant activities and monitoring and evaluation mechanisms based on a set of performance indicators of Framework for the Public Expenditure and Financial Accountability have been identified.

The General Secretariat of Public Financial Management Reform Steering Committee is responsible for managing, coordinating and monitoring and evaluating the PFMRP. Based on Sub Decree No. 24 dated 17 January 2014 issued by the Royal Government of Cambodia, General Secretariat of Public Financial Management Reform Steering Committee (GSC) was established by taking over and extending the functioning of Steering Committee Secretariat (SCS). More detail on the organizing and functioning of GSC is shown in Prakas No. 223.MEF dated 05 February 2014.

On November 07, 2013, Public Financial Management Modernization Project (PFMMP) was established to build on the successes of the ongoing Public Financial Management and Accountability Project (PFMAP). Total proposed project cost and financing were USD 12 million, agreed to be financed by standalone Recipient Executed Trust Fund (RETF), Investment Project Financing (IPF) under the Public Financial Management Trust Fund. With the additional financing contributed to the project in the amount of USD 7,600,000 in letter dated April 21, 2015, the total estimated financing amount is around USD 19,600,000.

The release of financing from the European Union and Sweden through the World Bank as Trust Fund Administrator has been proceeded as a tranche basis. Based on the final fund released, the total Grant made available to PFMMP Project is less than the initial estimation due to the fluctuation exchange rate between Euro and US Dollar and finally the total accumulated figure is recorded in the amount of USD 18,796,197 as follows:

- Initial Grant Amount: USD 5,903,013 (Refer to Grant Agreement dated 07 Nov 2013)- Additional Financing: USD 7,600,000 (Refer to 1st Amendment dated 21 April 2015)- Next Contribution: USD 2,000,000 (Refer to 2nd Amendment dated 05 May 2016)- Next Contribution: USD 2,115,319 (Refer to 3rd Amendment dated 26 October 2016)- Final Contribution: USD 1,177,865 (Refer to 4th Amendment dated 30 December 2016).

The project development objectives are to enhance public financial management by strengthening: (a) revenue mobilization and (b) budget execution processes through the implementation of the Financial Management Information System (FMIS). FPT Information System Company was selected as supplier for the supply and implementation of the Financial Management Information System (FMIS) project through the contract dated 23 December 2013. FMIS contract was then officially kick-off on 21 January 2014 presided over by H.E. Dr. Aun Pornmoniroth, Senior Minister, Minister of Economy and Finance.

40

II. Progress Activities

Component 1: Mobilization of Revenue and Project Management Functions of the GSC

Sub-component A: Carrying out of capacity building activities to support the revenue administration and preparation of a revenue mobilization strategy, and the monitoring and implementation of said strategy.

In the 2014, the Revenue Mobilization Strategy Steering Committee prepared the Medium-Term Revenue Mobilization Strategy (RMS) 2014-2018. The strategy gives clear guidance: what we want to achieve; and how we want to achieve it.

Regarding with the RMS, there were 2 Steering Committee that were established to monitor and evaluation RMS 2014-2018 as follows:

1) Committee for Monitoring and Evaluation of Tax Revenue; and2) Committee for Monitoring and Evaluation of Non-Tax Revenue.

The main roles of committees are closely coordinate, monitor and provide guidance on the implementation; and make sure that there is an agreement and strong support at senior management level on proposed set of reforms.

In the practice, Secretariat of RMS Steering Committee has produced the monitoring report twice per year namely mid-year report and annual report. With strong monitoring and implementation, the current revenue has increased from 14.9% of GDP in 2013 to 18.7% of GDP in 2016 and estimated to increase 19.3% in 2017 as highlighted in the graph below.

Figure 1: Current Revenue: RMS Target vs. Actual Collection

Source: General Department of Policy

Implementation of Result Framework

General Department of State Property and Non-Tax Revenue is responsible for coordination and monitoring of non-tax revenues. The GDSPNTR has worked with revenue line ministries to prepare and revise Prakas to make sure that non-tax revenue sources have been collected transparently. As until now, there are 38 Prakases that have been prepared and revised.

In addition, the General Department of Taxation (GDT) is responsible for collection of revenue from property tax. Through modernization tax system, GDT provides better service to tax payers and tax payers can pay the proper tax at commercial bank or tax branch. It has been noted that revenue from tax

41

property is increasing. In fact, revenue from property tax collected in 2016 was KHR 86.7 billion.

In term of capacity building, PFMPP mainly supports the 2 general departments, Policy and Taxation as follows:

A1. General Department of Policy

Study visit :

- Taxation Practice in Paris, France and in Hanoi, Vietnam. The main objective was to oversee the taxation reform such as legal enforcement, E-tax filling system, tax management system.

Oversea/Domestic training programs and Workshops:

- Monitoring and Evaluation of RMS 2014-2018- TOFE/GFS- Revenue-Expenditure Forecasting and sharing knowledge and experience on the

implication of Macro-Economic Model.- MEF info Database - Tax Analysis and Revenue Forecasting at Duke University to support Monitoring and

Evaluation of Revenue Mobilization Strategy 2014-2018, Comparative Tax Policy and Administration, Global VAT at International Bureau of Fiscal Documentation, Netherland from 06-08 July 2016. The course is focusing on basic principles of VAT/GST System used by various developing countries and advanced economies including the definition of a taxable person.

- Skill Development in Malaysia and Tax Administration and Policy Reform in Thailand- Formulating the MTEF including the processes, successes, challenges and possible

recommendations.

A2. General Department of Taxation

- Study visit on “Capital Gain Tax”, which aims to gain more experiences and lesson learned in order to get more input for preparing draft law on Personal Income Tax-PIT and Capital Gains Tax

- Organized series of dissemination workshops on “Medium Term Revenue Mobilization Strategy 2014-2018”, which included four main topics: (1) Dissemination of Tax Culture, (2) Tax Administration Reform, (3) RMS, and (4) NAA Recommendations for central and provincial level

- Organized series of dissemination workshops on “Tax Culture and other Taxes” in all provinces

- Created Tax Revenue Forecasting Model for GDT

A3. General Department of State Property and Non-Tax Revenue

Support the mission to province on “the Rolling out of Official Receipts” to the sub-national administrations.

Sub-component B: Support the GSC in the management of the project

Under PFMMP, GSC plays important role to coordination with all stakeholders and manage the funds to support the project. There are several activities that have been completed as follows:

- Developed CAP 2 New and CAP3. Entities under MEF were prepared GDAP 2 New and GDAP3, and line ministries prepared MAP 2 New and MAP3 to support the implementation CAP 2 New and CAP3.

42

- Cambodia’s Public Financial Management System were assessed by using framework for PEFA 2011. The PEFA Report 2015 was widely published on the GSC’s website: www.pfm.gov.kh. The PEFA report is quite more significant inputs for PFM Reform Steering Committee to develop CAP3 (2016-2020).

- Setup Financial Management Database in Peachtree Accounting Software to create a financial management database in computerized accounting system in line with reporting requirement in Project Appraisal Document. New chart of account was also developed using a uniform account code structure issued in Prakas No. 189 MEF.BK dated 22 February 2013 on the budget classification.

- Developed Supplementary Financial Management Manual (SFMM) for using PFMMP.- Workshop/Annual Review/Internal Annual Retreat:

1) Annual review 2014-2016 and internal annual retreat2) Procurement Clinic and SFMM Dissemination Workshops. 3) Public Forum on Macro Economy and Budget Plan 2016.4) Workshop on raising awareness among top managements from Line Ministries in order

to push the strengthening of their ownership on the implementation of PFM related activities.

5) Public Awareness Workshop for Union of Youth Federations in order to increase the understanding and participation in the PFMRP. All participants were encouraged to raise their opinions and concerns regarding on what extend the public sectors can contribute in the program. The same training/workshop is needed for future dissemination.

6) Workshop on Awareness PFMRP: Several workshops have been conducted from August 2016 in order to increase awareness of line ministries, provincial administration, youths and university students.

- PFM Publication: 1) PFM Newsletter No.1 for Year 2015 and PFM Newsletter No.2 for Year 2016.2) Concept Note on Cambodian Budget Reform Strategy 2013-2020 was prepared and

implemented.3) Vision and Strategy of PFMRP Stage 3 were developed and published.4) These PFM publications are available on the GSC’s website.

- Capacity building: Attended training on Reform Communication: Leadership, Strategy and Stakeholder Alignment, Public Sector Financial Reform Program, which was organized by Civil Service College of Singapore, PEFA Conference and Training at Budapest, Hungary and PEFA regional conference in Asian Development Bank (ADB) and PEMNA Conference in the Philippines.

Component 2: Improvement of Budget Execution Processes

Sub-component A: Strengthening Budget Execution Process and Core Treasury System

Through the PFM Multi-Donor Trust Fund (MDTF) led by the World Bank and mainly financed by the EU to purchase and deploy an FMIS, the first phase of which was centered on the Ministry of Economy and Finance (including the central and provincial treasuries). The FMIS Phase 1 was launched in December 2013 and was completed with full deployment and bug fixing during 2016. The planning for FMIS Phase 2 started in 2017. The followings are main outputs for supporting FMIS project:

- FMWG developed “As Is” Business Process and Project Management Plan including Master Plan, Gantt chart, Change Management, Training Plan, and Risk Management.

- Main Data Center-MDC, Disaster Recovery Center-DRC and Training room are determined - A website, fmis.mef.gov.kh, was also created in order to publish FMIS System to relevant

stakeholders as well the public.- FMWG published the Newsletter No.1-No11, which are available on the website of FMWG:

www.fmis.mef.gov.kh.

43

http://www.pfm.gov.kh/

- FMWG conducted several provincial missions to build wall point and setup PC, Printer and Scanner and mission for on-site support and on-the-job training, support helpdesk, remote assistance and computer, printer and scanner maintenance.

Sub-component B: Provision of implementation support for the FMIS

Significant FMIS progress can be summarized based on the 5 major Phases, in which all Phases were completely achieved. The remaining tasks are mainly related with two-year warranty period starting from 28 April 2016, the date of the approval on the Final System Acceptance of FMIS as a complete, integrated system and the balance payment is only USD 294,360 or 3% of the contract amount.

Table 1: FMIS Major Activities by Phase

Description Major Activities Status

1. Interception Phase FMIS Project Plan 100%

2. Elaboration Phase To be Business Process 100%

3. Construction Phase System development and configuration 100%

4. Transition Phase Training and testing 100%

5. Production Phase Pilot and roll-out (system go-live) 100%

FMIS Implementation Outcomes

After completion and full implementation of FMIS phase-1, there are 4 main outcomes that have been identified as follows:

- Realizing the roadmap to better implementation of the accounting standard, business processes, performance budgeting and full delegation of budget authority.

- Improved Users’ happiness.- Financial Accountability has been improving significantly.- FMWG is capable of providing government finance managers with a wealth of information to

manage and deploy government financial resources across various programs, projects and line ministries.

Implementation of Result Framework

FMWG completed the FMIS Phase 1 and finalized the FMIS Phase 2. In the FMIS phase 1, main entities under MEF that have used the FMIS are: General Department of Budget, General Department of National Treasury, General Department of Public Procurement (GDPP), General Department of Sub-National of Administrative Finance (GDSNAF), GDICDM, GDIA, General Inspectorate Department (GDI), Information Technology Department of General Secretariat of MEF and all provincial treasuries. There 6 modules (1) Budget allocation, (2) Purchase Order, (3) Account Payable, (4) Account receivable, (5) Cash Management and (6) General Ledger. Moreover, the FMIS is interfaced with Core Banking System, and Revenue System. Meanwhile, all seven budget classifications have been prepared and issued as Prakases to implement such as administrative classification (AC), economic classification (EC), geographic classification (GC), source fund classification (SFC), project classification (PC), functional classification (FC) and program classification (PC).

Due to implementation of FMIS phase 1, the financial report can be extracted from FMIS system and the time spending is less than 10 minutes. However, the time spent to close the financial account is around 6 months since (1) there are new line ministries that are added to implement the full program budgeting, (2) new budget entities were established and slow spending in the early year so it has effect on the financial account closure, (3) rolling out of FMIS to provincial treasuries. In 2015 there are 10 LMs that implemented the full program budgeting, 15 LMs in 2016, 11 LMs in 2017 and 3 LMs in 2018. Some provincial treasuries were implemented in early 2016 and some are implemented until April 2016.

44

In addition, the payment process spent in average 10-15 days within GDNT. Usually, the spending process is long starting from October to the December. During these months, there are many payment orders that have been submitted to GDNT for requesting payment; therefore, the payment process can be longer than 15 days. In the average of payment day in 2016, there were no payment over 15 working days.

Furthermore, FMWG has prepared financial statements presented with disclosure of the accounting standards used as the basis for their preparation and accounting policies as follows (1) IPSAS Budget Income 100% complete, (2) IPSAS Budget Expenditure 100% complete and (3) IPSAS Cash Flow Statement 90% complete. Currently, GDNT has been testing the above reports by using FY2016.

More importantly, the financial performance of each component and category was shown in the table below.

Table 2: Project expenditure by component

Project Expenditures Y2014 Y2015 Y2016 Apr-Jun 2017

Cumulative as of Mar,

2017Component 1: Strengthening Revenue Mobilization Strategy and Implementation Monitoring

183,442.11 902,689.93 1,411,872.18 568,038.71 3,066,042.9

3

1.1 Mobilization of Revenue 51,117.46 400,103.17 704,065.14 350,259.97 1,505,545.7

41.2 Implementation

Support- GSC 132,324.65 502,586.76 707,807.04 217,778.74 1,560,497.19

Component 2: Improving Budget Execution Process through the Acquisition and Implementation of FMIS

2,544,208.44

2,246,914.72

9,256,270.74

1,236,105.60

15,283,499.50

2.1 Budget Execution Process and Core Treasury System (FMIS Contract)

1,958,259.67 762,954.04 6,159,034.3

4 294,360.48 9,174,608.53

2.2 FMIS Implementation Support 585,948.77 1,483,960.

683,097,236.4

0 941,745.12 6,108,890.97

Total 2,727,650.55

3,149,604.65

10,668,142.92

1,804,144.31

18,349,542.43

Budget 4,795,690.58

8,383,189.95

13,715,843.00

2,096,689.0

18,796,197.00

% 57% 38% 78% 86% 98%

Table 3: Project expenditure by component

Project Expenditures Y2014 Y2015 Y2016 Jan-Aug 2017

Cumulative as of Aug,

2017

Goods (General) -

44,518.80

1,369,306.30

354,369.90

1,768,195.00

Goods (FMIS) 1,958,259.67

762,954.04

6,078,954.34

294,360.48

9,094,528.53

Consultant's service 549,094.10

1,092,191.1

967,516.25

342,286.41

2,951,087.94

45

8

Training/Workshops 115,117.06

1,130,884.27

2,087,186.93

736,428.03

4,069,616.29

Incremental Operating Cost

105,179.72

119,056.36

165,179.10

76,699.49

466,114.67

Total 2,727,650.55

3,149,604.65

10,668,142.92

1,804,144.31

18,349,542.43

Budget 4,795,690.58

8,383,189.95

13,715,843.00

2,096,689.00

18,796,197.00

% 57% 38% 78% 86% 98%

III. Lessons learnt

- Building a good dialouge between the Royal Governement of Cambodia and delopment partners to shape the Cambodian PFM reform program to meet best practise.

- Enhance capacity of Royal Governement of Cambodia officials by attending and organzing the training program, conference, workshop, annual review and retreat.

- Strong leadership, commitment and ownership of stakeholders is the key to achieve performance target in the result framework.

- Improving the coordination between the executive agency (EA) and implementing agency.- Communication and reporting to the leaders of different levels should be attentive in order not only to

have their approval for the project but also to have their commitment and determination for the project’s implementation.

46

ANNEX A: Result Framework and Monitoring

No Indicators Responsible Agency

Unit of Measure Baseline

Accumulative Target Value Performance (list down in detail)

(End 2017)

Reference (Supporting the achievement Attached with

Performance Report)2016 End 2017

1

Improved timeliness to locate financial data and report

GDNT, FMWG, GDB, GDSNAF, related agencies

Time spent to locate financial data and report

It took up to two days to locate specific data

Less than 30 mn

Less than 30 mn

The financial report can be extracted from FMIS system and the time spending is less than 30 mn. The actual time is less than 10 mn.

GDNT’s report

2


GDNT, related agencies

Time spent on processing payment at GDNT

Payment process could take between 15 to 30 days in 2013

10-15 working

days

10-15 working

days

The payment process spent in average 10-15 days. Usually, the spending process is long starting from October to the December. During this month, there are many payment orders that have been submitted to GDNT for requesting payment so the payment process can be longer than 15 days.

In 2016, per the report of payment processing, there is no payment request unprocessed beyond 15 working days.

GDNT’s report: Payment Process Duration Report

47




(End 2017)



3

More timely closure of financial accounts at the end of the fiscal year

GDNT, GDB, GDSNAF, related agencies

# of months after each fiscal year

9 to 10 months delay in financial account closure

3 - 4 months

3 – 4 months

The time spending to close the financial account is around 6 months since there are new line ministries that are added to implement the full program budgeting.

The new budget entities are slow spending in the early year so it has effect on the financial account closure.

In fact, in 2015 there are 10 LMs that implemented the full program budgeting, 15 LMs in 2016, 11 LMs in 2017 and 3 LMs in 2018.

Another reason is the rolling out of FMIS to provincial treasuries. Some provincial treasuries were implemented in early 2016 and some are implemented until April 2016.

GDNT’s report

48




(End 2017)



4More non-tax revenue sources

GDSPNT, GDSNAF, related agencies

Number of new and revised inter-ministerial Prakases [1]

24 35 (14 revised)

37(22

revised)38 inter-ministerial Prakases Prakas, Sub-decree, Law

5Revenues from property tax increased

GDT Revenue in KHR billion

Revenue from property tax KHR 62.7 billion (2013)

82 85

Revenue from property tax is increasing. Revenue from property tax collected in 2016 was KHR 86.7 billion.

GDT's report

6

Improve budget classification through the implementation of uniform account code structure

FMWG, GDNT, GDB, GDSNAF, related agencies

# of budget classification segments implemented

Seven budget classification codes developed [Function Classification (FC), Administrative Classification (AC), Economic Classification (EC), Program Classification (PC), Geographic Classification (GC), Source of Fund Classification (SFC)], and

EC, AC, GC, PC

EC, AC, GC, PC,

FC

All seven budget classifications have been prepared and issued as Prakas for implementation (AC, EC, GC, PC, FC, SFC and Project Classification).

Prakas on Implementation of EC, GC, AC, SFC, PC, FC and Project classification.

49




(End 2017)



Project Classification

7

Financial Statements presented with disclosure of the accounting standards used as the basis for their preparation and accounting policies followed

GDNT, related agencies

Yes/No

Preparation of IPSAS cash basis in progress

Partial IPSAS

cash basis report

produced

Partial IPSAS

cash basis report

produced

FMWG team has achieved as follows:1. IPSAS Budget Income 100% complete2. IPSAS Budget Expenditure 100% complete3. IPSAS Cash Flow Statement 90% complete

GDNT has been testing the above reports by using FY2016.

FMWG's report

8

FMIS implemented at MEF and Provincial Treasury (PTs)

FMWG, related agencies

Number of treasury offices at the national and provincial levels implementing FMIS

Procurement process in progress

MEF and all PTs

MEF and all PTs

The FMIS is capable of providing government finance managers with a wealth of information to manage and deploy government financial resources across various programs, projects and line ministries. MEF's using FMIS -GBD, GDNT, GDPP, GDSNAF, GDICDM, GDIA, General Inspectorate Department (GDI)-ITD of GS-All of PTs

FMWG's report

50




(End 2017)



9


FMWG, related agencies

Number of FMIS modules implemented

0

BA; GL, AR; AP; CM; and

PO

BA; GL, AR; AP; CM; and

PO

There 6 modules (1) Budget allocation, (2) Purchase Order, (3) Account Payable, (4) Account receivable, (5) Cash Management and (6) General Ledger. Moreover, the FMIS is interface with Core Banking System, Revenue System.

FMWG's report

10


GDEPFP, related agencies

Scheduled progress (1 = finalize and approve strategy and action plans, 2 = prepare sequenced and prioritized action plans, 3 = monitor implementation, 4= interim monitoring report)

Revenue mobilization strategy developed (2013-2018) and being finalized.

3,4


In 2014, RMS Steering Committee prepared and approved on the Medium-term RMS 2014-2018.

In the practice, Secretariat of RMS Steering Committee has produced the monitoring report twice per year mid-year and annual. Medium-term Revenue

Mobilization Strategy 2014-2018

Monitoring on RMS report

51

ANNEX B. List of Main Workshops/Trainings

No Workshop/Training Responsible

1 Training on “Guideline for the Conduct of Audit Assurance Assignment”

GDIA

2 Workshop on “Audit IT Application”3 Training on “Conduct of Audit Assurance Assignment” to LMs.

4Workshop on introduction to performance audit: was held on 06-07 October 2015 at Siem Reap Province. It was designed to build the capacity of internal audit officials from LMs/Institutions about 130 participants.

5Four IT Auditors attended standardized training courses on: Oracle Database 11g Administration Workshop 1, Oracle Database 11g SQL Fundamentals, and CCNA R&S at Sunrise Institute Co., Ltd.

6Training on “Auditing PeopleSoft” at the Institute of Internal Auditors (IIA) at Chicago, USA. Since there was a failure to get visa entry, GDIA requested to use this budget for training on “Security Awareness” in Malaysia.

7 Study visit on Budgeting for sub-national level in New Zealand.

GDSNAF

8

Training on Fiscal Decentralization and Local Government Financial Management at Duke Center for International Development to be held in Durham, NC, USA from July 05-24, 2015. This training course can help improve the in-house capacity of GDSNAF to challenge with critical issues for D&D such as (1) substantial functions need to be transferred from Ministries to SNAs (2) the SNAs needs sufficient financing for contributing to local development (3) Financial system needs need to be revised in order to respond to the scope of transferred function and to be consistent with PFMRP and (4) the need of assigning own sourced revenue for SNAs.

9

Five sessions of ToT and Regional Training on BSP for Sub-National Administrations were held in May 2016. The training sessions were designed as a step-by-step approach to raise awareness on BSP Concept, to improve understanding on the determination of indicators and the BSP formulation and to introduce M & E mechanism. They were held at Phnom Penh, Siem Reap, Kratie, and Sihanouk Ville with totally around 360 participants.

10

10 Sessions of training on DM Administration Budget Plan 2017 were conducted to increase awareness of sub-national administration on the budget formulation and execution. They were held at Phnom Penh with totally around 846 participants.

11

To ensure efficiency and effectiveness of cash management planning and to monitor national revenue and expenditure, two days training on Cash Management Planning was organized on 24-25 December 2015for finance officials from Line Ministries/ Institutions.

GDNT

12 Local Consultant to develop Online Web Based Application already completed their assignment for Cash Management Department of GDNT. GDNT

13GDNT had arranged consultation meeting from 13-17 December 2015 as a lesson learned opportunity for their officials to exchange experience about Accounting Standard with two technical experts from French.

GDNT

14 15 GDNT Senior officials attended two training courses on Essential Skills for Leading and Empowering People and Training of Trainers GDNT

15 Organized Seminar on “Public Financial Management Reform of China Experience and Training on “Budget Entity and Program Budget Execution.”

EFI

16 Organized series of in-house training on Program Budgeting Execution

52

17Joined the presentation on the Successful Launch of Cambodia FMIS at USA 11 sessions of Training Program on Oracle and People system at Singapore Attended PEMNA Treasury Community of Practice Korea

FMWG

18

GDPP has cooperated with EFI to conduct two sessions of training on Public Procurement in April 2016 in order to enhance awareness and capacity of Budget Entities from Line Ministries on Rule and Regulation of Public Procurement. There were around 360 participants attend the training.

GDPP&EFI

19 Local training on Accounting: five GDEPFP officials have received a financial support to study financial accounting at CAMED Business School. GD Policy

20

Organized two regional workshops on the effectiveness of legal provision dissemination for Sub National Administration by focusing on PFM Reform, Budget Framework, Procurement Procedure, the Role of Public Accountant and State Property Management.

GS-MEF

21

Organized the regional workshops on the effectiveness of legal provision dissemination for Sub National Administration by focusing on PFM Reform, Budget Framework, Procurement Procedure, the Role of Public Accountant and State Property Management.

GS-MEF

22GDCE had organized 3 sessions of training on “Accounting and Budget Entity” for GDCE Officials. The training is designed to improve in-house capacity and to enhance the understanding of PFM Reform Program.

GDCE

23

Attended the training on Strategic Management Program that was organized by National University of Business School in Singapore. The in-depth understanding of stakeholder analysis, corporate governance, and strategic management obtained through the training would benefit GDSNAF in finding mechanism for urgent financial reform. GDSNAF

24Training on Program Budgeting Formulation: was organized 07-08 November 2016 for officials at sub-national level, particularly those selected to implement program budgeting in Year 2017.

25 Induction course for new official of SNIF Secretariat was organized in Kep Province by GDSNAF on 08-09 May 2017.

26

Study visit in the Republic of India on Budgeting Reform and Monitoring and Evaluation. The purposes of this training are to:

- understand of Public Financial Management in India- learn about Medium-Term Expenditure Framework and Budget

Strategic Plan- understand the Budget Preparation and Budget Execution in India- learn about the process for budget monitoring and evaluation

GS-MEF

27

Dissemination Workshop on Draft Law on State Property Management was organized in Siem Reap Province on 02-03 May 2017 under join coordination of Legal Affair Department and General Department of State Property and Non-Tax Revenue. There were about 500 participants from MEF and Line Ministries.

Legal Council of

MEF

28Organized internal retreat of Legal Affair Department was held in Kep Province.

Legal Council of

MEF

29 GDB organized ToT training on Program Budgeting about 500 participants from Line Ministries.

GDB

30 Internal retreat of GDB to review the training material for program budgeting.31 Program Budgeting Training were co-organized by EFI and GDB.32 Short course oversea training on Innovation for Economic Development at

53

Harvard Kennedy School, USA.

33Senior government officials from relevant General Departments attended Study visit to France on Performance Based Budgeting.

54

ANNEX 6. SUPPORTING DOCUMENTS

1. Project Appraisal Document, Report No.: 76854-KH, dated November 4, 2013

2. Project Paper, Report No.: 1141, dated April 9, 2015

3. Project Paper, dated August 23, 2012

4. Implementation Status and Results Back to Office Reports/Aide-Memoires/Mission Notes – March 2014 through March 2017

5. Mid Term Review Reports, dated July 20-30, 2015

6. Memos regarding amendments to the Grant Agreements, and Additional Financing

7. Borrower’s Implementation Completion Report, dated October 2, 2017.

55

ANNEX 7. FREQUENCY DISTRIBUTION OF TRANSACTIONS

Period of Analysis: January 2017 - August 23rd 2017

Type of transactions: Expenses type Posted through the FMIS

56

8.65

2.78

14.22

54.82

1.14

9.61 8.7911.57

4.41

14.49

45.69

1.81

15.18

6.863.67

0.00

13.75

70.46

0.00 0.05

12.08

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Capital Projects Financial Charges Goods and Services Payroll Reversal and Refund on tax Subsidies Other

Percentages by types of Expenditurefor Total, Center and PTs

% amount total % amount Central % amount PTs

Frequency Distribution of Transactions per type and amount of expenditures

Period of Analysis: January 2017 -August 23rd 2017

Type of transactions: Expenses type Posted through the FMIS

57

0 2,000,000,000,000 4,000,000,000,000 6,000,000,000,000

Total Expenditures

Other Subsidies Reversal and Refund on tax Payroll Goods and Services Financial Charges Capital Projects

58

7,226

103,844

1,486 1,2020

20,000

40,000

60,000

80,000

100,000

120,000

National PTs

No of transactions

Total transactions Total count > 400.000.000

6,040,697,803,730

4,067,050,043,020

5,591,288,070,447

2,630,424,981,456

0

1,000,000,000,000

2,000,000,000,000

3,000,000,000,000

4,000,000,000,000

5,000,000,000,000

6,000,000,000,000

7,000,000,000,000

National PTs

Amount

Total Amount Total Amount > 400.000.000

20.56

1.16

92.56

64.68

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

National PTs

At the center 30% of the transactions are above 400M Riel and they constitute 94%

of the expenditure. At the PTs 1.3 % of the transactions are

above 400M Riel and they constiture 67% of the expenditure.

59

Frequency Distribution of Transactions

Period of Analysis: January 2017 - August 23rd 2017

Type of transactions: Expenditure transactions by Range

60

39.55

65.47

79.65

88.04

94.1196.44 97.58 99.36 99.64 99.99 100.00

0.62 2.534.67

7.3411.46

15.1218.66

37.24

45.85

90.38

100.00

0.00

20.00

40.00

60.00

80.00

100.00

120.00

% Cumulative Transactions and % Cumulative Amount

Cumulative % transactions Cumulative % Amount

61

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70 80 90 100

Cum

ulati

ve %

of a

mou

nt

Cumulative % of transactions

% Transactions vs % Amount

ANNEX 8. MAP OF CAMBODIA

62

Documents

Cambodia - PFM Modernization Project - Implementation ... · Web view2017/11/13 · Furthermore, peer learning evolved, as more advanced users (i.e. Koh Kong treasury) supported