Report and Recommendation of the President to the Board of ...€¦ · Division, SERD Team leader J. L. Gomez, Senior Public Management Specialist, ... The current wave of reforms—initiated

Report and Recommendation of the President to the Board of Directors

Sri Lanka Project Number: 41392 August 2012

Proposed Programmatic Approach, Policy-Based and Project Loan for Subprogram 1, and Technical Assistance Grant Kingdom of Cambodia: Decentralized Public Service and Financial Management Sector Development Program

CURRENCY EQUIVALENTS (as of 30 July 2012)

Currency unit – riel/s (KR)

KR1.00 = $0.00024 $1.00 = KR4,085

ABBREVIATIONS

ADB

IP3 MEF NCDD-S MOI NP-SNDD PAM SNA SNIF CDTA

– – – – – – – – – –

Asian Development Bank Three Year Implementation Plan Ministry of Economy and Finance National Committee for Sub-National Democratic Development Secretariat Ministry of Interior National Program for Subnational Democratic Development project administration manual subnational administration Subnational Investment Facility capacity development technical assistance

NOTES

(i) The fiscal year (FY) of the Government of Cambodia and its agencies ends on 31

December. (ii) In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations 2 Director General K. Senga, Southeast Asia Department (SERD) Director S. Hattori, Public Management, Financial Sector and Trade

Division, SERD Team leader J. L. Gomez, Senior Public Management Specialist, SERD Team members I. Ahsan, Counsel, Office of General Counsel

R. V. Barba, Senior Safeguards Specialist, Cambodia Resident Mission (CARM), SERD U. Hoque, Social Development Specialist, SERD M. A. Ingratubun, Senior Procurement Specialist, Central Operations Services Office S. Kotagiri, Social Development Specialist, SERD M. J. Mitra, Associate Project Analyst, SERD T. Niazi, Principal Public Management Specialist, Regional and Sustainable Development Department C. Ouch, Senior Programs Officer, CARM, SERD K. M. Sanchez, Operations Assistant, SERD S. Sandhu, Senior Environment Specialist, SERD S. Sok, Senior Procurement Officer, CARM, SERD S. Tukuafu, Principal Financial Sector Specialist, SERD

Peer reviewer B. Reid, Senior Finance Specialist, EARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

PROJECT AT A GLANCE

I. THE PROPOSAL 1 II. THE PROJECT 1 A. Rationale 1 B. Impact and Outcome 3 C. Outputs 3 D. Development Financing Needs 5 E. Implementation Arrangements 6 III. TECHNICAL ASSISTANCE 7 IV. DUE DILIGENCE 7 A. Economic and Financial 7 B. Governance 8 C. Poverty and Social 8 D. Safeguards 9 E. Risks and Mitigating Measures 9 V. ASSURANCES 10 VI. RECOMMENDATION 10 APPENDIXES 1. Design and Monitoring Framework 11 2. List of Linked Documents 14 3. Development Policy Letter 15 4. Policy Matrix 19

PROJECT AT A GLANCE

1. Project Name: Decentralized Public Service and Financial Management Sector

Sec tor Development Program, SP1

2. Project Number: 41392-013

3. Country: Cambodia

4. Department/Division:

Southeast Asia Department/Public Management, Financial Sector, and Trade Division

5. Sector Classification:

Sectors Primary Subsectors

Public sector management

√ D Decentralization

P Public expenditure and fiscal management

6. Thematic Classification:

Themes Primary Subthemes

Governance √ P Public administration (national,

decentralized, and regional)

6a. Climate Change Impact

No Climate Change Indicator available.

6b. Gender Mainstreaming

Gender equity theme (GEN)

Effective gender mainstreaming (EGM) √

Some gender benefits (SGB)

No gender elements (NGE)

7. Targeting Classification:

General Intervention

Targeted Intervention

Geographic dimensions of inclusive growth

Millennium Development Goals

Income poverty at household level

√

8. Location Impact:

National

High

9. Project Risk Categorization: Low

10. Safeguards Categorization:

Environment C

Involuntary resettlement C

Indigenous peoples C

11. ADB Financing:

Sovereign/Nonsovereign Modality Source Amount ($ Million)

Sovereign

SDP – Program loan

Asian Development Fund

24.00

Sovereign

SDP – Project Loan

Asian Development Fund

13.50

Sovereign

Capacity Development Technical Assistance

Technical Assistance Development Fund

.8

Total

37.5

12. Cofinancing: No cofinancing available.

13. Counterpart Financing:

Source Amount ($ Million)

Government 1.0

Total 1.0

14. Aid Effectiveness:

Parallel project implementation unit No

Program-based approach Yes

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on (i) a proposed programmatic approach for the Decentralized Public Service and Financial Management Sector Development Program, (ii) a proposed policy-based loan for subprogram 1, and (iii) a proposed project loan for subprogram 1 of the Decentralized Public Service and Financial Management Sector Development Program to the Kingdom of Cambodia. The report also describes proposed capacity development technical assistance (CDTA) for Decentralized Public Service and Financial Management, and if the Board approves the proposed programmatic approach, policy-based loan, and loan, I, acting under the authority delegated to me by the Board, will approve the CDTA.1

2. The program seeks to improve public service delivery by supporting the development of efficient and accountable subnational administrations. The program comprises policy-based lending and project lending. In close alignment with the Government of Cambodia’s subnational democratic development reforms, the program will (i) assist in the development of the policy and regulatory framework for decentralization, (ii) provide selected rural districts with offices for their operations, and (iii) contribute to the development of financial management capacity in central and subnational public administrations.2

II. THE PROJECT

A. Rationale

3. Uneven distribution of economic growth and large disparities in poverty reduction. Territorial development disparities across Cambodia are partly the result of the country’s narrow base for economic growth and a historical deficit of infrastructure investment in rural areas, but are also a result of weak service delivery mechanisms. Robust economic growth between 1998 and 2007 has resulted in substantially reduced poverty rates, from 47% in 1993 to 30% in 2007. However, in a pattern common to other Southeast Asian nations, economic growth has been accompanied by significant increases in income inequality and an uneven distribution of development gains. In 2007 rural areas of Cambodia displayed poverty rates of about 35% and accounted for 91% of the poor. By comparison, only about 9% of the poor live in urban areas, with average poverty rates of 22% (less than 1% of the population in Phnom Penh is poor).3

4. Weak service delivery mechanisms and a fledging culture of local participatory democracy. Greater disparities are observed in access to basic services. The percentage of families with access to safe drinking water varies from 92% in Phnom Penh to less than 30% in Mondul Kiri Province. The average distance from a village to a health center in Stung Treng Province is 25 kilometers (km), compared with a national average of less than 5 km. Largely as a result of limited access to services, human development indicators for rural areas lag behind those of urban areas. Infant mortality rates are about three times higher in rural areas (64 deaths per 1,000 children) than urban areas (22 deaths per 1,000 children).4 An inefficient mix of centralized and deconcentrated mechanisms limits the capacity of government to match service delivery to local needs.5 Local planning and budget formulation systems do not yet fully incorporate the needs and preferences of local constituencies. This limits the capacity of local populations to hold subnational administrations (SNAs) accountable for their performance. In addition, there is a lack of both

1 The design and monitoring framework is in Appendix 1.

2 The Asian Development Bank (ADB) provided policy and advisory TA. ADB. 2009. Technical Assistance to the Kingdom

of Cambodia for Developing an Institutional Framework for Decentralization Reforms. Manila (TA 7373-CAM). 3 World Bank. 2009. Poverty Profile and Trend in Cambodia. Washington, DC.

4 Government of Cambodia. 2010. Commune Database Indicators. Phnom Penh: National Committee for Democratic

Development at the Subnational Level. 5 Government of Cambodia. 2010. National Program for Subnational Democratic Development. Phnom Penh.

2

available funds for local investment projects and efficient financing mechanisms that reward good SNA project formulation and high rates of socioeconomic return to capital expenditure.

5. Improved living standards through subnational democratic development. The

government is committed to tackling local development disparities by creating democratically elected SNAs that meet locally defined priorities in service delivery. The policy framework for reforms is contained in the National Program for Subnational Democratic Development (NP-SNDD) 2010–2019.6 Efforts toward subnational democratic development in Cambodia began with the 2001 Organic Law on Commune/Sangkat Administrative Management, which allowed for the direct election of councilors. Since 2002, commune councils have gained legitimacy as the local representatives, and their share of expenditure has increased from 1.5% of domestic revenues to 2.7% by 2008. The current wave of reforms—initiated in 2008 with the Organic Law on Capital, Provinces, Municipalities, Districts, and Khans—extends subnational democratic development reforms to the district and municipal level of administration. Having established democratically elected SNAs, the policy reform focus is on the regulatory framework for intergovernmental fiscal relations, and on administrative decentralization. District and municipal councils lack clear functional responsibilities, an adequate financing system, and, often, even premises to operate from. In addition, SNAs need substantial capacity development to ensure their efficient operation.

6. Lessons learned from Asian Development Bank sector experience. The Asian Development Bank (ADB) initiated its assistance to subnational democratic development reforms in Cambodia through the Commune Council Development Project.7 Under the two phases of the project, 697 commune centers were built, capacity development for commune councils was provided, and a civil registration system was implemented. The centers have facilitated good local governance at the commune level. The project delegated procurement and contract implementation responsibilities to the commune councils, helping build their project management skills and assisting local ownership.8 ADB has supported the development of the regulatory framework for intergovernmental fiscal relations in Cambodia.9 Technical assistance has been provided for the preparation of the Subnational Finance Law 2011, the District Municipal Transfer Fund, and the Sub-Decree on Functional Assignments, among other regulations. Coordination of activities between the National Committee for Democratic Development at the Subnational Level Secretariat (NCDD-S), the Ministry of Interior (MOI), and the Ministry of Economy and Finance (MEF) has been essential for efficient delivery of advisory assistance. ADB’s TA has also underlined the large capacity development needs of SNAs, and the importance of providing adequate support to the line ministries that will pilot future functional assignments to SNAs. Support for subnational democratic development reforms has been identified as a crosscutting theme by ADB’s country partnership strategy 2012–2015.10 The reforms will impact many other parallel efforts assisted by ADB, such as public financial management reforms,11 and may also aid work in sectors such as education, agriculture, and rural development.

6 The Strategic Framework for Decentralization and Deconcentration Reforms 2005 provided an earlier policy

reference. 7 ADB. 2006. Report and Recommendation of the President to the Board of Directors on a Proposed Grant to the

Kingdom of Cambodia for the Commune Council Development Project (Phase 2). Manila (Grant 0066-CAM, for $7.80

million, approved on 12 December). 8 The design of the project under subprogram 1 draws heavily on other best practices from the Commune Council

Development Project, in particular with regard to implementation arrangements (i.e., project delegation to ADB’s resident mission, disbursement of block grants to SNAs through private financial institutions, community participation in project monitoring, and others).

9 ADB. 2009. Technical Assistance to the Kingdom of Cambodia for Developing an Institutional Framework for

Decentralization Reforms. Manila (TA 7373). 10

ADB. 2011. Country Partnership Strategy: Cambodia, 2012–2015. Manila. 11 ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Grant to the

Kingdom of Cambodia for the Public Financial Management for Rural Development Program, Subprogram 1. Manila; and ADB. 2010. Report and Recommendation of the President to the Board of Directors on a Proposed Grant to the Kingdom of Cambodia for the Public Financial Management for Rural Development Project 2. Manila.

3

Ap

pe

ndix

4 3

7. Lending modality and donor coordination. The comprehensive nature of the subnational democratic development policy reforms needs to be supported by adequate investments on public infrastructure and institutional capacity that allow district administrations to assume their future responsibilities in service delivery. The sector development program lending modality best articulates these needs while offering a framework for ADB’s long-term support to reforms. Coordination with development partners has been fruitful. The policy matrix has received development partner contributions through several meetings of the donors’ working group, currently cochaired by ADB. The program has been discussed with civil society organizations, benefiting from their inputs on areas such as project implementation arrangements and management of grievances.

B. Impact and Outcome

8. The expected impact of the program is improved access to and coverage of basic services across the country.12 The expected outcome is an efficient system of intergovernmental fiscal relations that assists service delivery by SNAs.13 The proposed subprogram includes a policy-based loan and a project loan. The policy-based loan includes 29 reform actions (10 triggers and 19 milestones) that the government completed during 2010–2012. The project loan will provide assistance to the construction of rural district offices and institutional and capacity development for local public financial management.

C. Outputs

1. Policy-Based Loan Outputs

9. The policy-based loan is structured around seven major outputs covering all key areas of reform:

(i) development and regular update of a gender-sensitive policy and regulatory framework for decentralization,

(ii) establishment of institutions for efficient coordination of subnational democratic development policies,

(iii) definition of clear service delivery responsibilities of SNAs, (iv) assignment of efficient tax and nontax revenue sources to SNAs, (v) implementation of fiscal transfers that ensure comparable levels of service delivery

across SNAs, (vi) development of capacities for efficient decentralized public financial management, and (vii) design and implementation of accountability mechanisms for SNAs to their

constituencies.

10. Each of the outputs includes triggers and milestones that are drawn from the Three-Year Implementation Plan (IP3) for the NP-SNDD. Accomplishment of several of the triggers and milestones included in subprogram 2 is expected as early as late 2012, effectively sequencing reforms during the full subprogram period.

11. Development and regular update of gender-sensitive policy and regulatory framework for decentralization. The government has made substantive progress in developing an efficient policy and regulatory framework for reforms where gender considerations are mainstreamed. The NP-SNDD (2010–2019) has been approved, together with the first IP3. The IP3 mainstreams gender in subnational democratic development reforms and gender experts have been appointed at the NCDD-S. Subprogram 2 of the cluster will assist development of the second gender-responsive IP3 (2014–2016) and the preparation of midterm reviews.

12

Including basic health and sanitation services, rural road rehabilitation, and agricultural extension. 13

The impact and outcome statements are common to the policy-based loan and the project loan of subprogram 1.

4

12. Establishment of institutions for efficient coordination and policy design of subnational democratic development policies. The Subdecree on the Establishment and Functioning of the NCDD-S was approved in December 2011 in order to (i) establish the mandate of

the NCDD-S to generate decentralization and deconcentration policy, (ii) reorganize divisions

and offices to better align them with the NP-SNDD, and (iii) create permanent civil service positions. All subcommittees of the NCDD-S are fully appointed and hold meetings as required. A draft strategy for gender-responsive human resource management at the subnational level has been prepared and is being discussed by the NCDD-S subcommittee on personnel. Subprogram 2 will support the development of a civil service code for SNAs that strives for gender equity in civil service

recruitment and the strengthening of the NCDD-S as the lead agency for decentralization and deconcentration reforms.

13. Definition of clear responsibilities for service delivery of subnational administrations. The government has approved a subdecree on a strategy for functional assignments and, with priority ministries, is piloting manuals for gender-responsive functional mapping and reviews. The NCDD subcommittee on functional assignments and resources is in operation. Subprogram 2 will assist the piloting of the first functional assignments to SNAs, once functional mapping and review processes in priority ministries are completed.

14. Assignment of efficient tax and nontax revenue sources to subnational administrations. With the introduction of Ministerial Order 371 of 2011, the government has authorized the collection of property tax at the provincial level. The government continues to evaluate potential sources of own revenues for SNAs. Subprogram 2 will support the development of a subdecree on revenue assignments (tax and nontax to SNAs).

15. Implementation of fiscal transfers that ensure comparable levels of service delivery across subnational administrations. The government has approved the creation of the District and Municipal Fund. The fund includes the definition of a formula-based development component for discretionary expenditure of districts and municipalities. For subprogram 2, the government will design the system of conditional grants for delegated functions to SNAs. In addition, the government will establish the Subnational Investment Facility (SNIF), a complementary element of the financing system of SNAs. The SNIF will aim to mobilize financial resources for local investment projects in key development sectors. A competitive project selection system will reward good project preparation, and capacity development assistance will be provided to weaker SNAs.

16. Development of capacities for efficient decentralized public financial management. The government has approved the Law on Financial Regime and Property Management of Sub-National Administrations that provides the structure of intergovernmental fiscal relations. The implementation of the law is assisted by the Sub-Decree on Financial Management procedures and associated regulations. Subprogram 2 will assist the further implementation of the subdecree with the approval of regulations for the subnational budget classification and chart of accounts; the guidelines for budget preparation, execution, and audit; and accounting and payment procedures. In addition, the capacity of the National Audit Authority for SNA audit and the capacities of local financial officers and central government departments on SNA financial management systems will be strengthened.

17. Design and implementation of accountability mechanisms for subnational administrations to their constituencies. The government has finalized and is piloting technical manuals on SNA council meetings and public forums that promote the equal participation of men and women. In addition, the government has conducted the first training of trainers for 79 facilitators to assist dissemination of the manuals to all districts and municipalities. The NCDD-S has developed a district charter template, which will be piloted in the second half of 2012, providing a guideline for the preparation of district charters as stipulated by the Organic Law of 2008. Subprogram 2 will

5

Ap

pe

ndix

4 5

support further implementation of coaching and mentoring systems and the adoption of district charters by these SNAs.

2. Project Loan Outputs

18. Output 1: Construction of district offices in rural areas.14 The project will provide approximately 40 selected rural districts with basic premises. The districts will be selected on the criteria of poverty, population, and state of premises. The project will not entail any land acquisition. Only public land, upon presentation of the land title, will be used for construction. Upon signing of a block allocation agreement between the district authorities and the MOI, district authorities will take full responsibility for procurement,15 contract implementation, and processing interim payments based on progress at sites. Initial orientation and procurement training will be provided to selected districts to ensure their capacities are built.16

19. Output 2: Efficient system of intergovernmental fiscal relations developed; expenditure and revenue assignments and fiscal transfers designed and implemented. Advisory assistance provided to the MEF will include support to the development of a medium- and long-term strategic road map for fiscal decentralization in Cambodia, the definition of tax and nontax revenue assignments to SNAs, and the review and design of conditional and unconditional transfers. Consultants will be recruited using ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).

20. Output 3: Development of the Subnational Investment Facility. The project will support the development of the SNIF, designed to mobilize resources for local investment projects through competitive procedures. The package of outputs will include, as required, technical support to draft the regulations on the SNIF, its operational guidelines, the terms of reference for the facility’s staff, and advisory services for pilot testing and initial implementation. The government is committed to ensure the SNIF is in full operation by 2014.

21. Output 4: Capacities for efficient decentralized public financial management developed. The project will enhance the financial management oversight, monitoring, and support capacity of SNAs by the MEF and its provincial departments. The project will build the knowledge base and analytical foundations on fiscal decentralization and local public financial management at the Local Finance Department of the MEF. It will provide analytical inputs, training and training support, systems development, and capacity development to relevant MEF departments, provincial departments, and provincial administrations.

D. Development Financing Needs

22. Subprogram 1 is estimated to cost $38.46 million equivalent (Table 1). The government has requested both a policy-based loan and project loan for subprogram 1 from ADB’s Special Funds resources.

Table 1: Financing Plan ($ million)

Source Amount ($ million) Share of Total (%)

Asian Development Bank (policy-based loan) 23.97 62.30 Asian Development Bank (project loan) 13.49 35.10 Government of Cambodia 1.00 2.60 Total 38.46 100.00

Source: Asian Development Bank estimates.

14

The Project Administration Manual (accessible from the list of linked documents in Appendix 2) provides more detailed descriptions of project interventions. 15

Procurement will be guided by the government’s standard operating procedures for externally funded projects. 16

The proposed arrangements reproduce those successfully followed during the implementation of the Commune Center Development Project.

6

23. Policy-based loan financing plan. The government has requested a loan of SDR15,772,000 equivalent from ADB’s Special Funds resources to help finance subprogram 1. The loan will have a 24-year term, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan agreement.17 The amount of the policy-based loan is based on development financing needs for the sector as identified during country programming and strategy formulation, the importance the government attaches to the reform program, and the estimated costs of designing and implementing the medium-term reform program minus estimated financial support provided by other development partners. The policy-based loan will be released in a single tranche upon loan effectiveness.

24. Project loan investment plan. The government has requested a loan of SDR8,876,000 equivalent from ADB’s Special Funds resources to help finance the project, including taxes and duties (Table 2).18 The loan will have a 32-year term, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan agreement. The government will contribute in-kind counterpart staff, office accommodation, and facilities.

Table 2: Project Investment Plan ($ ’000)

Item Amounta

A. Base Costb

1. Output 1: Construction of district offices 10,977.00 2. Outputs 2, 3, and 4: capacity development for local public financial

management 1,460.20 3. Government (office accommodation, facilities, and administrative

support) 762.30 Subtotal (A) 13,199.50 B. Contingencies

c 1,052.80

C. Financing Charges During Implementationd

237.70 Total 14,490.00

a Inclusive of local taxes and duties estimated at $948,500 financed by the Asian Development Bank. The loan may finance transportation and insurance costs.

b In mid-2012 prices.

c Physical contingencies computed at 3.9% for civil works and price contingencies computed at 3.9% on foreign exchange costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Estimated on the basis of 1% interest rate per annum accrued on the disbursed loan amount

Source: Asian Development Bank estimates.

E. Implementation Arrangements

25. The NCDD-S will be the executing agency for the program. The MOI will be the implementing agency for output 1 and the MEF will be the implementing agency for outputs 2–4. The implementation arrangements are summarized in Table 3 and described in detail in the project administration manual (PAM).19 A project technical cell will be established at the MOI to assist with implementation of output 1. The cell will provide orientation and capacity building to district administrations in procurement and contract implementation, and will act as coach on technical

17

The proceeds of the policy-based loan will be disbursed in accordance with provisions set out in ADB. 1998. Simplification of Disbursement Procedures and Related Requirements for Program Loans. Manila. The loan proceeds will be used to finance the cost (excluding local taxes and duties) of items produced and procured in ADB member countries, excluding ineligible items.

18 Inclusion of taxes and duties on ADB-financed project expenditures is consistent with the current country partnership

strategy. Financing of taxes and duties does not represent an excessive share of the project cost and it is material to the success of the project.

19 Project Administration Manual (accessible from the list of linked documents in Appendix 2).

7

Ap

pe

ndix

4 7

matters. The project technical cell will also conduct at least monthly monitoring visits of the construction sites to assess compliance with contracts and confirm construction progress. Outputs 2–4 will be implemented by the MEF with ADB assistance as required by the government for the selection of consultants.

Table 3: Implementation Arrangements Aspects Arrangements

Implementation period January 2013–December 2015

Estimated completion date March 2013 for policy-based loan; December 2015 for project loan

Management

(ii) Executing agency National Committee for Sub-National Democratic Development Secretariat

(iii) Key implementing agencies MOI (output 1), MEF (outputs 2–4)

(iv) Project technical cell For implementation of project output 1: 2 MOI, 7 contractual staff.

Procurement NCB for works 40 contracts $ 9,400,000

NCB for goods 3 contracts $ 826,000

Shopping 1 contract $ 39,000

Consulting services ICS 198 p-m $ 628,200

Fixed budget selection 3 Contracts $1,422,184

Retroactive financing and/or advance contracting

No retroactive financing proposed. Advance contracting may be used by the MOI after loan approval by the ADB Board of Directors.

Disbursement The proceeds of the policy-based loan will be disbursed in accordance with the provisions of ADB's Simplification of Disbursement Procedures and Related Requirements for Program Loans. The $23.97 million policy-based loan will be

disbursed in one tranche. The project loan will be disbursed in accordance with ADB's Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed upon between the government and ADB. Disbursement will require the establishment of two imprest accounts (at MEF and MOI) with a combined maximum ceiling of 20% of the project loan amount due to its estimated cash flow requirements.

ADB = Asian Development Bank, ICS = individual consultant selection, MOI = Ministry of Interior, MEF = Ministry of Economy and Finance, NCB = national competitive bidding, p-m = person-month (international plus national), QCBS = quality- and cost-based selection. Source: ADB. 1998. Simplification of Disbursement Procedures and Related Requirements for Program Loans. Manila (R50-98).

III. TECHNICAL ASSISTANCE

26. In response to the government request, ADB incorporates the proposed capacity development TA for Decentralized Public Service and Financial Management for subprogram 2 for approval with subprogram 1. The CDTA is estimated to cost $800,000 equivalent, which will be financed on a grant basis by ADB's Technical Assistance Special Fund (TASF-IV). The government will contribute with office space, transport, national staff per diem, and communications within the possibilities of the budget of the NCDD-S. Assets required for TA implementation will be procured under ADB’s Procurement Guidelines (2010, as amended from time to time). 20

IV. DUE DILIGENCE

A. Economic and Financial

27. The set of policy reforms and project initiatives proposed may conservatively add $300 million to gross domestic product, or approximately 2.5 percentage points, over the duration of the program.21 The policy adjustment costs to the government are conservatively estimated as a discounted present value lump sum of $139.5 million. These include the administrative, investment, and fiscal costs to the government in implementing the reforms. As a result, the expected net benefit

20

Capacity Development Technical Assistance for Decentralized Public Service and Financial Management (accessible from the list of linked documents in Appendix 2).

21 Estimates of benefits extend to 2017, while present value sum of costs incorporates recurrent costs for the next decade of reform implementation.

8

from the program is estimated at some $160 million.22 The size of the program loan is based on a number of factors. The key considerations include the potential importance of the sector to the economy, as subnational public expenditure is expected to reach close to 20% of total government expenditure over the life of the NP-SNDD. The reform program includes several politically sensitive and complex policy and institutional reforms. To support the reforms, the program loan provides leverage to the executing and implementing agencies to support implementation. The program loan also reflects the government’s development financing needs as well as the need to conform to the overall financing requirement from the country partnership strategy period.

B. Governance

28. An assessment of the country’s financial management systems was conducted to understand fiduciary risks and determine appropriate fiduciary arrangements for the purposes of this operation.23 On the basis of these evaluations, the country’s public financial management systems have been found adequate. An external assessment of the NCDD-S was undertaken to evaluate its capacity to manage decentralized reforms. The report concluded that internal control is not fully established or operational in the secretariat, whereas accounting and external audit functions and procurement systems are well established and operate to a satisfactory degree.24 ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government, NCDD-S, MEF, and MOI. The specific policy requirements and supplementary measures are described in the PAM (footnote 19).

C. Poverty and Social

29. Subnational democratic development reforms in Cambodia are expected to assist economic growth and poverty reduction through a variety of channels: (i) higher economic growth through allocative efficiency in the delivery of public services to the poor, (ii) productive efficiency in service delivery, and (iii) providing incentives for improved revenue collection and public expenditure. Efficiency gains in public spending from reassignment of expenditure functions to local government may boost growth and reduce inequality. Local economic development can also be assisted if local governments increase the scope and improve the quality of public infrastructure spending, and as new financing instruments for investment, such as the SNIF, are implemented. The second channel is through the impact of potentially higher productive efficiency in the delivery of basic services at the local level. The use of local contractors and local materials for delivery of local services may offer important savings in public expenditure. Finally, the third channel refers to the incentives for revenue mobilization (and thus local public expenditure) from the assignment of own revenue sources to SNAs. Local populations may be more willing to contribute from tax and nontax sources if they know those revenues will be used for local service delivery.

30. Gender and subnational democratic development. The program is categorized as effective gender mainstreaming. The key gender impacts of the program include increased women’s participation in planning and administrative functions in district and municipal structures; greater integration of women’s needs and priorities in the development of legislation, policies, and programs related to subnational democratic development; strengthened gender awareness and capacities of male and female civil servants; and gender-sensitive development planning and resource allocation to support the delivery of services which address the specific needs and interests of men and women in the community. The policies supported by subprogram 1 ensure that (i) gender is

22

The Program Impact Assessment (accessible from the list of linked documents) provides detailed information on the estimates of benefits and costs.

23 The fiduciary assessment relies on the recent substantive diagnostic work including the Cambodia governance risk

assessment and risk management plan, public finance management assessment based on the public expenditure financial accountability framework, and external review of the government’s Financial Management Reform Program.

24 European Commission Development and Cooperation. 2011. Assessment Concerning Decentralized Management.

Phnom Penh.

9

Ap

pe

ndix

4 9

mainstreamed into the IP3 and gender functions are integrated in the annual work plans and budgets of the six implementing agencies; (ii) the NCDD-S is supported by gender experts, (iii) a draft gender-responsive human resource strategy is developed to increase women’s entry and promotion within the civil service, (iv) manuals developed for functional mapping and reviews integrate gender mainstreaming needs in the priority ministries, and (v) guidelines for council deliberations promote gender-sensitive processes and all women councilors are trained on the tools.25

D. Safeguards

31. Safeguards due diligence and review of the policy matrix show that policy actions will have no impacts on the environment, involuntary resettlement, and indigenous peoples. Similarly, due diligence and review show that the project will not have impacts on the environment, involuntary resettlement, and indigenous peoples. The project is categorized C for all safeguards. 32. There will be no land acquisition as subproject works are restricted to existing government land. All land to be used will have clear titles and be free of all encumbrances. These lands are not occupied or productively used by legal or nontitled occupants. The subproject selection criteria ensure that any proposed subproject with any involuntary resettlement and indigenous peoples impacts will not be included as part of the project. The subproject selection criterion also requires that proposed subprojects have no environmental impacts other than minimal adverse impacts.

33. The implementing agencies will categorize all proposed subprojects to ensure that they are category C for all safeguards. Review and field visits for sample subprojects confirm that environmental implications are limited to standard small-scale impacts of constructing single or two-story administration buildings for 50–80 persons, and provision of equipment. Environmental management plans containing environmental guidelines were developed during program processing to establish rules, procedures, and institutional arrangements to be undertaken with regard to identifying, monitoring, and mitigating adverse environmental impacts due to small civil works activities. The guidelines include a construction site checklist, environmental design criteria, and standardized environmental management plans. The guidelines will be implemented by the implementing agency supported by the project implementation unit. Consultations were undertaken with stakeholders during program processing, including consulting with women to ascertain their views on appropriate design of administration buildings. Since the program is categorized C for all safeguards, no safeguards documents are required to be disclosed on ADB’s website.

E. Risks and Mitigating Measures

34. Major risks and mitigating measures include losing reform momentum, and lack of adequate financial and institutional support to the NCDD-S. The reforms are complex from a technical point of view, comprehensive in their approach, and involve most central government agencies and all levels of administration. Through the attached TA, the recently created NCDD will receive advisory assistance on several of the key reforms outlined for subprogram 2 of the programmatic approach, supplemented by continued policy dialogue with ADB. Greater detail on fiduciary risks to efficient program implementation is provided in the risk assessment and risk management plan.26 Among them, development and implementation of the regulation for subnational public financial management systems (including budget formulation and audit processes) is of key importance. The attached TA will assist the dissemination of new regulations and the training of subnational staff on such procedures. A comprehensive governance and fiduciary risk assessment of the SNIF will be prepared during design to ensure that (i) the proposed facility is aligned with the reform objectives and national and local development priorities, (ii) the SNIF does not incorporate risks to the

25

Gender Action Plan (accessible from the list of linked documents in Appendix 2). 26

Risk Assessment and Risk Management Plan (accessible from the list of linked documents in Appendix 2).

10

macroeconomic stability of the country,27 and (iii) the selection and financing of projects under the facility follow accountable and transparent mechanisms in line with best public financial management practices. Efficient reforms will also require adequate MEF capacity for oversight and monitoring of local finances, which the program will support through the institutional and capacity building component of the project loan.

V. ASSURANCES AND CONDITIONS

35. The government and NCDD-S have assured ADB that implementation of the project shall conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the PAM and loan documents. The government and NCDD-S have also agreed with ADB on certain covenants for the program, which are set forth in the loan agreements.

36. The government has agreed that the project loan amount for output 1 will not be disbursed until: a) the process of establishing the project technical cell has been initiated as detailed in the project loan agreement and b) the instructions for the creation of the procurement review committees and bid evaluation committee for Project Districts are approved. The government has also agreed that the loan will not be declared effective until the government, through the NCDD-S, has fulfilled all conditions for the subprogram 1 policy-based loan as set out in the policy matrix in Appendix 4.

VI. RECOMMENDATION

37. I am satisfied that the proposed programmatic approach, policy-based loan, and project loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve:

(i) the programmatic approach for Decentralized Public Service and Financial Management Sector Development Program;

(ii) the policy based-loan of SDR15,772,000 equivalent to the Kingdom of Cambodia for subprogram 1 of the Decentralized Public Service and Financial Management Sector Development Program from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; for a term of 24 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft program loan agreement presented to the Board; and

(iii) the project loan of SDR8,876,000 equivalent to the Kingdom of Cambodia for the Decentralized Public Service and Financial Management Sector Development Program from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; for a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft project loan agreement presented to the Board.

Haruhiko Kuroda President 22 August 2012

27

Subnational borrowing is not allowed in Cambodia. The SNIF will provide grants to subnational administrations and not loans, as is the case of other institutions such as the Municipal Development Fund of the Philippines.

Appendix 1 11

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets and Indicators with

Baselines

Data Sources and Reporting

Mechanisms Assumptions

and Risks

Impact

Improved access and coverage of basic services across the country

By 2017: A 5 percentage point increase in basic service delivery indicators: (i) population with access to improved water sources (baseline: 40.5% in 2008); and (ii) population with access to improved toilets (2009 baseline: 34.7%)

NIS social statistics, Cambodia Socioeconomic Survey Commune database indicators NCDD status reports Review of completed policy actions

Assumptions

Accountability relations between elected local councils and their constituencies are established Continued economic growth generates revenues for local service delivery Risks

Insufficient efforts in building the capacity of SNAs for service delivery Diminished support for reforms from new government in 2013

Outcome

An efficient system of intergovernmental fiscal relations that assists service delivery by subnational administrations

By 2015: Provincial and district/municipal spending increases to 10.0% of total public expenditure (2008 baseline: 5.5%)

Nontax revenue collection by SNAs increases to 5.0% of general nontax revenues (2008 baseline: 2.7% )

MEF budget and financial reports.

Review of completed policy actions MEF budget and financial reports.

Review of completed policy actions

Assumptions

The government maintains its commitment towards establishing the system of intergovernmental fiscal relations Increased revenues for local service delivery through transfers, shared revenues, and local revenue collection

Risks

Lack of coordination in policy formulation among central government agencies may undermine the pace of decentralization and deconcentration reforms Resistance of line ministries to devolve functions Capacity constraints of subnational government may limit the implementation of reforms

Policy Outputs

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

National Program for Subnational Democratic Development (2010–2019) approved in 2010

Gender-mainstreamed IP3 2011–2013 approved in 2010 and 2014–2016

NCDD-S NCDD-S

Assumptions

Improved policy design and analytical capacity of the NCDD-S and MEF

Coordination of all key stakeholders in policy design and

12 Appendix 1


Baselines



and Risks

2. Establishment of institutions for efficient coordination of subnational democratic development policies

3. Definition of clear service delivery responsibilities of SNAs

4. Assignment of efficient tax and nontax revenue sources to SNAs

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

6. Development of capacities for efficient decentralized public financial management

approved in 2013

Policy and Program Management Department established and all positions appointed with high-quality professionals by 2013. Gender expert appointed at NCDD-S

New gender-sensitive civil service code prepared by 2014, granting human resources policy authority to SNAs

Quota of 20%–50% women among new recruits for civil service positions

Target of 30% women amongst new recruits for national and SNA advisers

NCDD-S fully staffed and obtaining $1.0 million in national budgetary allocations by 2015 (2012 baseline: $0.5 million)

Subdecree on mapping and review of functional assignments approved in 2012. Manual for functional reviews integrate gender issues in priority sectors

General mandates for all levels of administration and delegated functions clarified by 2014

Proposals for reassignment of functions to districts and municipalities approved, implementation started 2014

Subdecree on own revenue sources for SNAs approved by 2014 Property tax revenues assigned to provincial administrations in 2011

District and municipal fund decree approved in 2012, disbursing at least $8 million of development expenditure in 2013 and 2014

Conditional grants for delegated functions to SNAs for delegated functions designed by 2014

Subdecree on financial management procedures and related circulars and guidelines approved in 2012. Gender-responsive guidelines developed and dissemination started

NCDD-S

NCDD-S and State Secretariat for Civil Service

SSCS annual reports, NCDD-S

MOI project reports, NCDD-S

NCDD-S, MEF national budget

NCDD-S, MOI, and priority line ministries reports

NCDD-S, MOI, and priority line ministries

Line ministries reports, NCDD-S MEF, national budget, and NCDD-S

MEF and NCDD-S

MEF, national budget, and NCDD-S MEF annual reports

MEF

MEF, NCDD-S

implementation is improved

SNAs have authority over their personnel

Clear expenditure assignments to SNAs are implemented

Adequate level of transfers permits some discretion in service delivery

Risks

Persistent problems of coordination between key national agencies (despite improvements) delaying program implementation

Inequitable distribution of transfers, based on negotiations between central and local administrations, may delay achievement of reform goals

Line ministries delay assignment of functional responsibilities

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

At least 50% of relevant SNA officials trained in financial management procedures by 2014 (including all relevant female district and municipal officers)

Council deliberation systems, coaching, and support developed and implemented by 2014

MEF and NCDD-S annual IP3 reports

NCDD-S annual IP3 reports

Appendix 1 13

Ap

pe

ndix

4 1

3


Baselines



and Risks

Project Outputs

1. Rural district offices

2. Expenditure and revenue assignments and fiscal transfers designed and implemented

3. Development of the SNIF

4. Capacities for efficient decentralized public financial management developed

All women councilors trained

District charters adopted by all district councils

At least 30 new district offices built by 2015 with adequate facilities for women and children’s consultative committees

At least four advisory studies on relevant topics of fiscal decentralization by 2014

SNIF designed with resources for implementation in 2014

SNA computerized database and reporting system

Seminars on key SNA policy issues such as conditional grants and restructuring the LFD

Project six monthly reports, MoI

MEF project implementation reports



Activities with Milestones

1.1 Annual review of the National Strategy and Program for Subnational Democratic Development Reforms

1.2 Regular gender analysis of the impact of reforms 2.1 Policy and Program Management Department established and

officials appointed 2.2 Current human resources policies reviewed and temporary

arrangements for SNAs reviewed 2.3 Design for standard district and municipal buildings prepared,

site selection criteria clarified 3.1 Functional reviews of priority ministries completed, prior to the

piloting of functional assignments 4.1 General mandates of districts, municipalities, and communes

developed and approved 4.2 Policy paper on tax and nontax revenue assignments to SNAs

discussed by the MEF and NCDD-S. Consultations held on implementing regulations

5.1 Subdecree on the SNIF approved and resources allocated by the government to initiate implementation of the facility

6.1 Subnational Finance Law approved and implementation started 6.2 Implementing regulation for subnational financial management

procedures, budget classification, and chart of accounts approved and implementation started

6.3 Capacity needs assessment of the Local Finance Department of the MEF finalized and recommendations implemented

7.1 Operations manuals on council meetings and public forums developed

7.2 District charters finalized and approved

Inputs

ADB: $37.46 million for subprogram 1: (i) $23.97 million for policy-based lending (ii) $13.49 million for a project loan (infrastructure

investment and institutional and capacity development)

ADB: $25 million equivalent for subprogram 2 Capacity development TA: $ 800,000 The Government will contribute with office space, transport, national staff per diem, and communications.

ADB = Asian Development Bank, HR = human resources, IP3 = Three-Year Implementation Plan, LFD = Local Finance Department, MEF = Ministry of Economy and Finance, MOI = Ministry of Interior, NCDD-S = National Committee for Democratic Development at the Subnational Level, NIS = National Institute of Statistics, SNA = subnational administration, SNIF = Subnational Investment Facility. Source: Asian Development Bank.

14 Appendix 2

LIST OF LINKED DOCUMENTS http://adb.org/Documents/RRPs/?id=41392-013-3

1. Loan Agreement

2. Project Agreement

3. Sector Assessment (Summary): Public Sector Management

4. Project Administration Manual

5. Contribution to the ADB Results Framework

6. Development Coordination

7. Financial Analysis

8. Country Economic Indicators

9. International Monetary Fund Assessment Letter

10. Summary Poverty Reduction and Social Strategy

11. Gender Action Plan

12. Risk Assessment and Risk Management Plan

13. List of Ineligible Items

Supplementary Documents

14. Program Impact Assessment

15. Capacity Development Technical Assistance

16. List of Compliance Documents Required

Appendix 3 15

Ap

pe

ndix

4 1

5

16 Appendix 3

Appendix 3 17

Ap

pe

ndix

4 1

7

18 Appendix 3

Appendix 4 19

Ap

pe

ndix

4 1

9

POLICY MATRIX AND MEDIUM-TERM DIRECTION/GOALS

Objectives and Policy Actions

Subprogram 1 (Phase 1)

Summary of Actions Accomplished Under Subprogram 1 (2010–2012)


Milestones for Subprogram 2 (2012–2014)

Post-Program Partnership Framework

A. Strengthening the institutional framework for the implementation and coordination of subnational democratic development (SNDD) reforms

1. Developing the policy and regulatory framework for reforms

1.1 Policy Design and Implementation Strategy for SNDD reforms developed (Achieved)

1.1.1 National Program for Sub-

national Democratic Development (2010–2019) approved

1.1.2 Three Year Implementation Plan (2011–2013) approved by the NCDD-S

1.1.3 Gender concerns mainstreamed in the IP3 and gender experts appointed at the NCDD-S

Implementation strategy for SNDD reforms reviewed and updated

1.1 Development and approval of

the gender-responsive second 3-year implementation plan (2014–2016)

1.1.1 Midterm review, annual implementation reports (including gender assessments) of IP3 implementation plans conducted and publicly discussed, with recommendations covered in forthcoming plans

A gender-responsive policy framework that guides the long-term vision of subnational democratic reforms, and is anchored on regular consultative mechanisms

2. Establishing the institutions for efficient coordination and design of SNDD policies

2.1 NCDD-S organizational structure approved, with a clear mandate established, and with capacity for the generation of policy proposal. (Achieved)

2.1.1 Policy Analysis and Development Division established and all positions appointed with high-quality professionals

2.2 Subcommittees of the NCDD fully appointed and having held meetings as required

2.3 Draft strategy for gender-responsive human resources management at

the subnational level prepared by the state secretariat for the civil service

2.1 NCDD-S fully staffed with increasing national budgetary allocation for its operating expenditures

2.2 Develop permanent regulations for human resources management by SNAs

2.2.1 Draft civil service code prepared and discussed by the NCDD-S subcommittee

2.2.2 Implement legal reforms required for the alignment of critical pieces of legislation (in particular the Public Finance Law) with the D&D laws

2.2.3 Quota of 20%–50% women amongst new recruits for civil service positions

2.2.4 Target of 30% women amongst new recruits of national and SNA advisors

Establishment of strong institutions for reform design and implementation that are fully financed by recurrent resources Development of human resources management systems that endow SNAs with authority over the selection, promotion, and firing of their associated civil servants

20 Appendix 4







B. Assigning clear responsibilities for service delivery to the subnational levels of administration

3. Service delivery responsibilities of subnational administrations

3.1 Develop and implement the legal framework for the assignment of clear functional responsibilities to subnational administrations (Achieved)

3.1.1 Subdecree on strategy for functional assignments to SNAs approved

3.1.2 Manuals for functional mapping and reviews developed by the NCDD, which integrate gender mainstreaming needs

3.1.3 Subcommittee on functional assignments and resources active

and holding meetings as required

3.1.4 Functional mapping process at priority ministries started

3.1 Proposals for the reassignment of functions at priority line ministries approved with implementation started

3.1.1 Finalize mapping and functional reviews in the priority line ministries

3.1.2 Government subdecree on functional assignments across levels of administration issued

3.2 First set of sector functions piloted at SNAs

3.3 Evaluation of pilots for functional reassignment includes an assessment of gender impacts

Increase coverage of public services and access to district officials by designing and providing funding for 40 district offices in rural areas

Clear and sequentially implemented functional assignments to SNAs that distinguish between delegated and decentralized functions Functional assignments incorporated into government regulations together with systems for their continuous review and amendment

C. Endowing subnational levels of administration with adequate revenue collection capacity

4. Assigning tax and nontax revenue sources to subnational administrations

4.1 Assignment of property tax revenues to the provincial administrations (Achieved)

4.1.1 Policy paper on tax and nontax revenue assignments to SNAs discussed by the MEF and

NCDD-S

4.1 Tax and nontax revenue sources at the subnational level assigned

4.1.1 Subdecree on own revenue sources for SNAs approved

Differentiated and efficiently designed revenue assignments to SNAs that provide adequate own-revenue collection capacity Revenue assignments (including tax and nontax) incorporated into government regulations together with systems for their continuous review and amendment

D. Designing equitable, efficient, and adequate intergovernmental fiscal transfers for subnational authorities

5. Implementing unconditional transfers to ensure

5.1 District/Municipal Fund approved with implementation started (Achieved)

5.1.1 Subdecree on the

5.1 Formula for distribution of D/M Fund (including all subcomponents) published with budget documents

Unconditional transfers defined that assign funds on the basis of

Appendix 4 21

Ap

pe

ndix

4 2

1







comparable levels of service delivery across SNAs

District/Municipal Fund approved as a discretionary source of

financing that establishes budget separation

5.1.2 District/Municipal Fund includes a development, discretionary, and formula-based component that receives increasing allocations over and above the expenditures on salaries and operations and maintenance

5.2 Subdecree on the SNIF drafted by the NCDD-S, with involvement of gender experts (Achieved)

5.2.1 Policy paper on SNIF design options discussed by NCDD-S and MEF

together with data sources and weight factors used in the

estimation of shares

5.1.1 Timely and transparent

release of D/M and C/S fund allotments to jurisdiction

5.1.2 Review of first years of operation of the D/M Fund with consideration of options for policy and operational strengthening

5.2 Subnational Investment Facility established and fully operational

5.2.1 Subdecree on SNIF approved defining the regulatory framework and institutional and organizational structure

5.2.2 Adequate resources appropriated in the 2014 budget to initiate implementation of the facility

5.3 Conditional grants for delegated functions to SNA on the basis of service delivery standards designed and implemented

5.4 Reforms of the financing modalities for provinces implemented

5.4.1 Conduct review of current financing modalities for provinces and define options for reform

both expenditure needs and

revenue collection capacity to SNAs SNIF channels increasing volume of resources for local investment, rewarding good project formulation under a competitive selection process Clear technical criteria development for the design of conditional grants devoted to the financing of delegated functions to SNAs

E. Ensure sound financial management at the SNA level

6. Developing the regulatory framework for an efficient system of decentralized public financial management

6.1 Establishment of the legal foundations of a decentralized system of financial management (Achieved)

6.1.1 Sub-national Finance Law approved and implementation started

6.1 Consolidation of the legal foundations of a decentralized system of financial management

6.1.1 Regulation on the management procedure of public property at subnational administration enacted with implementation started

Fully implemented Sub-national Finance law and associated regulations providing a comprehensive framework for intergovernmental fiscal relations and local public

22 Appendix 4







financial management

6.2 Subdecree for subnational financial management procedures approved (Achieved, document pending)

6.2.1 Regulation on the management procedure of public property at subnational administration drafted

6.3 Capacity needs assessment of the Local Finance Department of the MEF finalized and recommendations being implemented

6.4 District and municipal office of the

MEF – Local Finance Department created and operational

6.2 Capacity of the National Audit Authority to audit SNAs strengthened

6.2.1 Develop SNA-specific audit procedures and tools

6.2.2 Recruit, train, and assign auditors to perform the internal audit function of SNAs, promoting improved female representation

6.3 Circulars for the Subnational Budget Classification and Chart of Accounts approved

6.4 Guidelines for district and municipal budget preparation, execution, and audit, and for accounting and payment procedures are approved, which includes the involvement of WCCCs

6.5 District and municipal officers trained on financial management procedures and all relevant implementing regulations of the Sub-national Finance Law

6.5.1 Ensure all female district and municipal officers are trained on financial management procedures and gender-responsive budgeting

6.6 Gender-responsive budgeting guidelines developed and dissemination started across SNAs

6.7 Capacity of the MEF to monitor subnational administration finances strengthened

6.7.1 Implementation of a

capacity development plan for policy analysis and implementation of the Local Finance Department

Establishment of internal and external audit mechanisms for SNAs that ensure adequate transparency in the use of public funds Regular capacity building systems for district financial officers designed and implementation started, ensuring adequate participation of female officers Oversight capacity of the MEF for SNAs financial management development, including the production of annual expenditure and revenue reports of SNAs

Appendix 4 23

Ap

pe

ndix

4 2

3







F. Foster accountability of SNAs towards their constituencies/jurisdictions

7. Develop and implement council deliberation systems, coaching, and support

7.1 Develop and implement council deliberation systems, integrating gender perspectives and gender equity concepts (Achieved)

7.1.1 Draft technical manuals for subnational council meetings and public forums finalized and piloted, that promote gender-sensitive processes promoting equal opportunities for participation .

7.2 District charter template developed by the NCDD-S (Achieved)

7.1 Coaching and mentoring systems and procedures developed and documented

7.1.1 Technical manuals for subnational council meetings and public forums finalized and training delivered to all districts, with all female councilors trained

7.1.2 Affirmative targets for the recruitment of trainers and coaches to increase the share of women

7.2 District charters adopted by all district councils

Participatory mechanisms extend to the preparation of participatory planning and budgeting processes, with a view to incorporate gender aspects in local plan and budget formulation

Note: Triggers are listed in bold.