1 adb grant 0133-cam: public financial management in rural development ministries (component 1) news...

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ADB Grant 0133-CAM: Public Financial Management in Rural Development

Ministries (Component 1)

News and Developments of the Public Financial Management Reforms in MOWRAM

March 26, 2010, SOKHA HOTEL

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Processes of Public Financial ManagementMULTI-YEAR

PLANNING AND BUDGETING

ANNUAL BUDGETALLOCATION OF

CASH TO MINISTRIES

BUDGET EXECUTION:Internal control,

Revenue Collection, Procurement,

Expenditure Control

ACCOUNTINGBUDGETARY

CONTROL REPORTING

ANNUAL FINANCIAL

STATEMENTS

INTERNAL AUDIT – part of

internal control

EXTERNAL AUDIT – external opinion

PERFORMANCE REPORTING: Achievement of objectives, value for

money

POLICY

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The Public Financial Management Reform Program

• Implemented since 2004.

• Designed as four ‘platforms’ of progressive improvement, with the following objectives:

Platform 1: Making the budget more credible in terms of timely and effective delivery of funds to budget managers.

Platform 2: Implementing effective financial accountability.

Platform 3: Linking policy to the budget to create a fully affordable policy agenda.

Platform 4: Integrating performance accountability and financial accountability.

3ADB Grant 0133-CAM: Component 104/19/23

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PFM Reform Program in Cambodia 4 platforms of PFM development

Platform 1 - More credible budget

Platform 2 - Effective financial accountability

Platform 3 – affordable and prioritized policy agenda

Platform 4 – effective performance accountability

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• The first stage of PMFRP concentrated on Platform 1 and was mainly focused at Ministry of Economy and Finance. The target of achieving a more credible budget was achieved in 2006.


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Budget Credibility – Platform 1

Since implementation of Platform 1 …. There is more certainty that resources for

ministries will be:1. Available as envisaged in the budget2. Released on time to ministries

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Results achieved in Platform 1 …. Improvements have been made to:• Law on State Budget System• Budget classification / chart of accounts • Macrofiscal discipline• Budget preparation and management systems• Debt management• Tax revenue administration• Commitments and payment request system• Decreasing use of cash• Closing unnecessary bank accounts and

strengthening the Treasury Single Account

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Results achieved in Platform 1 …. • Capacity has improved: short and long term

training, etc• Recruitment better linked to budget

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• We are now in Stage 2 of PFMRP which is mainly concerned with implementing Platform 2, that is improving the financial accountability of budget managers.

• This stage therefore involves managers in all ministries, departments and agencies of the Royal Government of Cambodia, at national and sub-national level.


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Implementing stage 2

• It is now possible to:• Focus on those who are responsible for using

the budget resources • Enable a fairer emphasis on accountability for

the use of resources• Give greater empowerment to those using

budget resources• Have greater visibility and transparency on

the use of resources

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Main objective of financial accountability:• Managers should be able to show how they have used the money

they have been entrusted with. Systems needed: • Good records of budgets and actual transactions, so that regular

comparisons can be made and differences explained. • Achieved by installing Financial Management Information System

(FMIS).• Installation of FMIS will require improvements to many work

processes and controls in ministries.Planning:• The master document for PFMRP Stage 2 is the Consolidated Action

Plan (CAP 2). • Based on this, ministries have produced their own Ministry Action

Plans (MAP).


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Platform 2 /CAP2 Core Areas

1. Continue P1 activities, including rollout to line ministries at central and provincial levels

2. Implement P2 activities

3. Advance work on activities for later platforms

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SUMMARY OF WORK UNDER PFMRP STAGE 2 – CAP2

Platform 1 – more credible budget

Platform 3 – fully affordable policy agenda through policy budget linkage

Platform 2 – effective financial accountability

4 OBJECTIVES FOR FURTHER - Revenue policy and administrationSTRENGTHENING: - Debt management

- Cash and bank a/c management - Public procurement

8 OBJECTIVES BUILDING ON PLATFORM 1: - Roles, functions and responsibilities - Incentives and sanctions - Budget classification & chart of accounts - Budget execution and transactions - Accounting and financial reporting - Internal auditing / inspection - Fiscal decentralisation - Institutional capacity and motivation

2 OBJECTIVES FOR ADVANCE WORK: - Improve & extend program budgeting - Comprehensiveness and integration of budget

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Ministry Action PlanThe MAP for MOWRAM follows the suggested structure given in the

CAP2. There are five areas of reform activities.

Revenue Administration and Policy: (not relevant): input to non fiscal revenue policy, Review of prices, and Improving capacity of revenue collectors.

1. Budget Preparation: This is a major area. Work includes: – defining the roles and responsibilities of budget managers– extending the budget classification – extending program budgeting – integrating the different budgets which are used at the

moment (program budget, non-program budget, project budgets)

– improving budget reporting.


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Ministry Action Plan

2. Budget Implementation: Another major area Includes:

– cash planning,

– improvements to procurement,

– streamlining the approval of payments,

– improving the accounting and reporting system so that it is ready for transition to the FMIS.

3. Audit and Monitoring: This area covers the role and effective operation of internal audit, which is a vital part of the system to improve accountability.


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Ministry Action Plan

4. Financial Management Information System: This is not just a ‘computer project’. Introduction of the FMIS will require proper documentation of existing systems and proposed new systems, changing of workflows, training and change management. It will affect the work of financial managers and line managers and provide them with greatly improved information.

5. Capacity Development: This area covers the functional review of the ministry, recruitment retention and job rotation policies, identification of skills gaps, training needs and plans, and motivation.


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MOWRAMPFM Working Groups ???

e.g. MAFF has set up a PFM Working Group and five subgroups, as follows:


Subgroup Number

Name Areas of MAP covered

Subgroup 1 Strategic Policy Area 2

Subgroup 2 Setting up policies and income-expenditure management

Areas 1 and 3

Subgroup 3 Information policy management Area 5

Subgroup 4 Capacity building management and functional analysis

Area 6

Subgroup 5 Monitoring & Evaluation and Auditing Area 4

MOWRAM could ensure the PFM Working Group Structure by learning from MAFF or MRD.

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Minister

Working DirectorH.E. Lord Reaksmey

Vice DirectorMr. Doung Bunny

Coordinating Officer

Mr. Hong Bonaka

Administration Officer

Miss Mol Sokary

Vice DirectorMr. Hong Narith

Controller OfficerMr. Ngoun Soty

Subgroup 1

Strategic Policy

Subgroup 2

Setting up Policies and

Income/expenditure Management

Subgroup 3

Information Policy Management

Subgroup 4

Ability Management and works analysis

Subgroup 5

M & E and Auditing

MINISTRY OF AGRICULTURE, FORESTRY AND FISHERIESPFM Organization

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Strategic Framework of the Royal Government of Cambodia

STRATEGIC FRAMEWORK• Government’s Rectangular Strategy (Stage II)• National Strategic Development Plan (Ministry of

Planning)• Third Socioeconomic Development Plan (SEDPIII:

2005-2010)• Sector Development Plans – (SDP)

MAFF/MOWRAM/MRD• External Development Partner programs

(Example ADB /World Bank /EU) e.g. ADB’s


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SECTOR: STRATEGIC DEVELOPMENT PLAN (SDP)• How these are linked to the national plans?MOWRAM:

– Foundation 1: RGC Rectangular Strategy Phase II;– Foundation 2: Sub-decree on the establishment of

MOWRAM;– Foundation 3: National Policy on Water Resources

Sector.


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EXTERNAL DEVELOPMENT PARTNER PROGRAMS• Asian Development Bank (ADB)

– ADB country strategy and program 2005–2009• (i) intensifying agricultural productivity and diversifying

livelihoods; • (ii) supporting rural development policy and institutional

arrangements to coordinate sector interventions• (iii) promoting rural development through Tonle Sap • (iv) strengthening water resources and integrated river basin

management for sustainable natural resource management, • (v) supporting PFM for rural development ministries • (vi) sustaining rural livelihoods - sub-regional “new agriculture”

solutions• AusAID / Other bilateral organizations


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EXTERNAL DEVELOPMENT PARTNER PROGRAMS• World Bank (WB)

– Microfinance– Garment Sector– Land Titling– Aid Coordination– Public Finances– Oil and Gas Revenue

• AusAID / Other bilateral organizations


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EXTERNAL DEVELOPMENT PARTNER PROGRAMS• AusAID

– First, it supports research that aims to increase and secure the productivity of rice-based farming systems.

– Second, it supports applied R&D that underpins agricultural diversification, particularly into non-rice field and horticultural crops and ruminant livestock.

– A third thrust recognises the vulnerability due to climate variability and change.

– Cambodia Agricultural Value Chain Program (CAVAC)


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Strategic Development Plans

MINISTRY OF WATER RESOURCES & METEOROLOGY

2009-2013• Elements:

– Review of the 2004-2008– Sector Analysis– Mission & Goals & Objectives– Strategy– Action Plan


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MINISTRY OF WATER RESOURCES & METEOROLOGY 2009-2013

• Activities– Irrigation – Construction & Rehabilitation– Irrigation – Maintenance – Dams – Maintenance – Canals - Construction & Rehabilitation– Drought Intervention, flood mitigation & Management– Hydrology & Meteorology – Human Resource Development


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2009-2013• Linkage with National Strategy

– First: Rectangular Strategy• Promoting agriculture sector• Rehabilitation & construction of physical infrastructure• Developing private sector & job creation• Human resource development


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– Second: Sub-decree of establishing MOWRAM• Degree 58, June 30, 1999 – Mandate:

– Define policies for the sector /prepare & implement law – Study water resources– Develop & conserve water resources– Manage water resources & mitigate risk– Provide meteorological & hydrology information


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– Third: National Policy on Water Resources• Vision:

– Provision of safe water at reasonable price for all citizens– Supply sufficient water for agriculture, industry & economic

activities– Respond to and minimize water related hazards– Keep water resources free from pollution

{Note: MOWRAM cooperates closely with MAFF for water strategy}


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Strategic Development PlansLinkage Tool: Logical Framework


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• Goal: the higher order objective to which a development intervention is intended to contribute

• Outcome (or Purpose): the likely or achieved short-term and medium-term effects of an intervention’s output

• Outputs: the products, capital goods, and services which result from a development intervention; may also include changes resulting from the intervention which are relevant to the achievement of outcomes.

• Inputs: the financial, human and material resources used for the development intervention

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• What is the difference between outcome and outputs?• Example:Goal: Everyone riding a motorbike must wear a helmet!Input: The number of police hours employedOutputs: The number of fines given to motorbikes stopped by

the policeOutcome: The number of motorbike riders wearing helmets

increasesThe above illustrates that monitoring outcomes is the most

definitive way of informing whether an objective is being realized.

1 adb grant 0133-cam: public financial management in rural development ministries (component 1) news...

Documents

budget credibility platform

budget resources

adb grant

implementation of platform

pfm reform program

stage of pmfrp

effective delivery of

affordable policy agenda