FISCAL DECENTRALIZATION CAMBODIA AND ELSEWHERE

SUB-NATIONAL REFORM AND PUBLIC FINANCIAL MANAGEMENT FOUR MAIN THEMES Sub-national administration (SNA) geography SNA governance at a glance SNA finances Receipts Disbursements SNA concepts of decentralization

The geography of SNA World look Brazil State of Parana Paraguay Neighbors Malaysia Thailand

A QUICK WORLD LOOK World population about 6.6 billion Population lives in small cities Here are some questions oHow many cities over 10 million population? oIncluding how many over 1 million? oWhat number is Phnom Penh? oWhat is population of city number 1,000 oWhat is population of city number 2,000 oWhat is population of city number 3,000

ANSWERS TO QUESTIONS No. Over 10 million 8 Over 1 million311 Phnom Penh505 Population City no. 1,000357,000 City no. 2,000176,000 City no. 3,000118,000 77% of population lives in cities of less than 120,000 23% live in 3,000 cities with population greater than 120,000

BRAZIL Population (million)190 States 26 BRAZIL--PARANA STATE Population (million) 10.5 Cities 400 Pop. avg. per city (000) 26.2 Per capita income (US$) 13,867

PARAGUAY Population (million) 6.8 Provinces 17 Cities 236 Pop. avg. per city (000) 28.9 Per capita income (US$) 1,982 CAMBODIA Population (million) 14.2 Provinces 24 Districts 185 Cities 1,621 Pop. avg. per city (000) 8.7 Per capita income (US$)540

OBSERVATIONS Brazil and Paraguay have states and cities or TWO levels of sub-national administrations Cambodia has provinces, districts and communes or THREE levels of sub-national administrations. The average size of Cambodian communes at 8.7 thousand is considerable less than average size in most of the world

SNA GOVERNANCE AT A GLANCE North and South America State/province- Governors elected, Board of Governors elected Cities- Governing board elected which elects a president of the board

TALK POINTS Budgets Political parties Legislation Execution Accounting records Bank accounts Cash disbursements

SNA FINANCIAL MANAGEMENT Each SNA is a legal entity  It has a budget o Revenues o Expenditures o Balanced  To understand decentralization o Understand cash flow o Understand types of revenues o Understand types of expenditures o Understand current operations o Understand capital operations

SAMPLE SNA

QUICK REVIEW 11 large cities, thousands of smaller Average population less than 30,000 All SNAs operate with a budget Understand money in money out –Ordinary –Capital Decentralization concepts next section COFFEE BREAK

Centralization Example The Cambodian provincial government –The budget Line department at province Negotiated with MEF –Source of funds Transfers from National Treasury Treasury account for each line department Deposits of local revenues Centralized with some delegation

Decentralization Example Local revenue decision Local disbursement decision

The Decentralized Profile Local source revenue 30% Government transfers 70% 100% Unconditional income –Local source revenues 30% –Government transfers 35% 65% Conditional from gov’t 35% 100%