Comments on Agriculture/Rural Development in the IFAPER National Workshop 20 October 2003

Issues Framework for public expenditure Quantity of public expenditure Quality of public expenditure – composition Quality of public expenditure – service delivery

Framework Overall vision - Contribution of rural-based economy to growth and poverty reduction – agriculture is one important part of this Role of different actors – public vs. private sector, ministries, levels of government in achieving vision Policy tools – public expenditure, tax, trade, regulations, etc. Role of public expenditure - support a well- functioning, efficient, rural private sector not dependent on income transfers

Quantity Need to better define basis for “agricultural” or “rural sector” expenditures Agricultural spending is typically about 6 to 7% in LDCs and about 3% in MDCs compared to almost 2% (?) in Cambodia – but only captures RGC Need to improve budgetary process to capture different sources of expenditures – RGC, ODA – for strategic alignment, transparency and accountability – MTEF linked to NPRS Composition and quality matter more than quantity

Quality - composition Focus should be on public goods (infrastructure and research) rather than subsidies – applied to donors & RGC expenditures Agricultural pricing subsidies/SOEs – WTO, “unregulated monopolies” Shift agricultural support services of private goods to the private sector – research, extension, seeds Adequate funding for recurrent costs – declines for salaries and O&M worrisome/ODA impacts Concentration of expenditures – subsectors (forestry and fisheries) and crops (rice)

Quality – service delivery Incentives – public expenditure reform but what can be done now at ministry level? Decentralization – demand responsive services (administrative autonomy, PAP, commune/sangkat funds) Cost recovery – irrigation, services to groups Responsibility should be accompanied by resources, flexibility and accountability

Conclusions - priorities Define “rural economy expenditures” based on vision, institutional roles, instruments Develop MTEF ministry by ministry and then consolidate – don’t lose accountability Discipline RGC & donor expenditures towards public goods and recurrent costs – budget support Align incentives of users (cost recovery) and providers (administrative and fiscal decentralization)