1. ADB Grant 0133-CAM: Public Financial Management in Rural Development Ministries (Component 1) Linking Strategic Plans with Budgets January 28, 2010

2. Session 4: Day 4 Contents of Presentation EXERCISE 1 Question 1: What is the meaning of NSDP and SDP? Define the relationship between NSDP and SDP, then highlight the main elements of SDP for your department/entity (under MAFF/MRD/MOWRAM) Answer 1a: NSDP is the National Strategic Development Plan (Ministry of Planning) SDP is Sector Development Plan MAFF/MOWRAM/MRD 2ADB Grant 0133-CAM: Component 110/24/2015

3. Session 4: Day 4 Contents of Presentation EXERCISES Question 1: What is the meaning of NSDP and SDP? Define the relationship between NSDP and SDP, then highlight the main elements of SDP for your department/entity (under MAFF/MRD/MOWRAM) Answer 1b: The NSDP is the foundation for the SDPs and it is referred to in the MAFF SDP. However, in MRD and MOWRAM their mandates are quite specific and therefore they refer to mandates and sector policies – while MAFF plays a larger role is fulfilling the goals and objectives of the NSDP through it own Sector Development Plan (SDP). 3ADB Grant 0133-CAM: Component 110/24/2015

4. Strategic Development Plans MINISTRY OF AGRICULTURE, FORESTRY & FISHERIES 2006-2010 Answer 1c: Elements: – Review of the 2001-2005 – Sub-sector analysis Rice & crop production Animal health & production Rubber production Fisheries activities Forestry activities – Vision, Mission, Goals & Objectives for sector and sub-sector – Strategy – Action Plan – MAFF Budgeting plan & Strategy 4ADB Grant 0133-CAM: Component 110/24/2015

5. Strategic Development Plans MINISTRY OF WATER RESOURCES & METEOROLOGY 2009-2013 Answer 1c Activities – Irrigation – Construction & Rehabilitation – Irrigation – Maintenance – Dams – Maintenance – Canals - Construction & Rehabilitation – Drought Intervention, flood mitigation & Management – Hydrology & Meteorology – Human Resource Development 5ADB Grant 0133-CAM: Component 110/24/2015

6. Strategic Development Plans MINISTRY OF RURAL DEVELOPMENT Answer 1c Vision and aims: – Rural poverty reduction – Capacity Building & Human resource development – Integrated local planning – Rural water supply – Primary health care & rural sanitation – Rural economic & rural community development 6ADB Grant 0133-CAM: Component 110/24/2015

7. Question 2: What is the meaning of Logical Framework? The log frame is a conceptual and analytical tool for undertaking sector analysis, project planning and project management. The log frame matrix layout is shown ….

9. 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 Meaning of terms

10. OutputPriority ranking Key activitiesIndicatorsSource of verification Assumptions and risks 1.4 Self- management and empowerment in farmers groups and village common works is achieved 2 1.4.1 Facilitate the transformation of self-help groups to farmer/villager organizations (FOs) 4000 FOs are registered by year 4 FO registration records. Attendance records from self- management capacity and skills training. Assumptions Registration of FOs becomes decentralized to the district level. Risks FOs do not collect enough revenue to become self- supporting. 1.4.2 Conduct participatory planning training for the implementation of community projects including safety net activities Participatory planning training conducted by year 3. Community projects are implemented using participatory planning techniques by year 3. Attendance records from participatory planning training. Community project planning document- ation.

11. Original table

12. Session 4: Day 4 Contents of Presentation EXERCISE 3 Question 3: What is the meaning of budget? Explain its rationale? 12ADB Grant 0133-CAM: Component 110/24/2015

13. Budget Structure of the Royal Government of Cambodia Answer 3: MEANING OF BUDGET & ITS RATIONALE Definition: A budget is a financial document used to project future income and expenses. The budgeting process is carried out by the government to estimate whether it can continue to operate service delivery and investment with its projected income and expenses. 13ADB Grant 0133-CAM: Component 110/24/2015

14. Budget Structure of the Royal Government of Cambodia Answer 3: MEANING OF BUDGET & ITS RATIONALE Rationale: – balanced budget a government’s use of resources for operating purposes does not exceed available resources over a defined budget period. – structural balance maintaining a balance between operating expenditures and operating revenues over the long term, not just during the current operating period. 14ADB Grant 0133-CAM: Component 110/24/2015

15. Budget Structure of the Royal Government of Cambodia Answer 3: MEANING OF BUDGET & ITS RATIONALE Principles: – Comprehensiveness: the budget cover all government entities and institutions – Unity: captures all revenues and expenditures – Universality: No offset – no net positions – Specificity: Information must be in the format required – Balance: Proposals for expenditure must be countered with proposals for savings 15ADB Grant 0133-CAM: Component 110/24/2015

16. Budget Structure of the Royal Government of Cambodia Answer 4: STRUCTURE OF THE GOVERNMENT BUDGET Administrative Classification: The budget signifies this classification by ministry but not lower. For example MAFF is code 17, MRD is 20, MOWRAM is 29 Economic Classification: Expenses, allowances for staff, staff salaries Period: One year 16ADB Grant 0133-CAM: Component 110/24/2015

17. Budget Structure of the Royal Government of Cambodia Answer 4: Main elements of budget {Article 13 of the Law on Public Finance System} Current Revenue – Group 1: Real Revenue Category 1: Tax Revenue Category 2: Non-tax revenue – Group 2: Revenue by Order Category 3: Revenue by order Capital Revenue – Group 1: Real Revenue Category 1: Revenue from own sources Category 2: Revenue from external sources – Group 2: Revenue by order Category 3: Revenue by order 17ADB Grant 0133-CAM: Component 110/24/2015

18. Budget Structure of the Royal Government of Cambodia Answer 4: Main elements of budget BUDGET EXPENDITURE 2007 Current Expenditure – Group 1: Real Expenditure Category 1: Operations & Maintenance Category 2: Financial expenses Category 3: Public intervention Category 4: Miscellaneous expenditure – Group 2: Expenditure for order and unforeseen expenditure Category 5: Expenditure by order Category 6: Unforeseen Expenditure 18ADB Grant 0133-CAM: Component 110/24/2015

19. Budget Structure of the Royal Government of Cambodia Answer 4: Main elements of budget BUDGET EXPENDITURE 2007 Capital Expenditure – Group 1: Real Expenditure Category 1: Repayment of borrowings Category 2: Fixed assets – Group 2: Expenditure by order Category 3: Expenditure by order 19ADB Grant 0133-CAM: Component 110/24/2015

20. Q5: Main points of correlation between Strategic Budget Plan and Annual Budget 1.SBP and Budget should be prepared using the same budget classification – Preferably this should have dimensions for economic items, administration structure, programme structure, function and funding 2.Annual budget must link directly to the first year of the SBP 3.SBP should be a rolling three year plan.. – Work each year should focus on forecasts for year 3 and minor changes for years 1 and 2, NOT a complete rewrite of the plan

21. Q5: Main points of correlation between Strategic Budget Plan and Annual Budget 4.SBP should be a ‘living plan’, not just something that is prepared in April-May – Agreed annual budget should be immediately reflected in the SBP 5.SBP must show future changes in recurrent costs that result from capital investment now 6.Estimates in the SBP should be backed up by good costing records. 7.SBP should distinguish ongoing committed plans, existing plans not yet started, and new plans.

22. Q5: Advantages of effective linkage between program plans, SBP and annual budget 1.Making three-year SBP estimates reduces the need to set over-optimistic annual budgets. 2.Annual budgets are easier to set, because planning has already taken place for the program and SBP. 3.The annual budget is linked to strategic plans, not made on an ‘incremental basis’. 4.Hence sectors and ministries can plan to progressively improve their operations and achieve longer term objectives. 5.MEF can plan to allocate resources to sectors targeted in national strategic plans.

23. Q5: Difficulties of linking program plans, SBP and annual budget 1.The master copies of three-year plans are often held at ministries, and are often significantly rewritten from year to year, which should be unnecessary. 2.Finance Ministry should hold master copy of agreed three-year plans. Submissions from ministries should focus on changes to this plan 3.Ongoing plans can be ignored if arbitrary budget cuts are made.