Transcript Linkages between Planning and Budgeting

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Linkages between Planning and Budgeting
Case of Cambodia
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Planning in Cambodia –
background
 Cambodia
is a planned economy, operating in a
market framework
 Development
targets, hence capital expenditures,
are planned through 5-year plans
 Each
5-yr plan sets growth targets at the sectoral
and sub-sectoral levels. It also sets institutional
targets, trade targets, targets for capacities, etc.
 While
the government makes investments in most
of infrastructure and social sectors; industry,
agriculture and services sectors are under the
investment domain of the private sector
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Some overlaps in domain
There is some overlap, though:
Both, the
government and private sector invest
and operate in the social sectors
The government investments in large irrigation
projects, though private sector also invests in
irrigation
Almost all public investment projects are
implemented through private contracting
agencies
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The modus operandi of planning 1

The planning authorities set aggregate and sectoral
annual growth rates. These are based on a political
consensus and the extant capacities in the country
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For each sector, there is a set incremental capital-output
ratio and capital-labour ratio
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These ratios help forecast resources and labour
deployment needs in the years to come

The government has a medium-term expenditure
framework (MTEF), which links the real and financial
sectors through pre-determined fixed coefficients
(between inputs and outputs) and prevalent prices
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The modus operandi of planning 2
Other than the political consensus:

Economic growth rates in the private sector are
determined based the investment rates – these
data are available through investment approvals
that the government makes
 Public
investments are determined, based on
allocation of resources and commitments made by
Finance Ministry (own resources) and ODA
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Financial planning
 Finances
for capital expenditure under the
plans are forecast, based on the requirements
of the real economy described above
 Based
on the MTEF, a 3-year forecast on
financial requirements is made, by sectors and
sub-sectors (3-year rolling plans)
 There
is a revision of the 3-year forecast each
year, based the exact progress, changing
prices and resources available
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Actual allocation
Actual allocations are made at two levels:
The
Finance Ministry makes allocations to the
implementing ministries/agencies, from both,
the government’s own revenues, and donor
finances routed through the finance ministry
Some donor commitments are disbursed
directly to the line ministries
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Harmonization of planning and
finances
 There
are at least three levels of
harmonization required:
Between
private (both FDI and national)
investment and public sector investment
(both ODI and own)
Between the government’s scheduling of
investments and donor commitments
Intra-donor coordination
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Current approaches
In the earlier years, there was a lot of mismatch
However, effort has now been made to
harmonize, align and become result-oriented,
and some effective progress has been made.
Some results can be seen in the next slide
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Concluding remarks – the way
ahead
 Financial
Sector Planning needs
strengthening in the sense that ODA
funding cycles and national needs must be
matched.
 Programme-based
approaches need
universal application to harmonize financial
and real sector planning
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Greater use of country systems can make
planning easier