Royal Government of Cambodia Ministry of Economy and

Royal Government of Cambodia Ministry of Economy and Finance General Department of Finance for Sub-national Administration State Budget Allocation to Sub-national Administrations Presented by : Mr. Hoy Vicheth Asian Public Governance Forum on Local Finance Management. Lombok, Indonesia. May 7 -8, 2015. 1

Contents 1. Cambodia at a Glance 2. Administration System 3. Sub National Administrations (SNA) Budgeting 4. Summary of SNA’s Annual Budget 5. Challenges

1. Cambodia at a Glance Kingdom of Cambodia • Capital: Phnom Penh • Area: 181 035 KM 2 • Border: Thailand, Lao, Vietnam. • Population: >15 M • Language: Khmer • Currency: Riel • Religion: Buddhist

2. Administration System

3. Sub National Administration (SNA) Budgeting. Ø Capital/ Province Budget (CP Budget) Ø District/ Municipality Funds (DM Fund) Ø Commune/ Sangkat Funds (CS Fund)

3. 1. Capital/ Province (C/P) Budget • The central government transfers state budget in a rate of 0. 96% of current national revenue to C/P. • The CP also have their own source(tax) revenues. • Increment rate of CP budget 2015 is 17. 65% compared to CP budget 2014. 6

3. 1. Capital/ Province (C/P) Budget (Cont. ) The C/P budget allocates based on the following indicators and formula as below: • Admin Operation was allocated; Ø Equal shares: 40% Ø Number of councilors: 20% Ø Number of Board of Governor: 20% Ø Number of staff: 20% • Local development component was allocated; Ø Equal shares: 40% Ø Number of population: 20% Ø Poverty scores: 20% Ø Number of Districts/Municipalities: 20% 7

3. 1. Capital/ Province Budget (Cont. ) CP Budget Allocation (2010 -2015) Year Amount (in million $) 2250 2200 2010 80. 59 2011 88. 30 2012 105. 64 2150 Amount (in million $) 2100 Year 2013 124. 23 2014 158. 23 2015 186. 16 TOTAL 743. 15 2050 2000 1950 1 2 3 4 5 6 8

3. 2. District /Municipality Funds • Royal Government of Cambodia has been transferred state budget to DM fund in the following rate; Ø 0. 80% of current revenues (2012 -2015) Ø 0. 90% of current revenues (2016) Ø 1% of current revenues (2017 -2019) 9

3. 2. District/ Municipality Funds (Cont. ) The DM fund allocates based on the following indicators and formula as below: • Admin Operation was allocated; Ø Equal shares: 40% Ø Number of councilors: 20% Ø Number of Board of Governor: 20% Ø Number of staff: 20% • Local development component was allocated; Ø Equal shares: 40% Ø Number of population: 20% Ø Poverty scores: 20% Ø Number of Commune/Sangkat: 20% 10

3. 2. District/ Municipality Funds (Cont. ) • The DM fund in 2015 had allocated for two component as the following: Ø 75. 57% for administrative component Ø 24. 43% for development component • Annual increment rate of DM funds 2015 is 14. 64% compared to DM funds in 2014. 11

3. 2. District/ Municipality Funds (Cont. ) DM Fund allocation (2013 -2015) Year Amount (in million $) 2035 2030 2013 14. 42 2025 Amount (in million $) 2020 2014 Year 16. 74 2015 19. 19 TOTAL 50. 35 2010 2005 1 2 3 12

3. 3. Commune/ Sangkat Funds (CS) • Royal Government of Cambodia (RGC) has allocated CS funds firstly in 2002. • Royal Government of Cambodia (RGC) has to transfer the State budget into CS funds account (2002 -2018) in a rate from 2% - 2. 80% of the approved annual national budget in the previous year. • Transferring of CS Fund to CS Account will be made in 4 installments as below: - 1 st Installment : 25% of total CS fund in earlier 1 st quarter - 2 nd Installment : 25% of total CS fund in earlier 2 nd quarter - 3 rd Installment : 25% of total CS fund in earlier 3 rd quarter - 4 th Installment : 25% of total CS fund in earlier 4 th quarter 13

3. 3. Commune/Sangkat Funds (Cont. ) • CS fund is allocated in two different components; 1. Admin component (not exceed 1/3 of total fund) 2. Development component (not less than 2/3 of total fund) 14

3. 3. Commune/Sangkat Funds (Cont. ) Ø The Administrative Operation component allocates based on the following indicators and formula; - Equal share 30% - Number of CS councilors 60% - Poverty score 10% 15

3. 3. Communes/Sangkat Funds (Cont. ) Ø The Local development component allocates based on the following indicators and formula; - Equal share = 30% - Number of population in CS = 30% - Poverty score = 30% - Number of villages in CS = 10% 16

3. 3. Commune/ Sangkat Funds (Cont. ) • Total CS funds in 2015 is US$ 67. 15 million (in average, each CS has received US$ 21, 138 for general admin operations component and US$ 19, 983 for local development component) • Average annual increment rate of CS fund 2015 is 14. 62% compared to CS fund in 2014 17

Summary of CS Funds Allocation in 14 years (2002 -2015) Year Amount )in million Riel ( (in million US$ ( 2002 30, 688 7. 87 2003 51, 420 13. 18 67. 56% 2004 58, 000 14. 5 12. 80% 2005 66, 100 16. 32 13. 97% 2006 77, 814 18. 98 17. 72% 2007 89, 550 21. 84 15. 08% 2008 93, 025 22. 97 3. 88% 2009 113, 340 27. 64 21. 84% 2010 148, 649 35. 82 31. 15% 2011 159, 400 38. 41 7. 23% 2012 181, 990 44. 94 14. 17% 2013 204, 141 50. 41 12. 17% 2014 237, 266 58. 58 16. 23% 2015 271, 954 67. 15 14. 62% TOTAL 1, 783, 337 438. 61 Increment rate (%) 18

4. Summary Budget Allocation to SNA 2015 1. CS budget 2015 : 271, 954 million Riels (US$ 67 m) 2. DM budget 2015 : 81, 302 million Riels (US$ 20 m) 3. CP budget 2015 : 753, 940 million Riels (US$ 186 m) GRAND TOTAL SNA BUDGET 2015: 1, 1071, 96 million Riels EQUIVALENT: US$2 73 million 19

5. Challenges for Sub National Administrations § The budget for SNAs’ is low. § Most of annual budget (over 70%) is to cover staff salary and operation costs and the budget for local development is very tight. § Lack of human resources at SNAs § Lack of equipment at SNAs § The financial management system is new to SNAs. 20

THANK YOU 21