This document summarizes Cambodia's perspective on program/performance budgeting for an OECD budget meeting. It outlines Cambodia's 4 stage approach to budget reform, focusing on budget credibility, financial accountability, budget-policy linkages, and performance accountability. It describes progress implementing program budgeting in 25 ministries by 2016 and all ministries by 2018. Key challenges include defining clear policy objectives and program structures, developing quality indicators, and transitioning budget execution procedures to accommodate program budgeting. Next steps involve building capacity, seeking advice on moving to performance-based budgeting, and revising financial system laws.

1. CAMBODIA’S PERSPECTIVE
ON
PROGRAM/PERFORMANCE
BUDGETING
OECD BUDGET MEETING
Bangkok, 17 December 2015
1By Mr. Hav Ratanak, Director of Department of Budget Formulation

2. Content
1- Platform Approach in Budget Reform System
2- Framework for Policy Linked Budget
3- Progress to date of PB Implementation in
Cambodia
4- Challenges
5- Next Step
2By Mr. Hav Ratanak, Director of Department of Budget Formulation

3. • Stage3: CAP3
(2016-2020)
• Stage4: CAP4
(2020-2025)
• Stage2: CAP2
(2009-2015)
• Stage1: CAP1
(2005-2008)
Platform 1:
Budget
Credibility
Platform 2:
Financial
Accountabil
ity
Platform 3:
Budget-
Policy
Linkages
Platform 4:
Performance
Accountabili
ty
1- Cambodia’s 4 Platforms 4 Stages
Approach
3

4. 4
Medium term framework and Annual Budgeting
National Policies (Rectangular
Strategy/NSDP)
Macroeconomic policy and
Public Finance Policy
Sectoral Policies
Medium term framework of
revenue and expenditure
Budget Strategic Plan
Annual Budget Law
2- Linking National Policies and Sectoral
Policies
By Mr. Hav Ratanak, Director of Department of Budget Formulation

5. By Mr. Hav Ratanak, Director of Department of Budget Formulation 5
Linking Institutional Management Structure and
Policy Structure
Management and Policy
Formulation
(Ministerial/Organizational Level)
Technical Level and
program/strategic formulation
(Secretariat/General Dept)
Strategies/Programs
Technical level and Formulation of
sub-program/activity cluster
(Department)
Sub-program/activity cluster
Technical level and
implementation of activities
(Agency under supervision of ministry)
activities
Policy Formulation
Policy Objectives,
Strategies/Programs
Formulation of
Strategy/program
Sub-program/activity
cluster formulation
Implementation of
activities
Management Structure Authority and Responsibility Policy Structure

6. 3- Progress of PB Implementation
I. 10 ministries have been piloted full program budgeting in 2015
II. Another15 ministries have been put for piloting program budgeting in
2016, making the total 25 ministries and their related provincial
departments piloting full program budgeting in 2016
III. Another 11 ministries will be put for piloting PB in 2017
IV. A few provincial governor’s budget out of the 25 provinces will be put
for piloting program budget in 2017
V. By 2018, all ministries and provincial governors’ budget will be in
program
VI. By 2018 Cambodia would need to revise a current financial system
law in order to allow annual budget law adopted by programs in 2020
By Mr. Hav Ratanak, Director of Department of Budget Formulation 6

7. 4- Challenges
I. Budget Preparation Side
 Policy Structure : Defining Policy Objectives to response to National Strategic
Development Plan and Sectoral Policy or the Role and Function of Ministry (1
or 2)
 Program Structure: Defining Program to response to the policy objectives ( Up
to 5)
 Too many sub-program and too many activities leading to a continued changes
 End up with Org. Chart program structure rather than policy linked program structure
 Quality of indicators at output level is much more important than outcome level
 M&E : M is critical for this stage of program budgeting whereas E is important
for performance based budgeting.
 Who do the performance evaluation ? Ministry of Finance/Budget Bureau do it
or a third party?
 Budgeting is based on performance or just focusing on efficiency of allocation
 Does MTEF/Medium Term Ceiling have important role in annual allocation ?
 What is the best practice of budget ceiling : hard ceiling vs indicative ceiling
By Mr. Hav Ratanak, Director of Department of Budget Formulation 7

8. Challenges (continued)
II. Budget Execution Side
 A transition from pre-audit system to post-audit system to accommodate
the program budgeting resulted in changes of legal documents,
 A delay of budget spending during the year due to capacity to absorb new
rules and regulations which are new to both MOF and LMs
 Petty cash system has been widely used to provide cash advance for
spending units ( called Budget Entity-BE), but BE has no experience in
budget clearance compliance
 Legal framework for post-audit is not yet in place resulted in downside
risks of compliance and legal enforcement
 Controversy on speed of the changes in budget execution procedures
 Big concern on a rapid change without a smart Captain, which may lead to
inefficiently use of public money: spend on items rather than on activities
result oriented
By Mr. Hav Ratanak, Director of Department of Budget Formulation 8

9. 5- Next step
I. Need to build human resource and institutional capacity to support
the implementation of new budget system as they are a key to the
success and sustainability of the implementation of budget system
reform.
II. Seeking a budget advisor
 Strategy to move from program-based to performance based budgeting
 A New Financial System Law
By Mr. Hav Ratanak, Director of Department of Budget Formulation 9