Monitoring of Priority Projects (response to economic downturn)
Report to 15th Meeting of GDCC
September 2009

Background

The April 2009 meeting of the GDCC endorsed a list of 68 projects that together would contribute to the national response to the economic downturn in Cambodia. With a combined estimated expenditure of USD 370 million in 2009, representing 3.33 % of estimated 2008 Cambodia's GDP, these projects are of significance as the Royal Government and its development partners seek to ensure that development assistance contributes to: (a) stimulating growth and employment; (b) protecting the livelihoods of the people; and (c) ensuring some minimum level of social safety nets.

Aggregate Results of the Monitoring Exercise

CRDB/CDC, in its capacity as the Secretariat to the GDCC, received 64 (out of 68) project reports, together with 8 consolidated reports from TWGs.

The subsequent consolidation and analysis can be viewed in Annex One but the main findings are:

1. Projected total expenditures for 2009 (reported in September 2009) have decreased from USD 370 million (recorded in April 2009) to USD 283.5 million. (See Annex One, Figure 1). Recorded expenditure in the first three quarters of 2009 was USD 192 million (52% of the original annual projection).
   
   
2. The largest percentage reductions are in RWSSH TWG, NBC project, Natural Resource Management and Livelihoods Project (managed by CRDB/CDC) and in projects managed by MEF/PFM TWG. This has been off-set by increases in PPR and D&D TWGs. (Figure 2). In absolute terms the largest reductions are in MEF/PFM (especially PRGO) and Health. (Table One).
   
   
3. Performance against the revised budgets, pro rated for the Q1-Q3 of 2009, shows that almost all TWGs appear to be well on track to meet their revised 2009 expenditure targets, having attained 75% of the implied pro rated expenditure. Exceptions are MEF/PFM and PSD TWGs. (Figure 3).
   
   
4. 46 out of 68 projects (equivalent to two-thirds) report that they are "on schedule" based on their own assessments and revised budgets. (Table One) 20 of the 68 projects now anticipate higher expenditure than indicated in April 2009 although it is not clear if this is associated with any effort to fast-track these projects as a result of this priority monitoring initiative.
   
   
5. Concerning the three broad categories (growth, livelihoods and safety nets), the growth projects appear to have experienced the most significant implementation challenges (and downward revision in expenditure). Projected livelihood expenditures have declined by only USD 5 million, a much smaller decline than for safety nets (USD 20 million, 30%) or projects targeted at economic growth (USD 61 million, 33%). (Figure 4).

Progress by sector

      A.   Agriculture sector

            a.   Quantitative progress

Consolidation of projects submitted by TWGs Agriculture and Water shows that 2009 planned budget is USD 49,015,970. Until September, the revised 2009 planned budget is USD 35,523,258. This shows the decline 27.50% of initial budget. As a result, the amount of money contributed to improving livelihood has been reduced. The total of three quarters expenditure is USD 23,904,641. This amount represents 67% of revised planed budget. Thus, agriculture sector has made good progress. But, the decline of revised planned budget illustrate that some activities of projects have been delayed to 2010. So the effort to fast-track the project implementing for fourth quarter 2009 is very important. Furthermore, we should shorten the project in order to increase more disbursement in this sector.

Based on the graph below, we observe that the expenditure is still low comparing to the revised planned budget. The expenditure should be at least 75% of revised planned budget. This shows the disbursement was slow due to the status of project implementation was late. As we know that agriculture sector is one of the catalyst of Cambodia economic growth. Furthermore, among the 15 projects under consolidation of A&W TWGs, 12 projects were aimed at improving livelihoods (3 for economic growth). The late of disbursement has negative impact of increasing the dynamic of economic growth and livelihood. In this effect, it can be analyzed that Northwest Irrigation Sector Project, Tonle Sap Lowlands Rural Development Project, Community Based Rural Development Project in Kampong Thom and Kampot, Rural Livelihoods Improvement Project in Kratie, Preah Vihear and Ratanakiri, Rural Poverty Reduction Project in Prey Veng and Svay Rieng, Krang Ponley Water Resources Development Project should speed up their process faster to be firmly on schedule and use all resources effectively.

            b.   Qualitative progress

• Overall Progress in Implementing All Projects of Agriculture and Water

We observe that 11 of 15 Projects are on schedule. These projects are: Identifying commune and province investment plan (CIP), Reviewing & revising for flexible policy, providing technical skill, workshop, certain support for those involved. Progressing has been made and some diverse minor issues.

• Common Issues and Challenges identified

Loan and/or Grant affective by 2010: Construction of provincial and district Agriculture office and equipment and vehicles.

• Possible Speed up the Implementation of On-Going Project

For project Tonle Sap Poverty Reduction and Small Holder Development (PY2009), Financing to enable MAFF to develop coordination unit (DCU) by ADB and this will minimize implement Start-up delays. We can initiate midterm review mission for an extension of the project by 6 months till December 2010 for utilizing CLF. We can increase expanding 3 more provinces in 2010 for Cambodia Agriculture Marketing Information Project (CAMIP). We should clearly identify and address subjects, procedure and policy for Tonle Sap Lowlands Rural Development Project, Agriculture Development in Mine-Affected Areas of Cambodia (ADMAC) project, and Rural Livelihoods Improvement Project in Kratie, Preah Vihear and Ratanakiri. Furthermore, we should develop the existing strategy and sustainability activities, establish agriculture extension service cooperation, and organize the follow up mission support. Improving and clarifying details of a financing agreement with EC before project implementation, especially related to RGC tax contribution, RGC staff incentives, and decision making in tendering procedures should be launched. We should also translate tender related documents, manuals, contract in language of host country, and review.

            c.   Main donor in agriculture sector

Based on 2009 planned budget, we observe that the main donors in agriculture sector are: Republic of Korea ($16,794,110), EU/EC ($10,518,638), IFAD ($5,250,000) and ADB.

      B.   Rural development and infrastructure Sector

            a.   Quantitative progress

Projects submitted by APSARA Authority shows that 2009 planned budget is USD 6,413,488; including Amenagement urbain de Siem Reap/Angkor Project and The Pavement of the Siem Reap Bypass Road in the Kingdom of Cambodia, Phase II. The three quarter expenditure is USD 4,645,191. The first project expenditure estimation for the 4th quarter is USD 1,768,296 and second project is already terminated.

Consolidation of Projects submitted by TWGs Land is comprised of 6 projects. The initial 2009 planned budget of this sector is USD 12,666,116. The revised planned budget is only USD 10,410,147. This budget corresponds to 82% of initial 2009 planned budget. The total three quarter expenditure is USD 8,264,785. It represents 80% of revised 2009 planned budget. This shows that the projects under land TWG has made very good progress as they accomplished expenditure more than 75% of revised budget.

Infrastructure

In Infrastructure and regional integration, we have 16 projects. The initial 2009 planned budget is USD 116,165,383. The revised budget is USD 108,897,230. It corresponds to 94% of initial planned budget. Infrastructure sector has highest level of revised budget comparing to others sectors. This shows that infrastructure is in good condition of their management and project implementation. Based on the graph below, we observe that three quarter expenditure is USD 79,069,887; 73% of revised planned budget. It means that infrastructure has made a good progress. For three quarters, the expenditure is less than 75%, but infrastructure got revised planned budget 94% of initial planed budget. It illustrates a huge amount to generate economic growth. 15 of 16 projects in infrastructure aimed at stimulating economic growth.

The late of implementation of overall projects in IRI has caused by the slow implementing of the Greater Mekong Telecommunication Backbone Network Project. So the acceleration of project implementation in IRI is crucial for economic growth as we are now on the road to recovery. The slow implementation can give ineffectiveness in terms of economic stimulation. As many developed countries are on the road to economic recovery, the acceleration of all projects in IRI can make Cambodia economy to the global road of economic recovery.

            b.   Qualitative progress

                 1. TWGs RWSSH

• Issues and Challenges identified:   Grant in under negotiation considered by KOICA

• Solution Agreed at TWGs Addressing Those Issues and Challenges:   Proposal is accepted by KOICA and under KOICA's consideration.

• Issues and Challenges Identified

Drainage Priority Works are currently studied by Consultant NJS; PW and subsequent detailed design are finally decided by September 2009 for construction to begin by the end of 2009.

• Solution Agreed at TWGs Addressing Those Issues and Challenges

Disbursement of 2007-08 having several delay were due to heavy procedure; slowing mobilization of the Consultant team due to administrative requirement (bank guarantee, payment delay, too much nonstructural reading).

• Progress in Moving Pipeline Project to Actual Implementation

Implementation of the works shall probably be phased in order to implement with the project schedule at least part of the priority works.

                 3. TWGs-LAND

• Overall Progress in Implementing All Projects

699 parcels and 1914.20 hectares have been provided for 774 families. The activities are on going: Administrative and operating system to allocate SLC and ELC; targeting 2012 at least 10,000 households, support 5 components; land Titling Program, registration and its policy, and development of modern Multi-purpose cadastral system; capacity development including institutional development and good governance and strengthening mechanism for dispute solutions.

• Issues and Challenges Identified

State land classification process is still at sub-national level; pipeline begins in 2010.

• Solution Agreed at TWGs Addressing Those Issues and Challenges

More training, widely dissemination of information, and good coordination between stakeholders; preventing illegal encroachments at SLC areas would help to accelerate the distribution and settlement of the land; RGC has to ensure sufficient state private land for social land concessions; testing of high-tech application is needed to accelerate systematic land titling and registration; establishing a “permanent Technical Secretariat” at MLMUPC for a more effective coordination and implementation of the comprehensive land sector program; creating appropriate conditions for a licensed private surveying industry could accelerate this process substantially.

            c.   Main donor in health sector

The planned budget for 2009 shows that the main donors in rural development and infrastructure sector are: China, ADB, France and World Bank.

      C.   Health sector

            a.   Quantitative progress

Consolidation of projects submitted by TWGs Health indicates that initial 2009 planned budget is USD 36,119,678. The revised planned budget is USD 14,843,980. The revise budget corresponds to 41% of initial 2009 planned budget. This shows a huge amount of decline form the initial planned budget. We did not get information about this issue. For this reason, we should discuss during GDCC meeting to find out the main root causes, challenges and solution. As we observe that all projects in this sector aimed at strengthening Safety Net, so we needs to reconsider how maintain the initial budget, USD36,119,678, and to accelerate all these projects.

Based on the graph, expenditure from January to September 2009 is high in terms of percentage, 94% of revised budget. But it still represents a small amount, 30%, comparing to initial planned budget. So, the Safety net still needs more improvement by accelerating the implementation of project in this sector. Though, the implementation of all projects in health sector was in good progress. But, the acceleration of these projects is still crucial because it can lead to improve safety net and also increase the money injection into the economy. Consequently, it can mitigate the impact of global crisis and lead Cambodia economy to be recovered soon.

            b.   Qualitative progress

• Overall Progress in Implementing all Project

Program implementation was effectively begun after receiving funds. They have launched Workshop such as implement Units (IUs) and HSSP2 Development Partners (DPs) in March 2009 (establishment of Provincial Focal Groups, Annual Operational Plans and Quarterly work plans). Operational Manual and Financial Management manual were issued for guidance to all IUs; and also finalizing and publishing SOA, SDG and MBPI manual.

• Common Issues and Challenges Identified:

Extensive capacity building is required at provincial and operational district including detailed organizational and financial management assessments. They still require capacity building (transitional management) when integrating program management into the MOH's existing structure. The Ministry of Health has not decided to allocate the operating cost of OD/SDGs at central level or at Doctor Level. The administrative costs of operating HEFs are very high. An expansion of the SDG grants mechanism, Health Equity Funds, MBPI may required additional RGC counterpart funding.

• Solution Agreed at TWGs Addressing Those Issues and Challenges

SDG manual is being translated and disseminated, and job training is being provided to all IUs. DPs will work closely with high level MOH leadership to finalize the transitional arrangement. The Ministry of Health will seek advice from MEF to address allocation of operating cost of OD/SDGs. The MOH intends to hire a consultant firm to solve high administrative cost and makes recommendations for HEF implementation and monitoring modalities. MOH and DPs need to re-estimate and consult with MEF on RGC counterpart allocations for the life of program and MOH does not envisage any delays in program implementation and budget execution from 2010 when the program will be operating at full scale.

            c.   Main donor in health sector

The planned budget for 2009 illustrates that the main donors in health sector are: World Bank, United Kingdom, AusAID and World Food Program.

      D.   Education sector

            a.   Quantitative progress

Consolidation of projects submitted by TWGs Education has initial 2009 planned budget USD 20,688,900. The revised planned budget is USD 18,164,328. The revised planned budget represents 88% of initial planned budget. The total three quarters expenditure is USD 8,814,805, 48.50% of revised planned budget. The estimated expenditure for 4^th quarter is USD 9,349,523. So we conclude that the projects in education sector have low progress in project implementing. This shows some issues and challenges while projects were implemented. Based on report from education TWG, they have faced some issues of procurement in this sector.

As all projects in education sector were aimed at improving livelihood. So the acceleration of project implementation can lead to increase directly the livelihood and also generate economic growth through increasing consumption.

The project: Education for all fast track initiative catalytic trust fund is on-track, yet, it should use all its resource though its 4th quarter. The project Education Sector Support Project should apply its resource effectively because it has been behind schedule and 4th quarter estimation is USD 2,537,000 comparing to USD 4,088,000 left by 2009 planned budget.

            b.   Qualitative progress

Project FTI: Increasing access and quality of education for pre- and primary school through construction of schools and institutional development and capacity building has a good progress. The Project (CSSP): proving scholarship, teacher training, school construction, and library also in status of progress.

• Common Issues and Challenges Identified

The two projects have time constraint in ICB and NCB. These projects face some issues of re-designing and timeline and poor disbursement from Education Sector Support Scale Up Action Program. (ESSSUAP) creates negative effect and poor quality. Moreover, quality management, understanding and coordination are low. For education sector, the main issue is procurement since it is new for them. These issues and challenges have caused to slow down the project implementing.

• Solution Agreed at TWGs Addressing Those Issues and Challenges

Project Management Committee (PMC), some senior MoEYS and MoEYS secretariats from technical staff, will meet for project discussion and members involved in PMC are covered by MBPI.

• Possible Speed Up the Implementation of On-Going Project

For Project FTI: increasing access and quality of education for pre- and primary school through construction of schools and institutional development and capacity building, implementers should address issues and reconsider realistic timeframe in which for both qualitative and quantitative progress.

            c.   Main donor in education sector

Based on 2009 planned budget, we observe that the main donor in education sector is World Bank. For 2009, the total budget supported by World Bank came to USD 20,688,900.

Implementation experience

Consolidated reports were received from 8 TWGs. In the cases of Health, PFM, D&D, Education, A&W and FSN these consolidated reports provided some analysis of general opportunities and/or challenges related to scaling-up and implementation. Reports from IRI, and RWSSH TWGs consolidated financial data but provided no additional synthesis or qualitative information.

At the April 2009 GDCC meeting it was emphasised that this monitoring exercise should have additional benefits in terms of maximising its contribution to broader aid effectiveness initiatives. These benefits were expected to be realised through the opportunity provided by this exercise to participate in dialogue and coordinating activities in order to ensure their developmental impact through managing information more effectively and encouraging the use of government coordination/monitoring systems. Where programme-based approaches have been (or are being) established it was also expected that routine dialogue, coordination and monitoring systems could be used, and strengthened, so that additional aid effectiveness benefits would be secured for the longer-term. There are some early encouraging signs of dialogue producing sector-wide benefits, including:

• In the FSN TWG, the broader adverse impact of the economic downturn has been analysed and discussed and the principal development partner in the sector, WFP, has worked with Government counterparts to identify quick actions that can ameliorate the crisis (maintaining and scaling-up food-based safety nets and developing new quick action programmes (vouchers, food-for-work etc).
• The education sector has been able to review timelines originally agreed and identify more realistic implementation schedules as well as agree on future actions to accelerate project formulation and implementation.
• In the health sector, the HSSP2 project is seen to provide an effective mechanism for RGC-DP dialogue concerning that project. Current implementation challenges are discussed and solutions have been proposed, e.g. in integrating the project into the Government system, NGO contracting, counterpart funding and financial arrangements for the project's implementation.
• PFM challenges – coordination across Government, contracting of consultants, utilising capacity development resources effectively – have been discussed in the TWG.
• D&D reforms are subject to a process of consultation. While this has caused delays it is felt to be a necessary step and interim measures have therefore been discussed.
• In A&W there is strong evidence that individual projects are frequently reviewed to allow cross-cutting challenges (procurement and contracting) to be identified and remedial measures taken, while opportunities for fast-tracking (including additional provinces, increasing provincial expenditure ceilings) have also been identified.

Based on individual reports from projects, in which implementation status is discussed in about half of the cases, the following challenges and needs are frequently identified:

• Procurement of goods and services, together with contracting, is regularly delayed.
• Preparing the legal framework for programme design and implementation is time-consuming, especially where consultation is undertaken and needs to be incorporated.
• Training and capacity support in project management, especially procurement, including for executing agencies implementing components of projects.
• More robust dialogue during project formulation to ensure timelines are feasible.

In all cases there is increased scope for sector-wide dialogue on implementation challenges and identification of generic actions that can enhance implementation and results.

Annex One

Table 1: Summary Data

1/  Includes Apsara Authority, AMK, Amrit and PRASAC, Peace and Development