9.     The Royal Government would like to emphasize the important role that sector/thematic programs can play not only in better aligning ODA supported activities with Cambodia’s national development priorities to achieve its Millennium Development Goals, but more importantly, in providing a framework for harmonizing donor practices around jointly agreed priorities and actions. Cambodia’s experiences with its sectoral/thematic programs show that sector-wide and/or broad issue based programs are not only more effective in aligning donor assistance with national priorities but that they also provide a practical framework for harmonizing donor practices as well as in enhancing Government ownership of the development process -- as compared to stand alone projects that are delivered without an overall framework. In addition to the existing sector programs in the Education and Health sectors, and the SEILA program that have been operating for some time now, as well as the newly formulated Public Finance Management Program, and on-going work in the areas of Private Sector Development and Land Management -- the Royal Government would welcome its development partner's support to prepare sector wide programs in other key sectors as well, such as, agriculture, infrastructure (transport/energy/water), private sector development, land management, and decentralization.

10.     The Royal Government’s National Poverty Reduction Strategy was launched in March 2003. In the implementation of this strategic framework, the challenge has been on how to clearly define the entry points for programming the agreed upon poverty reduction action plan. The experiences in the implementation of poverty reduction strategies in other parts of the world, in particular Africa, have not been very encouraging. Learning from these experiences as well as on basic conceptual grounds, the Royal Government believes that well defined sectoral and cross-sectoral programs that fully incorporate the action plan of the poverty reduction strategy are the most effective entry points for programming poverty reduction initiatives in Cambodia.

11.     In terms of Cambodia’s experiences with sector wide programs, in the Education Sector (SWAp) and Health Sector (SWiM), so far, the joint work in the education sector has progressed more than in the health sector. A significant number of donors are participating as partners in the planning, reviews and financing under the SWAp in the education sector. An Education Strategic Plan (ESP) 2001-2005 and a detailed Education Sector Support Program (ESSP) 2001-2005 were completed in 2001. The first joint review and appraisal of the ESP/ESSP were carried out in June 2001. Since then joint ESSP reviews in collaboration with development partners have been carried out each year. In September 2004, a revised ESP and ESSP for 2004-08 was reviewed and endorsed by development partners. The ESSP 2004-08 outlines how ESP 2004-08 priorities will be managed, monitored and implemented through specific programs. The SWAp in the education sector has made two important contributions. First, it has made available to the Ministry of Education a mechanism for aligning donor assistance with the education sector needs. Second, it has reduced the transaction costs to the MOEYS of coordinating with each donor agency bilaterally. On the financing side, however, donor funding through direct budget support in 2003 accounted for only 18 percent of total donor assistance to the education sector, most of which is comprised of loans from multilateral financial institutions.

12.     In the case of the health sector-wide management (SWiM) program the discussions with development partners started in 1999 and a Joint Health Sector Review was held in December 2000. A Health Sector Strategy (HSP) and a Health Sector Support Program (HSSP) for 2003-2007 were subsequently prepared. The implementation of the 5-year HSSP began only in January 2003. It has served as a way for three major donors, ADB, DFID and the World Bank, to coordinate their financial inputs to the health sector. The majority of donor assistance to the health sector under the SWiM arrangement is being provided in the form of project-type support. As compared to the SWAp in the education sector, the SWiM approach in the case of the health sector has not so far produced a significant reduction in the administrative burden on the Government of coordinating with each donor bilaterally.

13.     The Royal Government's SEILA Program was initiated in 1996 to formulate, test and continuously strengthen decentralized and de-concentrated systems for planning, financing and implementation of local development at the provincial and commune levels. Beginning with 5 provinces and a small number of pilot communes in 1996, by the end of 2001 and prior to the commune elections, coverage had expanded to half of the provinces and to more than one-third of the rural communes in the country. In 2003 the SEILA program coverage was extended to cover all provinces and communes. Adopting a partnership approach with the donor community at national level and an integrated annual programming framework with international agencies and NGOs at the provincial level, a high volume of additional, parallel resources have been mobilized and programmed each year to support development activities at the provincial and commune levels. External evaluations of the SEILA program have reaffirmed the socio-economic benefits that have resulted from civil works projects implemented by the private sector at the commune level as well as the growing capacity of the provinces, districts and communes to manage the decentralized systems. The partnership arrangements now cover all aspects of the programming cycle through joint planning, programming, budgeting/financing, and management of the program implementation. Progress is also being made to extend this partnership arrangement further to include the harmonization of monitoring and reporting procedures.

14.     In addition to the sector wide programs and the SEILA program, over the last two years a number of donors have also begun to jointly finance a specific project or program. One recent example is the multi-donor funded Land Management and Administration Project. This project was based on a multi-donor appraisal mission, involving the World Bank, the Governments of Germany and Finland and the ADB. Work is now underway to develop a SWAP for Land Management and Administration.

15.     Enhancing public financial management is crucial for strengthening good governance. The Royal Government and the development partners have recently completed the formulation of a SWAp for Public Financial Management (PFM). This Program that is being jointly financed by 10 donors provides a framework for coherent and focused efforts to achieve the goals of the Royal Government’s public finance management reform program. The Royal Government’s PFM reform program is built upon four sequenced and prioritized platforms: (i) a more credible budget; (ii) effective financial accountability; (iii) the RGC policy agenda becomes fully affordable and prioritized; and (iv) RGC managers become fully accountable for program performance. The Royal Government is also working at developing a SWAp for Private Sector Development.

16.     There is now also a growing awareness and recognition among the development partners of Cambodia that sector and/or program based approaches for ODA programming can not only bring a greater coherence to ODA programming by providing a framework for alignment of donor programs with Government’s priorities, but more importantly, the sector/thematic programs also provide a framework for harmonizing donor practices. Over the last few years, a series of resolutions have been adopted by the Council and European Parliament that are aimed at the re-orientation of aid instruments, where appropriate, towards increased use of budget support and sector-wide approaches. To operationalize these resolutions, in February 2003, the European Commission issued detailed "Guidelines for European Commission Support to Sector Programmes". The Royal Government is encouraged by this recent EU initiative, and the fact that the OECD/DAC Working Party on Aid Effectiveness and Donor Practices has prepared a “Good Practices Paper on Providing Harmonized Support to Sector Approaches”.

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