100008 Cambodia An IEG Country Assistance Evaluation 1999–2006 THE WORLD BANK GROUP WORKING FOR A WORLD FREE OF POVERTY The World Bank Group consists of five institutions—the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID). Its mission is to fight poverty for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. THE INDEPENDENT EVALUATION GROUP IMPROVING DEVELOPMENT RESULTS THROUGH EXCELLENCE IN EVALUATION The Independent Evaluation Group (IEG) is an independent, three-part unit within the World Bank Group. IEG-World Bank is charged with evaluating the activities of the IBRD (The World Bank) and IDA, IEG-IFC focuses on assessment of IFC’s work toward private sector development, and IEG-MIGA evaluates the contributions of MIGA guarantee projects and services. IEG reports directly to the Bank’s Board of Directors through the Director-General, Evaluation. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank Group’s work, and to provide accountability in the achievement of its objectives. It also improves Bank Group work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. Cambodia An IEG Country Assistance Evaluation, 1999–2006 The World Bank http://www.worldbank.org/ieg Washington, D.C. ©2010 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 12 11 10 9 This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other informa- tion shown on any map in this work do not imply any judgement on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Cover: Children selling postcards to tourists at Angkor Wat, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. ISBN-10: 1-60244-134-0 ISBN-13: 978-1-60244-134-7 World Bank InfoShop Independent Evaluation Group E-mail: pic@worldbank.org Communications, Learning, and Telephone: 202-458-5454 Strategy (IEGCS) Facsimile: 202-522-1500 E-mail: ieg@worldbank.org Telephone: 202-458-4497 Printed on Recycled Paper Facsimile: 202-522-3125 Contents v Abbreviations vii Acknowledgments ix Foreword xi Preface xiii Cambodia: Summary of Bank Program Outcome Ratings xvii Executive Summary xxiii Management Action Record xxv Chairperson’s Summary: Committee on Development Effectiveness (Code) 1 1 Introduction and Country Background 5 2 The Bank’s Strategy and Assistance Program 7 Country Assistance Objectives 8 Overview of Lending 11 Overview of Analytical and Advisory Assistance 12 Overview of Partnerships 15 3 Outcome in Areas of Bank Support 17 Macroeconomic Stabilization through Public Sector Financial Management Reforms 20 Private Sector Development 22 Economic Growth 22 Poverty Reduction 27 4 Delivery of Social Services 29 Education 32 Health 37 5 Agriculture, Rural Development, and Natural Resource Management 45 6 Infrastructure 53 7 Governance 61 8 Conclusions, Lessons, and Recommendations 63 Overall Assessment 65 Institutional Development Impact 65 Risks to Development Outcome 65 Contributions to Outcomes 67 Summary Findings and Recommendations iii C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 69 Appendixes 71 A: Statistical Supplement 99 B: IEG–IFC Country Evaluation Note 109 C: Individuals and Organizations Interviewed 117 D: Guide to IEG-World Bank’s Country Assistance Evaluation Methodology 121 E: Comments from the Cambodian Government 137 Endnotes 143 References Boxes 8 2.1 World Bank Country Assistance Strategies 23 3.1 Measuring Results: Data Quality and Comparability Are Key 42 5.1 Economic Land Concessions 57 7.1 The Bank’s Fiduciary Report and Investigation of Misprocurement in IDA Projects Figures 10 2.1 Cambodia’s Percentage of Projects at Risk 10 2.2 Disbursement Ratios, Fiscal 1999–2006 19 3.1 Reorientation of Domestic Public Spending (as % of GDP) 24 3.2 Decline in Poverty Tables 4 1.1 Economic and Social Indicators for Cambodia, East Asia and Pacific Region, and Low-Income Countries 9 2.1 Cambodia: Composition of Lending, 1994–98 and 1999–2006 9 2.2 Cambodia: Planned vs. Actual Lending (US$ millions) 11 2.3 IEG Evaluation of Project Outcomes 12 2.4 Aid per Capita for Cambodia and Other Low-Income Countries under Stress (in current US$) 18 3.1 IDA Projects Dealing with Public Financial Management Reform 23 3.2 Economic Indicators for Cambodia, 1998–2006 30 4.1 IDA Projects in Education or with Education Components 31 4.2 Education Outcomes 33 4.3 IDA Projects in Health 35 4.4 Health Outcomes 40 5.1 Productivity of Selected Crops in Southeast Asian Countries (2001 tons/hectare) 41 5.2 IDA Projects in Agriculture, Rural Development, and Natural Resource Management 48 6.1 IDA Projects in Infrastructure or with Infrastructure Components 50 6.2 International Comparisons of Infrastructure Services (2003 or latest available year) 51 6.3 Distribution of Land, Population, and Selected Infrastructure Characteristics by Region: 1998, 2004 (in percent) 64 8.1 Overall Outcome Ratings iv Abbreviations AAA Analytical and advisory assistance ADB Asian Development Bank CAE Country assistance evaluation CAS Country assistance strategy CESSP Cambodia Education Sector Support Project CG Consultative Group CSES Cambodia Socio-Economic Survey DFID Department for International Development (UK) DHS Demographic and Health Survey EDC Électricité du Cambodge ESP Education Strategic Plan GDP Gross domestic product GNI Gross national income HSSP Health Sector Support Project IDA International Development Association IEG Independent Evaluation Group IFAPER Integrated Fiduciary Assessment and Public Expenditure Review IICCR Institutional Investor Country Credit Rating IMF International Monetary Fund INT Department of Institutional Integrity LJR Legal and judicial reform MEF Ministry of Economy and Finance MPDF Mekong Private Sector Development Facility NGO Nongovernmental organization NIS National Institute of Statistics NPRS National poverty reduction strategy NRM Natural resource management NSDP National strategic development plan PER Public expenditure review PFM Public financial management PFMRP Public financial management reform program PIU Project Implementation Unit PPAR Project Performance Assessment Report PRGO Poverty Reduction and Growth Operation PSD Private Sector Development SAC Structural Adjustment Credit SME Small and medium enterprise TA Technical assistance TWG Technical working group UNDP United Nations Development Programme v Making artificial legs in a factory at the Veterans International Center, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. vi Acknowledgments Task Managers for the country assistance evalua- provided research assistance, and Roderick De tion were Lily Chu and Jaime Jaramillo-Vallejo. Asis and Agnes Santos provided administrative The report was prepared by Stephen O’Brien assistance. (consultant), assisted by Laurie Effron (consul- tant). A review of IFC operations in Cambodia during this period was prepared by Hiroyuki Hatashima Background papers, as inputs to the evaluation, (IEG-IFC) and is included in appendix B. Peer were prepared by James Brown, James Harrison, reviewers were Keith Leonard (ADB), Mark Jane Hwang, Stephen O’Brien, and Yoshine Sundberg (DECVP), Yvonne Tsikata (AFTP3), and Uchimura (consultants). Rupa Ranganathan Rene Vandendries (consultant). Director-General, Evaluation: Vinod Thomas Director, Independent Evaluation Group-World Bank: Cheryl Gray Senior Manager, IEGCR: Ali M. Khadr Task Manager: Jaime Jaramillo-Vallejo vii A boy sits at a desk working on a computer, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. viii Foreword Following more than three decades of conflict Governance reforms have been a key focus beginning in the 1960s, Cambodia, by the early of Bank activity during the CAE period. 1990s, had become one of the poorest of develop- However, Bank-government relations have ing countries. Social indicators were below those been adversely affected by events result- of other low-income countries and far below ing from weak governance, such as what was Cambodia’s Southeast Asian neighbors. Follow- found by the Inspection Panel and Department ing the 1991 peace treaty and United Nations of Institutional Integrity investigations—the intervention, the newly installed coalition latter leading to findings of misprocurement in government was struggling to rebuild social and several projects, credit suspensions, cancella- economic institutions and physical infrastruc- tion and repayment of IDA funds, and sanctions. ture. Despite these positive steps, low-level The government expressed dissatisfaction with conflict persisted through much of the 1990s, the follow-up to these Bank actions. However, and political stability was not fully established these issues are being resolved. The govern- until after the second national elections in 1998. ment has taken remedial actions required by Allowance must be made for this troubled past in the Bank and suspensions have been lifted. The assessing Cambodia’s recent accomplishments. Bank and government have also agreed that the government will employ an independent agent Cambodia joined the World Bank in 1970 but did to handle all procurement in Bank projects. not borrow from the International Development The Bank has also adopted a more focused and Association (IDA) until fiscal year 1994. A previous selective approach to governance reforms. country assistance evaluation (CAE) covered the Bank’s activities during fiscal years 1994–98. In contrast to these negative aspects, donor This CAE reviews results of the Bank’s assistance support for Cambodia has remained strong; the program from fiscal 1999 through the end of 2006. country has received over US$5 billion in highly During this period the Bank’s support focused concessional aid since 1994. The economy has on governance reforms, maintained macroeco- grown at over 9 percent per year since 1998, nomic stability, and sustained economic growth, led by the garment manufacturing and tourism private sector development, rural development sectors, and poverty incidence has been reduced and sustainable natural resource management, significantly. Bank support has led to substan- improvement and expansion in health and tial progress in poverty analysis and poverty education services, and investment in infrastruc- reduction, health and education, urban and rural ture. These objectives were consistent with the infrastructure, and public financial management. government’s own development goals. However, However, the results of the Bank’s interventions Cambodia did not receive adequate attention in in agriculture, rural development, and natural the early years of Bank engagement because the resource management have been weaker. The Bank did not build up a critical mass of staff in the Bank should continue to support the govern- field office until 2003. ment’s programs in these areas. ix A rice field in a rural area of Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. x Preface This country assistance evaluation (CAE) governance, poverty alleviation, progress in examines World Bank assistance to Cambodia the social sectors, agriculture, rural develop- from fiscal year 1999 to the end of calendar year ment and natural resource management, private 2006. It analyzes the objectives and content sector development, and infrastructure. The of the Bank’s assistance program during this CAE team visited Bangkok in January 2007 and period, the outcomes in terms of economic Cambodia in February 2007 for interviews with and social development, and the contributions Cambodian government officials, representa- of the Bank and other development partners tives of other development partners, the private to these outcomes. The report is based on a sector, nongovernmental organizations, and review of project files, economic and sector Bank staff in the two field offices responsible reports, implementation completion reports for the Cambodia program. A list of people (ICRs), Project Performance Assessment interviewed is provided in appendix C. Their Reports (PPARs), other IEG evaluations, Quality assistance is gratefully acknowledged. Assurance Group (QAG) ratings of quality-at- entry and supervision for Cambodia projects Comments received from the Bank’s Regional and economic and sector reports, and interviews Management have been incorporated into with Bank staff. The CAE also incorporates work the report. The report was also sent to the on background papers on macroeconomic Cambodian government authorities, whose management, public sector management and comments are reflected in the report. xi A handicapped boy plays with his wheelchair in a rehabilitation center, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. xii Cambodia: Summary of Bank Program Outcome Ratings Achievement of Associated Country Assistance Strategy (CAS) Bank Strategic Goalsa Outcomes or Results Bank Program Outcome Ratingsb 1. Macroeconomic Moderately satisfactory stabilization, economic growth and poverty reduction Public financial management After limited results over many years, substantial Moderately satisfactory reform progress is now being made in public financial management. The ratio of public spending on health, education, and rural development to GDP, a key objective of the Structural Adjustment Credit (SAC), doubled during 1998–2006. Revenue increased with introduction of a value-added tax but fell short of Bank and IMF targets. Improved environment for private Growth is narrowly based on foreign investment in the Moderately unsatisfactory sector development garment industry, with limited spread effects to other sectors. Modest progress has been achieved in reforming the regulatory regime but Cambodia is still ranked among the least competitive in the region. Corruption is the major constraint. The Bank has produced relevant economic and sector work and policy advice but has had limited impact on improving the competitive environment. Some progress has been made in trade reform but key measures proposed by the Bank have not been adopted by government. Sustained economic growth Bank lending, economic and sector work and policy advice Satisfactory have contributed significantly to macroeconomic stability and other preconditions for sustained growth. Economic growth averaged over 9.5 percent per year during CAE period, exceeding SAC target and 2000 CAS projections. Poverty reduction Poverty incidence fell from 47 percent in 1994 to 35 Moderately satisfactory percent in 2004, a faster rate of decline than targeted in 2003 National Poverty Reduction Strategy, driven by GDP per-capita growth of 5.7 percent per year in this period. The poor have also benefited from pro-poor expenditures in the social sectors. Continued high growth has undoubtedly further reduced poverty since 2004 but incidence remains relatively high and concentrated in rural areas. (continued on next page) xiii C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Achievement of Associated Country Assistance Strategy (CAS) Bank Strategic Goalsa Outcomes or Results Bank Program Outcome Ratingsb 2. Improved delivery of social Satisfactory services Improve access and quality of Education sector indicators have improved significantly, Satisfactory education services including access for the poor, girls, and in remote regions. Public spending on education has risen sharply. Net primary enrollment rate rose from 78 percent to 91 percent, and lower secondary enrollment from 16 percent to 31 percent between 1997/98 and 2005/06, faster than CAS targets. Bank is supporting quality enhancement programs and learning assessments to measure quality and efficiency. Improve access and quality of health Most health indicators have improved significantly, with Satisfactory services infant mortality falling from 89 in 1998 to 66 in 2005, more rapidly than targeted in CAS. Health service access has improved for the poor and in remote regions and the cost burden for the poor has been reduced. 3. Agriculture, rural Moderately unsatisfactory development, and natural resource management Improve agricultural productivity While Bank support for rural infrastructure development Moderately unsatisfactory and farmer incomes, support rural has had a positive impact and a Bank operation development supporting the government’s land titling program (a high-priority initiative) is making good progress toward the target of 1 million titles by end-2007, other Bank lending and analytical work has not addressed other key constraints to rural development and has had limited impact on agricultural service delivery and farm-level productivity. Support reforms in management of Management and protection of biodiverse areas is being Moderately unsatisfactory natural resources effectively supported by a Bank project. However, the Bank’s efforts to support reform of the forest concession system, which threatened total loss of Cambodia’s timber resources, has not resolved the problem and resulted in civil society protests and an Inspection Panel investigation, which faulted the Bank on application of safeguards. 4. Support infrastructure Initial Bank projects in urban water and power supported Satisfactory rehabilitation, reconstruction, major expansion of systems and improved operational and expansion performance with outcomes rated satisfactory to highly satisfactory. The Bank has also assisted government in development of a regulatory framework for private investment in power and water. The outcome of early investments in rural infrastructure through Social Fund projects was also generally satisfactory, while the outcome of more recent Bank projects in small-scale rural infrastructure has not been fully evaluated. (continued on next page) xiv C a m b o d i a : S u m m a r y o f B a n k P r o g r a m O u t c o m e R at i n g s Achievement of Associated Country Assistance Strategy (CAS) Bank Strategic Goalsa Outcomes or Results Bank Program Outcome Ratingsb 5. Reforms in public Unsatisfactory administration and governance Civil service reform The Bank has supported a civil service census, Unsatisfactory functional review of government ministries, training and compensation reform with little result. Average civil service wages are well below the poverty line. A modest beginning at selective pay reform has been made. The government recognizes the need for more far-reaching reforms, but progress has been slow. Legal and judicial reform The government has established a Council for Legal and Unsatisfactory Judicial reform and taken other mainly procedural steps but progress on needed reforms has been slow. Several important laws have been adopted but others are still pending. The Bank’s initiatives have had little impact. Measures to reduce corruption The Bank has elevated anticorruption to the highest Unsatisfactory priority in the most recent CAS and supported development of an anticorruption action plan and other measures to strengthen transparency and accountability but the impact of the Bank’s program has been very limited to date. An anticorruption law has been pending for over 10 years and repeated target dates for its passage set by government have not been met. The Bank is now focusing on limited steps where evidence of government commitment is clear. OVERALL Moderately satisfactory a. The goals of Bank assistance may be distinct from the client country’s own development objectives. For Cambodia, most goals of Bank assistance were fully aligned with, but were a subset of, the government’s objectives. b. The Bank program outcome rating and subratings assess the extent to which the Bank program helped achieve the results targeted in the relevant strategy document(s). This is, of course, distinct from assessing the quality of Bank’s or the client country’s performance. xv A fishing village on stilts in a river, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. xvi Executive Summary A t the beginning of the 1990s, following three decades of conflict, dur- ing which between two to three million people died under the Khmer Rouge regime (1975–79), Cambodia was one of the poorest countries in the world. Income per capita was below US$250, social indicators were substantially poorer than in other Southeast Asian countries, and the govern- ment was struggling to rebuild social and economic institutions and physical infrastructure. Despite a strong United Nations peacekeeping force in the early 1990s, low-level armed conflict continued until the late 1990s. Political stability was only fully established following national elections in 1998. How- ever, the donor community responded to Cambodia’s needs with sustained support; from 1994 through 2005 Cambodia received over US$5 billion in aid. While donor coordination was poor in the early years of the country assistance evaluation (CAE) period, this has improved markedly in recent years and the Bank has been a major contributor to this improvement. Between fiscal year 1999 and the first half of and productivity remains well below that of fiscal 2007, the period covered by this evaluation, Cambodia’s neighbors. In governance, which the World Bank was Cambodia’s third largest received increasing emphasis from the Bank over donor, providing US$390 million in Interna- this CAE period, progress has been disappointing. tional Development Association (IDA) funds. The Bank’s antipoverty focus and support for The Bank should remain engaged in areas rebuilding infrastructure (focusing initially on where reasonable success is being achieved— urban projects) and for health and education in education, health, poverty reduction, rural had positive outcomes. The Bank also produced infrastructure, and public financial management. high-quality analytical work, which provided Because governance problems present a signifi- the basis for the progress in these sectors and, cant obstacle to private investment and potential more recently, in public financial management. future growth, the Bank should continue to The economy has grown at over 9 percent per engage the government on governance issues year since 1998 and poverty incidence fell from through operations such as Poverty Reduction 47 percent to 35 percent between 1994 and 2004. and Growth Operations (PRGOs) and with the Substantial progress has been made in health wider donor community through the Consul- and education indicators, although from such a tative Group process. Given the importance of low base that Cambodia still lags behind other rural development for reducing poverty, and the Southeast Asian countries. The rural sector has potential for improving agricultural productiv- grown more slowly, agricultural production is ity, the Bank should address weaknesses in its subject to strong weather-related fluctuations, rural strategy. The Bank’s lending operations xvii C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 should be more streamlined than in the past rehabilitation and expansion of the country’s and focus on a few key objectives and limited infrastructure. The Bank emphasized through- actions to meet these objectives. Finally, the Bank out the period the importance of macroeco- should continue to focus attention on fiduciary nomic stability as an essential underpinning for safeguards with respect to the IDA portfolio. In sustained growth, and gave increasing emphasis this regard, the follow-up to the Department of to private sector development for growth and Institutional Integrity investigations in Cambodia poverty reduction. While the Bank recognized left a legacy of government ill-will toward the the importance of rural development, given Bank, and affected progress in the lending that Cambodia is a predominantly rural and program and in policy dialogue. For the future, agricultural economy, with poverty concen- the Bank should formulate a new disclosure trated in the rural areas, initially the Bank policy for its fiduciary investigations. lacked knowledge of the sector and problems of insecurity limited access to some rural Background areas. Nevertheless, during this CAE period Cambodia emerged in the early 1990s from 30 the Bank substantially increased its support to years of conflict, the brutal Khmer Rouge era, and rural development, primarily through invest- a decade of Vietnamese occupation, with one of ments in rural infrastructure. Finally, while the the world’s lowest per-capita incomes, and with need for reforms in public administration and social indicators far behind those of neighboring governance was fully apparent in the 1990s, and Southeast Asian countries. Physical infrastruc- the Bank attempted to work with the govern- ture had been largely destroyed. United Nations ment on civil service reforms, legal and judicial intervention led to a peace agreement in 1991, a reforms, and development of an anticorrup- new constitution, elections, and formation of a tion strategy, the lack of success in these earlier coalition government, although a reduced level efforts led the Bank to give even greater but of conflict and political instability continued until more selective emphasis to governance in the the late 1990s. The government began a process fiscal 2005 country assistance strategy. of economic liberalization in the late 1980s which has been sustained. The donor world Commitments of IDA credits and grants over responded rapidly to Cambodia’s huge resource the CAE period totaled US$391 million, of which need with a high level of concessional aid which over 60 percent was for infrastructure, health, has been sustained. Since the mid-1990s the and education. (Only one adjustment operation economy has been growing steadily; by 2006, accounted for 8 percent of the portfolio.) Annual per-capita incomes were double the 1998 level lending levels dropped sharply toward the end and the incidence of poverty had been signifi- of the review period. The Bank also carried out cantly reduced. Social indicators have improved, an extensive program of analytical and advisory generally to above the average for low-income assistance (AAA), focused on macroeconomic countries, but are still well below those for most management, growth and poverty reduction, Southeast Asian countries. and the environment for private sector develop- ment, as well as relevant sector studies in Bank Assistance health, education, and infrastructure. This work During the time frame covered by this CAE, provided a basis for policy dialogue and was well IDA’s assistance strategy was set out in three integrated with the lending program. country assistance strategies, in fiscal years 1997, 2000, and 2005. While the objectives With almost 40 donor countries and multilat- shifted somewhat over the period, the Bank eral agencies providing assistance to Cambodia, consistently focused on sustained growth and donor coordination has been challenging. For a poverty reduction, improving the delivery number of years, donor activity in most sectors and quality of social services, rural develop- was characterized more by competition than by ment and natural resource management, and cooperation, and the Bank did little to improve xviii e x ec u t i v e s u m m a r y coordination, due in part to its limited field and poverty reduction, and the recent progress presence. Since 2003 the situation has improved in public expenditure management, against considerably with a strong contribution from limited progress in the environment for private the Bank’s expanded field office. Improved sector development, and the unsatisfactory donor coordination also resulted in a more performance relative to the objective in revenue coherent strategic approach, illustrated by the mobilization, IEG rates the outcome of the Bank’s joint country strategy produced in 2005 by the support for economic management and poverty World Bank, Asian Development Bank (ADB), reduction as moderately satisfactory. U.K. Department for International Develop- ment (DFID), and the United Nations Develop- The Bank’s support to the education and health ment Programme (UNDP). One problem in the sectors has produced strongly positive results. donors’ engagement with Cambodia that still Education sector indicators, including enroll- needs to be addressed is the use by donors of ment rates, gender balance, access for the poor separate project implementation units, which and access in remote regions have improved compete for the limited pool of qualified staff in markedly. Excessively high student/teacher ratios, the public service. which rose sharply as access was increased, still need to be addressed. Health indicators have also Findings improved, including prenatal care, infant mortal- In the pursuit of broad-based growth and ity, maternal mortality, and child immunization. poverty reduction, one of the essential prereq- The significant increase in public spending in both uisites is macroeconomic stability. The Bank’s sectors, a reform which the Bank promoted, has support for this subobjective was focused on reduced the private cost burden, especially for public sector financial management, primarily the poor. Bank analytical work and projects have, through technical assistance, but these efforts in close collaboration with other donors, been produced slow and halting progress for a decade. instrumental in assisting government to develop However, following the recommendations of and implement these reforms. The outcome of a joint Bank/ADB Public Expenditure Review, the Bank’s program of support in these sectors is the government in late 2004 adopted a reform rated satisfactory. program, supported by a multidonor trust fund managed by the Bank, which has shown signifi- Results of the Bank’s interventions in agriculture, cant progress. At the same time, supported by rural development (excluding rural infrastruc- the Bank’s Structural Adjustment Credit, public ture), and natural resource management have spending was reoriented from defense and been mixed. Bank support for land titling and security to the social sectors and rural develop- management of biologically diverse, protected ment. However, progress in revenue mobiliza- areas has shown positive results. However, the tion has been limited. Some improvement in the Bank has devoted insufficient resources to the environment for private sector development has problems of limited irrigation infrastructure, poor been achieved but Cambodia remains at a strong irrigation water management, and low agricul- competitive disadvantage relative to neighbors. tural productivity, and has not developed a clear Nevertheless, overall economic growth has been strategy for future engagement in agriculture. In impressive, led by garment manufacturing and forestry the Bank worked with other donors to tourism; the dollar value of exports has increased develop a strategy for controlling serious overex- almost fourfold since 1998 and the share of ploitation of Cambodia’s timber resources, but exports in GDP has doubled. Poverty incidence the program became a focus of attacks on the has declined from 47 percent in 1994 to 35 Bank from civil society groups, leading to an percent in 2004, and has likely declined further Inspection Panel investigation that criticized since 2004 due to continued high economic the Bank for failure to apply certain safeguards growth. Balancing the positive outcomes in in project design and implementation. There expenditure reorientation, economic growth, is at present no clear strategy for further Bank xix C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 engagement in forestry. The overall outcome for 1996 and 2005. Also, while Cambodia’s Country this area of Bank assistance is rated moderately Policy and Institutional Assessment rating has unsatisfactory. improved over time and is now comparable to the IDA average of 3.2 in 2006, the specific The Bank’s involvement in urban power and governance components of the index are signifi- water and road reconstruction led to marked cantly lower. Despite the Bank’s best efforts, and improvements in physical indicators and financial the Bank’s more focused governance program performance. Vehicle operating costs were signif- under the fiscal 2005 country assistance strategy, icantly reduced; water availability in Phnom Penh the outcome of the Bank’s efforts over the CAE and electricity availability throughout the country period under this pillar of the Bank’s strategy is more than doubled, and system losses were rated unsatisfactory. sharply reduced as a result of Bank projects. The Bank is also supporting development of a regula- Taking into account the results across all pillars tory framework for private supply of electricity of the Bank’s strategy, the overall rating for the and water. In rural infrastructure, outcomes were outcome of the Bank’s assistance to Cambodia generally satisfactory in the Social Fund projects over the CAE period is evaluated as moderately and the Northeast Village Development project, satisfactory. but it is too soon to assess the outcomes of the more recent projects. Despite notable progress Bank performance has improved over the review in many areas, the country still lags well behind period, but in the earlier years (1998–2003) the neighbors in terms of infrastructure services, and Bank program suffered on a number of counts, there remain wide disparities between urban due in part to a limited field presence. Donor and rural areas. Nevertheless, given the positive coordination was poor, policy dialogue was results of Bank interventions, the outcome of the weak, and several projects were too ambitious Bank’s contributions to infrastructure is rated and complex in design for the country’s limited satisfactory. capacity. With the Country Director in the field, a Country Manager based in Phnom Penh, and The Bank has focused on governance issues a significantly expanded field office, these issues with increasing intensity in each succeeding have now been addressed. Because Cambodia country assistance strategy, and has worked with was a postconflict country, the Bank should have other donors in a number of areas. Progress has followed its own guidelines calling for a stronger been made on certain governance-related issues field presence in postconflict cases. such as public financial management, including expenditure reorientation, the poverty focus Given the poor governance environment in in health and education services, and support Cambodia, another weakness of the Bank’s for decentralized, community-based develop- performance was the inadequate attention to ment programs. However, in other areas there possible fiduciary risks to the Bank’s lending. has been little progress. Civil service reform has Only after numerous complaints about bid been a focus of Bank efforts since the mid-1990s, awards in a Bank project in 2002 did the Bank but with negligible results until the introduction react. In the course of subsequent investiga- (thus far on a limited scale) of a merit-based pay tions the Bank found evidence of fraudulent initiative. In legal and judicial reforms, the govern- practices in many contracts in about half of ment has created administrative structures but the Bank’s ongoing operations, resulting in produced limited reforms to date. The govern- cancellation of project funds and suspension of ment began working on an anticorruption law in three projects. Because of Bank policy in such 1995, but the law has yet to be passed. Cambodia’s investigations, the Bank could not disclose World Bank Institute governance ratings are the names of confidential witnesses which, below those of neighboring East Asia and Pacific according to the government, made it difficult Region countries and have deteriorated between to accept the validity of the findings or to take xx e x ec u t i v e s u m m a r y follow-up actions. The remedies that the Bank and operations such as the PRGOs and in col- invoked in follow-up to the investigations had laboration with the other donors through the a negative impact on Bank operations and on Consultative Group Joint Monitoring Indica- Bank-country relations. tors and follow-up meetings. • Given the importance of rural development, Recommendations including natural resource management, for The findings of this CAE suggest the following reducing poverty, and the potential to im- principal recommendations: prove agricultural productivity, the Bank has given inadequate attention to key issues in the • The Bank’s program has produced satisfactory sector, including water availability and usage, outcomes in several areas during the CAE pe- agricultural markets, and the scope for diver- riod—in education and health, poverty analy- sification. Although the Bank is not the lead sis leading to an increased poverty focus in donor in agriculture and rural development, government programs, small-scale rural in- the Bank should work with other donors and frastructure, and, recently, in public financial the government to carry out diagnostic work management. The Bank should continue to and develop a strategy that identifies the main focus on these areas. sector constraints and priorities for govern- • Although Cambodia has experienced strong ment action and donor intervention, including economic growth, weak governance remains the Bank. an obstacle to future private investment and • The Bank’s lending operations should be growth. The Bank’s efforts to improve gov- more streamlined than in the past, focusing ernance in a number of areas were not suc- on a few key objectives and specific imple- cessful. The Bank should continue to pursue mentation steps to achieve those objectives. reforms in governance, through Bank analyti- • The Bank should continue to focus on fidu- cal and advisory assistance, policy dialogue, ciary safeguards in its own portfolio. xxi Two young Cambodians. Photo by Masaru Goto, courtesy of the World Bank Photo Library. xxii Management Action Record IEG Recommendations Requiring a Response Management Response 1. The Bank’s program has produced satisfactory outcomes in several 1. Management agrees that we should continue to focus on these areas during the CAE period—in education and health, poverty areas of success; and believes that by maintaining selectivity in our analysis leading to an increased poverty focus in government focus we can expect to contribute to further progress in these areas. programs, small-scale rural infrastructure, and, recently, in public financial management. The Bank should continue to focus on these areas. 2. The Bank should continue to pursue reforms in governance, both in 2. Management agrees that we should continue to pursue reforms the more focused approach outlined in the fiscal 2005 CAS which is in governance along these lines; and initial discussions on the CAS incorporated in the series of IDA grants for PRGOs and, with respect progress report suggest that other stakeholders also agree that the to the broader governance agenda for civil service reform, legal/ Bank should continue with this approach. judicial reform, and anticorruption, through policy dialogue and AAA and through the Joint Monitoring Indicators approach adopted by all donors as part of the Consultative Group process. 3. Although the Bank is not the lead donor in the agricultural sector, 3. Management intends to maintain the selectivity of the CAS with the Bank should work with other donors and government to identify other donors taking the lead in the agricultural sector; and initial the main constraints to agricultural diversification and productivity discussions on the CAS progress report have confirmed the need increases and the priorities for future donor interventions, including to continue with such selectivity. But within this overall context, the Bank. Management agrees that the Bank can and should continue working with others on the overall constraints to agricultural diversification and productivity increases. On-going work by the Bank on such issues includes work on agrarian structure and on value chains in agriculture; and is expected to be followed by further analytic work on sources of growth, including agriculture. 4. The Bank’s lending operations should be more streamlined than 4. Management agrees on the importance of having a clear and was the case for some past operations, focusing on a few limited limited set of objectives and specific implementation steps for each objectives and specific implementation steps to achieve these of our operations; and focuses on these matters as part of the review objectives. process during project preparation. Management also believes that encouraging the government, donors and other stakeholders as well as the Bank to move toward sectorwide approaches, with appropriate fiduciary safeguards, will contribute greatly to streamlining and enhancing the overall effectiveness of Bank support. (continued on next page) xxiii C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 IEG Recommendations Requiring a Response Management Response 5. The Bank should continue its intensified focus on fiduciary 5. Management agrees on the importance of continuing its safeguards in the IDA portfolio. intensified focus on fiduciary safeguards in the IDA portfolio. This is expected to include a continued focus on good governance frameworks for all our projects, capacity building support for the government’s anticorruption working group and for the Ministry of National Assembly-Senate Relations and Inspections (the government ministry responsible for investigations), maintaining a Bank anticorruption committee to advise management and task team leaders on appropriate fiduciary arrangements in project design and implementation, and continuing to ensure we have in place strong procurement, financial management, governance and anticorruption capacity in the field. xxiv Chairperson’s Summary: Committee on Development Effectiveness (Code) O n December 10, 2007, the Informal Subcommittee of the Committee on Development Effectiveness (CODE) considered the Cambodia Country Assistance Evaluation (CAE), prepared by the Independent Evaluation Group (IEG). Background Conclusions and Next Steps At the beginning of the 1990s, following three The Subcommittee members welcomed IEG’s decades of conflict, during which 2–3 million evaluation of the Bank’s work in Cambodia. people died, Cambodia was one of the poorest Members concurred that the Bank should countries in the world. Income per capita was continue to capitalize on areas such as education, below US$250, social indicators were poor, poverty analysis, and infrastructure, where Bank and the government was struggling to rebuild operations had shown positive results. Regard- social and economic institutions as well as ing the Bank’s engagement going forward, physical infrastructure. National elections were members’ queries centered on governance held in 1993 but political stability was not fully issues; continued use of Project Implemen- established until 1998. The donor community tation Units (PIUs); technical assistance; responded to Cambodia’s plight with sustained economic diversification of the local economy; support. From 1995 through 2006 the country and the Department of Institutional Integrity received over US$5.5 billion in aid. (INT) investigations into allegations of fraud and corruption in Bank-supported projects, The CAE reviews the Bank’s assistance program among others. IEG acknowledged that the from fiscal 1999 through the end of 2006. Bank’s principal areas of contribution included During this period the Bank’s support focused the education and health sectors, as well as on governance reforms, maintained macroeco- infrastructure, and public financial manage- nomic stability and sustained economic ment. Also, IEG recognized the Bank’s contribu- growth, private sector development, rural tion in developing analytic work and improving development and sustainable natural resource overall donor coordination in Cambodia. The management, improvement and expansion in Cambodian authorities concurred with the health and education services, and investment overall findings of the IEG evaluation. The in infrastructure. These objectives were consis- Board of Executive Directors will meet later tent with the government’s own development to discuss the Cambodia Country Assistance goals. Strategy progress report. xxv C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 General Comments strategy, the Bank had focused on four areas of Members welcomed IEG’s evaluation and agreed governance where it believed there was commit- with the findings and recommendations of the ment to reform: public financial management, Cambodia CAE. One member noted that the CAE private sector development, natural resource was an insightful report that provided important management, and decentralization. One speaker lessons learned, which are relevant to other asked how the Bank was addressing corruption fragile and/or postconflict countries. risks. Management noted that as a result of the most recent investigations of the INT into allega- Sector Focus tions of fraud and corruption in Bank-supported Some members pointed to the cases of the projects, the Bank and the government of health and education sectors where govern- Cambodia have introduced anticorruption action ment commitment was critical to the success plans in all on-going and new projects. of Bank operations. Also, one member noted the improved performance in Cambodia Poverty Reduction and Growth operations once Bank field staff were in place. Operations Members concurred that the Bank should One speaker asked about the reference in continue to capitalize on successful areas (for the CAE to Poverty Reduction and Growth example, education, poverty analysis, and Operations (PRGOs) as a tool to confront infrastructure). IEG acknowledged that the governance challenges. Management noted Bank’s principal areas of contribution included that it was endorsing a more focused approach the education and health sectors, as well as through PRGOs on specific issues such as public infrastructure, and public financial manage- financial management, private sector develop- ment. IEG recognized the Bank’s contribution ment, and natural resource management instead in developing analytic work and improving of a broader approach. It also noted that other overall donor coordination in Cambodia. A development partners (that is, the United member urged the Bank to emphasize agricul- Kingdom, Japan, European Commission) were tural development within Cambodia because it looking to support PRGOs with cofinancing. had the potential to impact poverty reduction. Another member asked the Bank to break Project Implementation Units the current stalemate in dealing with the Members observed that the continued use of natural resource management sector (that project implementation units (PIUs) in Cambodia is, forest concessions) since this area held was weakening local technical capacity as well as great potential. Management recognized the ownership. Management noted that there had importance of the agriculture sector to the been progress in moving away from multiple Cambodian economy. Similarly, management PIUs (that is, from parallel to fully integrated) noted the importance of land issues (that is, for different donor-supported projects, and that titling) and natural resource management in in on-going projects (for example, education, the development of agricultural growth. transport, rural investment) there was increased coordination with government counterparts. Governance and Commitment to Reforms Management also acknowledged that it was Some members noted that a lack of govern- moving toward sector-wide approaches at the ment commitment had weakened efforts in sector level. A speaker queried the move to more governance, although the government of streamlined approaches (that is, sector-wide) Cambodia had underscored a lack of capacity when there are on-going fiduciary challenges rather than commitment. IEG agreed that both and asked management to clarify. Management commitment and capacity were essential to move commented that sector-wide approaches would forward on reforms (for example, civil service, help reduce the need for PIUs and increase judicial). Management added that in the context donor coordination going forward. Lastly, IEG of preparing the current country assistance added that the continued use of PIUs was due to xxvi C h a i r pe r s o n ’ s S u m m a r y: C o m m i t t ee o n De v e l o p m e n t E f f ec t i v e n e s s ( C OD E ) fiduciary concerns and was thus moving slower it had been rated in the CAE as “moderately than expected. unsatisfactory.” Management pointed to on-going discussions with the Doing Business team to try Technical Assistance to mainstream concerns into reform programs. Some members commented on the high level It also noted that it was currently working on of technical assistance (TA) provided by donors an Investment Climate Assessment where these in Cambodia, including the Bank, and noted the concerns would be analyzed. CAE’s conclusion that this TA had not brought about the desired results. Management acknowl- Debt Sustainability edged that local authorities were disappointed A member sought further information on the as to the level of knowledge transfer from TA. In level of external debt and its sustainability. IEG that sense, the Cambodian authorities wanted noted that the debt-to-GDP ratio had come down donors to increase the use of local capacity and, quite rapidly and was not a source of concern at when using external consultants, donor partners the moment. should be working with local staff to develop skills effectively. Donor Coordination and Harmonization Members noted the need to emphasize further International Development Association coordination with donors on the ground (that is, Credits and Grants 42 in all) to support weak administrative capacity A member inquired about the level of International and improve governance issues. Management Development Association (IDA) credits and grants commented that on the policy side, there were (that is, US$391 million) and asked if this amount 19 Technical Working groups, in which the donor was adequate to support reform and develop- community discusses issues jointly as well as in ment objectives in a country such as Cambodia. quarterly meetings with Cabinet members and IEG commented that the IDA commitment for the entire donor community. Cambodia was a performance-based allocation and that actual commitments had recently dropped Disclosure of INT Investigation Findings owing to concerns regarding fiduciary safeguards Members pointed to the lack of progress in in the wake of the investigations. governance and anticorruption issues and inquired as to the investigations into allegations of Economic Growth and Diversification fraud and corruption. IEG noted that the Bank’s A member pointed to the recent economic efforts in improving governance and anticorrup- growth in Cambodia (that is, over 9 percent, tion had been disappointing, because investiga- 1999–2006) and suggested that the Bank look tions during the 2005–06 period had identified into assisting the country in diversifying its numerous instances of fraud and corruption, economy beyond the garment and tourism which had been presented to the Cambodian industries. Another member asked manage- authorities. A member asked management to ment to comment on the impact that the lifting comment on the limits of disclosure of evidence of export quotas (that is, China) would have uncovered by the investigations since the govern- on Cambodia’s garment sector. Management ment of Cambodia sees this as vital to remediate commented that it was difficult to assess what issues of corruption. Management noted that impact increased competition to the garment the Bank had disclosed as much information as sector in Cambodia might have, and noted that possible regarding the investigations. Certain it was important to continue diversifying the evidence collected during the investigations was country’s export base. protected by confidentiality due to the concern that certain witnesses may face potential reprisals. Private Sector Finally, INT commented that it was working with One member queried management about the the Cambodian authorities to help build their private sector environment in Cambodia since capacity to carry out their own investigations. xxvii C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Edits to Cambodia CAE with the Cambodian authorities that the report IEG commented that after consulting with would be released after the National Assembly INT colleagues, some editorial changes in the elections in July 2008. redacted version of the Cambodia CAE would be introduced. A member asked that these editorial Upcoming Country Assistance Strategy changes would be made available to Subcommit- A member noted that the previous Cambodia tee members. IEG agreed to make them available, country assistance strategy had been prepared while also emphasizing that the editorial changes jointly (for example, with ADB, DFID, UNDP) would bring factual clarification and ensure and queried management on the donor partners greater accuracy without affecting the CAE’s involved in preparing the next country assistance findings, conclusions and/or recommendations strategy. Management noted that donors had in any way. (The revised text was subsequently asked the Bank to take the lead in bringing circulated.) donors together to develop the upcoming country assistance strategy. Release of Cambodia CAE In response to a query regarding the release of the Cambodia CAE, IEG noted that it had agreed Jiayi Zou, Chairperson xxviii Chapter 1 1 An elderly person walks through a market in Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. Introduction and Country Background T his country assistance evaluation (CAE) reviews the World Bank’s assis- tance to Cambodia from fiscal year 1999 through the first half of fiscal 2007; a previous CAE evaluated Bank operations in fiscal 1994–98.1 In the fiscal 1994–98 period, the Bank focused on macroeconomic stability and resumption of growth. The earlier CAE judged that International Develop- ment Association (IDA) assistance was appropriate for the country’s post- conflict situation and rated the outcome of the Bank’s program satisfactory. However, it found that capacity-building initiatives had limited impact and Bank objectives were not achieved in public sector management (especially financial management), in civil service and legal/judicial reforms, in natural resource management (NRM), and in the environment for private sector de- velopment (PSD). Sustainability was deemed uncertain due to the unstable political environment, precarious macroeconomic balance, and governance issues. The CAE recommended that future Bank assistance should focus on poverty alleviation, governance, improved fiscal management, agriculture and rural development, and the environment for PSD. Cambodia experienced prolonged armed conflict either were killed or fled, and formal school- over many decades—guerilla warfare beginning ing was largely eradicated. The Khmer Rouge in the 1960s, massive American bombing in the regime destroyed most of the country’s social, early 1970s, and four years of genocidal rule economic, and physical infrastructure. Low-level (1975–79) by the Khmer Rouge, which sought armed conflict continued during the 1980s and to “wipe the slate clean” by creating a classless most of the 1990s, despite a 1991 United Nations– rural society. An estimated two to three million brokered peace agreement, a transitional United people were killed during the 1970s, and most Nations peacekeeping force,2 a new constitu- of the educated middle class who survived tion, and the installation of an elected coalition fled the country. An estimated 75–80  percent government in 1993. The political situation has of all teachers and higher education students stabilized since an aborted coup attempt in 1997, 3 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 with the dominance of the ruling Cambodian ment law, and privatizing most state-owned People’s Party steadily increasing through enterprises. Due in large part to high aid inflows national elections in 1998 and 2003. While and prudent macroeconomic management, democratic processes have been established, and aggregate economic performance has been limited decentralization of government author- positive and the poverty level, while still high, ity to provinces and communes is under way, the has been significantly reduced. Recent economic administration remains highly centralized and performance and poverty reduction is discussed authoritarian. The public sector is characterized in chapter 3. by weak institutions and human resources and widespread problems in governance. Almost all social indicators have improved substantially across the entire population, often In the early 1990s, Cambodia was one of the faster than the average for low-income countries, poorest countries in the world, with an estimated but are still low, as described in chapter 4. per capita income below US$250. Social indica- Cambodia faces many other economic and social tors were well below the average for the East challenges, including the still severely underde- Asia and Pacific Region as well as those for other veloped institutional and human resource low-income countries (see table 1.1 below). base, extremely low civil service wages, which The international donor community responded inhibit effective delivery of public services, lack quickly and strongly to Cambodia’s plight and of infrastructure, and serious weaknesses in this donor support has been sustained through governance. Exploitation in the near future of this CAE period (see chapter 2). substantial oil and gas reserves could generate, by some estimates, a doubling of government The government began a process of economic revenues, creating an opportunity for substan- liberalization in the late 1980s, restoring private tial increases in public expenditures for health, property rights (including land ownership), education, and rural development, as well as eliminating domestic price controls and most significant increases in civil service wages, but it nontariff barriers, simplifying the tariff structure could also increase the risks of a “Dutch Disease” and lowering tariff rates, liberalizing the effect or waste of resources if the funds are not exchange rate, adopting a liberal foreign invest- managed for the public good. Table 1.1: Economic and Social Indicators for Cambodia, East Asia and Pacific Region, and Low-Income Countries Low-income Indicator Cambodia East Asia & Pacific countries GDP per capita (US$, 1994 in 2000 prices) 216 677 327 Population growth rate (1996) 2.6 1.2 2.1 Primary enrollment (gross, 1989–94) 47 118 83 Infant mortality (per 1,000 live births, 1992) 110 40 89 Maternal mortality (per 1,000 live births, 1992–97) 6.5 1.2 6.8 Life expectancy (1990) 54 67 56 Access to improved water source (percent, 1992–97) 13 72 64 Source: World Bank database, country reports. 4 Chapter 2 5 Children wait for a free lunch at a center where street children are taken care of by a local nongovernmental organization, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 6 The Bank’s Strategy and Assistance Program Country Assistance Objectives C ambodia became a member of the World Bank in 1970 but began to borrow only in fiscal 1994. During fiscal 1994–98 the Bank had a limited program of lending and analytical and advisory assistance (AAA), with operations focused primarily on emergency rehabilitation and restoration of economic and social infrastructure. In the area of economic policy and man- agement the Bank concentrated on improving public financial management (PFM) through technical assistance (TA), working in collaboration with the International Monetary Fund (IMF). Since the mid-1990s the Cambodian government Strategic Development Plan (NSDP), which is has produced numerous strategy documents, endorsed by all donors. The goals of the NSDP each of which focused on the key development include eradicating poverty, enhancing agricul- issues—economic and social development, tural productivity, achieving improvements in with emphasis on the rural areas, employment, health and education, environmental sustainabil- poverty reduction, and governance reforms. ity, gender equity, sustained economic growth, However, these strategies generally lacked and improved fiscal performance. It also incorpo- clear priorities or effective means of monitoring rates Cambodia’s Millennium Development Goal implementation or outcomes.1 Furthermore, in targets. The NSDP was prepared in a less partici- many cases, donors took a leading role, which patory manner than earlier strategy documents reduced the government’s commitment and but was also less donor-driven. sense of ownership. In one case, the Bank and IMF were supporting a poverty reduction strategy During this CAE period Bank operations were paper titled the National Poverty Reduction guided by three country assistance strategies Strategy (NPRS), in direct competition with the (CASs) from the mid-1990s to 2005. Each CAS had Asian Development Bank (ADB)-supported several main objectives (see box 2.1). Although Socio-Economic Development Plan (see chapter the primary objectives of these CASs shifted 3). Fortunately, there is now only one govern- slightly over time, the principal aims can be ment strategy document, the 2006–2010 National summarized under the headings: (i) macroeco- 7 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Box 2.1: World Bank Country Assistance Strategies Objectives of the first CAS: • Build infrastructure, especially in rural areas. • Support macroeconomic stability through improved fiscal man- • Improve quality of and access to social services. agement and support private sector development. • Support private sector development. • Support agriculture, rural development, and natural resource management. Objectives of the third CAS: • Improve social services and reduce poverty. • Improve governance by addressing constraints to PSD, im- • Rehabilitate physical infrastructure. prove transparency and accountability in NRM, support con- tinued PFM reforms, and promote accountability by supporting Objectives of the second CAS: decentralization and citizens’ partnerships. • Maintain a sound macroeconomic framework. • Support the strategy development and investments needed for • Improve governance through legal/judicial reform, civil service attainment of the Millennium Development Goals. reform, and military demobilization. nomic stability and economic policy reforms for 20 projects,2 or an average annual commit- (the primary objective in the first and second ment level of US$49 million through fiscal CASs), and private sector development leading 2006.3 There were significant changes in the to sustainable growth and poverty reduction; (ii) composition of IDA lending from the first CAE improving the delivery of social services, linked period to the second, shown in table 2.1. In the to attainment of the Millenium Development earlier period, 38  percent was for nonproject Goals; (iii) support for agricultural and rural lending (rehabilitation credits for balance of development and sustainable natural resource payments support without policy conditional- management; (iv) rehabilitating and rebuild- ity) while this CAE period saw only one adjust- ing physical infrastructure; and (v) improving ment credit for 8 percent of total commitments.4 governance through reforms in public sector Within investment lending the composition of management (elevated to the primary objective lending did not change significantly, although in the third CAS). These CAS objectives have been the sectoral distribution for this CAE period broadly consistent with the stated priorities of the (see table 2.1) is somewhat arbitrary because of Cambodian government. While the Bank has, in several multipurpose projects—the Social Fund the past, overestimated government’s commit- projects, which built schools and infrastructure; ment to politically difficult reforms, the third the Flood Emergency Rehabilitation project, CAS was more realistic than the previous ones which financed reconstruction of roads, irriga- about what could be accomplished and set out a tion systems, schools, and other rural infrastruc- more nuanced approach to pursuing governance ture; and the rural development projects, which reforms. Also, in keeping with the efforts of all financed primarily rural infrastructure but also donors to improve aid coordination, the third contributed to strengthening rural governance. CAS was prepared as a joint strategy with the Asian What is significant is the shift between the two Development Bank (ADB), U.K. Department for CAE periods, particularly for infrastructure invest- International Development (DFID) and United ments, in the share of rural projects. Projects Nations Development Programme (UNDP). entirely focused on the rural areas increased from 28 percent to 58 percent of the investment Overview of Lending portfolio between the two CAE periods. The During this CAE period the Bank commit- priority for shifting Bank resources to the rural ted US$391 million of IDA resources (US$334 areas, emphasized in each CAS, became a reality million in credits and US$57 million in grants) over the course of this CAE period. 8 T h e B a n k ’ s S t r at eg y a n d A s s i s ta n ce P r o g r a m Table 2.1: Cambodia: Composition of Lending, 1994–98 and 1999–2006 1994–98 Share of 1999–2006 Share of (US$m) commitment (US$m) commitment Nonproject lending 102.7 38% 30.0 8% Investment lending 165.4 62% 361.1 92% Public Financial Managementa 17.0 6% 37.9 10% Health, Education, Social Protectionb 50.4 19% 95.0 24% Infrastructurec 71.0 26% 152.2 39% Agriculture/Rural Development/Environmentd 27.0 10% 66.0 17% Private Sector Development — 0% 10.0 3% Total (US$ million) 268.1 100% 391.1 100% Source: World Bank database. a. Includes Demobilization Project. b. Includes Social Fund Projects. c. Includes Northeast Village Development Project and Rural Investment and Local Governance Project. d. Includes Flood Rehabilitation Project. The proposed CAS annual IDA commitment resulting from the Inspection Panel report and levels for Cambodia have declined sharply over the remedies the Bank invoked in response to the CAE period, from US$70–80 million (base the Department of Institutional Integrity (INT) case) in fiscal 1999–2003, to US$25–45 million in investigations (see chapters 5 and 7). fiscal 2005–08, due to the shift to a performance- based allocation system for IDA, and the influence Portfolio Management of weak governance and portfolio performance The Bank conducted country portfolio perfor- on Cambodia’s allocation. The trend in actual mance reviews in 2000, 2001, 2002, 2004, commitments has also been sharply downward, 2005, and 2006, the last three of which were from an average of US$56.5 million in the first carried out jointly with the ADB. A major six years of the CAE period to US$26 million focus of these reviews was the slow pace of per year in fiscal 2005–06. The recent decline project implementation and, more recently, in actual commitments may also be due in part the fiduciary risk to Bank operations. The to the disruptions in Bank-country relations percentage of projects at risk has fluctuated Table 2.2: Cambodia: Planned vs. Actual Lending (US$ millions) Total Total Total Total Lending (1999–2003) (2004)a (2005–06) (1998–2006) Planned lending 350.0 84.0 434.0 Actual lending 279.1 60.0 52.0 391.1 Source: World Bank database. a. The second CAS originally covered only fiscal 2000–03; the program was extended through fiscal 2004 due to delay in issuing the next CAS while a new government was being formed following the July 2003 election. 9 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 between 15 and 25 percent, significantly above has been close to Bank and Regional averages, the East Asia and Pacific average, as shown in before falling to 10  percent in the first half figure 2.1. The disbursement ratio (figure 2.2) of fiscal 2007. Appendix table A.6 indicates Figure 2.1: Cambodia’s Percentage of Projects at Risk 30.0 25.0 20.0 Projects at risk (%) 15.0 10.0 5.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 Year Cambodia EAP Bank-wide Source: World Bank database. Figure 2.2: Disbursement Ratios, Fiscal 1999–2006 30.0 25.0 20.0 Disbursements (%) 15.0 10.0 5.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 Year Cambodia EAP Bank-wide Source: World Bank database. 10 T h e B a n k ’ s S t r at eg y a n d A s s i s ta n ce P r o g r a m the problem areas, which help to explain the Overview of Analytical and relatively high percentage of projects at risk. Advisory Assistance Problems in procurement and project manage- The Bank carried out an extensive program of ment are more frequent in the Cambodia AAA over this period, with several economic portfolio than in East Asia and Pacific Region or reports focused on the preconditions for Bank-wide. Problems of mismanagement and sustaining growth and poverty reduction, includ- misprocurement in several active and recently ing a country economic memorandum, two closed projects have been uncovered over the Poverty Assessments and support for the NPRS past three years, leading to cancellations of and the NSDP. Reports focused on macroeco- contracts, repayments to the Bank, and project nomic management, revenue mobilization, suspensions (see chapter 7 for details). This and PFM included a Public Expenditure Review has undoubtedly contributed to the recent (PER), an Integrated Fiduciary Assessment and decline in disbursements. In the critical area of Public Expenditure Review (IFAPER), and Public procurement supervision the Bank has, until Expenditure Tracking Surveys in education recently, operated with headquarters procure- (jointly with ADB and with Cambodia Develop- ment specialists based in neighboring countries ment Research Institute conducting the field but without adequate staffing in the Phnom work) and health (with WHO technical input). Penh Country Office. This issue has now been An impressive volume of work has been done addressed by shifting a procurement special- on the constraints to PSD (see chapter 3). These ist from Viet Nam to Cambodia. The Bank and economic reports have been of generally high government have also agreed that the govern- quality and well integrated with policy advice and ment will employ an independent procure- lending.5 One of the PSD reports, the Investment ment agent for virtually all IDA projects. Climate Assessment, provided the analytical basis for the Trade Facilitation and Competitiveness IEG Evaluation of Closed Projects project. The IFAPER was a collaborative exercise During fiscal 1999–2006, ten closed projects for with government, ADB, and other donors, Cambodia totaling US$249 million in commit- which set out the recommendations that were ments were evaluated by IEG. The number of subsequently incorporated in the government’s project outcomes judged satisfactory was equal Public Financial Management Reform Program to the East Asia and Pacific Region average and (PFMRP) (see chapter 3). The IFAPER also linked slightly above the Bank-wide average. Institu- the findings of the 1999 poverty assessment with tional impact was also above the East Asia and social sector spending priorities and was used as Pacific Region and Bank averages, but sustainabil- a teaching tool at the Cambodian Economic and ity was judged less likely (see table 2.3). Finance Institute. Table 2.3: IEG Evaluation of Project Outcomes Outcome: Institutional development impact: Sustainability: percentage of projects, by percentage of projects, by percentage of projects, by Country/region number, rated satisfactory number, rated substantial number, rated likely Cambodia 80.0 60.0 62.5 East Asia and 79.7 54.5 74.5 Pacific Region All Bank 76.2 49.6 73.3 Source: World Bank database. 11 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table 2.4: Aid per Capita for Cambodia and Other Low-Income Countries under Stress (in current US$) Country Average, 1999–2005 Angola 33 Burundi 29 Cambodia 33 Congo, Dem. Rep. of 28 Lao PDR 51 Central African Republic 21 Timor-Leste 219 Source: World Development Indicators. The Bank also produced numerous sector 15–20 percent norm for aid recipients. Donor studies of generally high quality, including support has been sustained despite donors’ reports on the power sector, private solutions unhappiness over policy shortcomings on the for infrastructure, urban water supply, access part of the government and persistently weak and quality issues in basic education, and a governance. This is evidenced in the donor rural sector strategy. These and other sector pledges totaling US$600 million at the 2006 studies, and their relevance for the Bank’s sector Consultative Group (CG) meeting, and US$700 programs in Cambodia, are discussed in the million at the 2007 meeting. In addition, China in succeeding chapters. 2006 made a multiyear pledge of US$600 million outside the CG framework. Overview of Partnerships Cambodia, a low-income country under stress Some 40 bilateral and multilateral donors have and a postconflict country, remains heavily aid programs in Cambodia (for details see aid dependent. During the period of this CAE appendix table A.3a). The largest contribu- for which data are available (calendar years tors are Japan, the ADB, and the World Bank, 1998–2005), Cambodia received over US$3.4 with 22  percent, 14  percent, and 10  percent, billion in aid, an annual average of US$430 respectively, of net official development million, equal to 10 percent of GDP, compared to assistance disbursements in the CAE period. an annual average of US$390 million (12 percent With this large number of donors, coordina- of GDP) in 1994–98.6 On a per-capita basis, tion of donor programs presents a significant aid over the CAE period has averaged US$33 challenge. During the 1990s donor coordination per year. While the average for all low-income in Cambodia was generally poor; the environ- countries under stress for these years was only ment was frequently more one of competition US$18.4, a number of these countries received than collaboration.7 For much of this period comparable or greater volumes of aid per-capita the Bank’s participation in donor coordina- than Cambodia did (see table 2.4). Aid has tion was also constrained by limited staffing in been highly concessional—almost 80  percent the field office. In an effort to improve donor on grant terms and the rest in soft loans. Given coordination and increase government’s role in Cambodia’s recognized capacity constraints, an the management of aid, joint technical working estimated 40 percent of donor assistance has groups (TWGs) were established in 1999. Today been for technical assistance, well above the there are 18 TWGs covering all areas of donor 12 T h e B a n k ’ s S t r at eg y a n d A s s i s ta n ce P r o g r a m support, with normally a lead donor in each for discussion of sector plans and policies. The group. Bank, ADB, France, and Japan have been the principal donors in urban and national infrastruc- With the notable exception of the education and ture, while many donors are involved with rural health sectors, the effectiveness of TWGs was projects. To facilitate donor coordination among limited in the initial years. However, over the the partners in the third CAS, ADB takes the lead past three to four years, the TWG approach has role in education, agriculture, transport, and definitely led to substantial improvements in rural water supply, and the Bank takes the lead donor coordination and collaboration with the role in health, NRM, energy, and urban water government. Nevertheless, there is still room supply. The establishment of a TWG for poverty for improvement. Some TWGs function more in the course of NSDP preparation is an example effectively than others and the government of effective use of the working group approach. maintains that donor commitments in TWGs are not always delivered.8 Given the acknowledged weaknesses in the government’s institutional capacity, donors Some donors express the view that too much have provided an estimated 40 percent of their effort is being expended in coordination, but all assistance in the form of TA, in contrast to a norm agree that the current situation is a vast improve- of 15–20 percent for all developing countries. At ment over the dysfunctional system that existed the same time, the Bank and other donors have previously, and both government and other reacted to lack of capacity within government donors have offered strong praise for the Bank’s by setting up Project Implementation Units contribution to improved donor coordination. (PIUs) outside of the governmental structure In sectors such as health and education, where to handle project management. In some cases there are many donors but where the govern- a ministry has had to deal with separate PIUs ment is represented by a single ministry, coordi- for each donor. These PIUs, along with interna- nation has been working well. Coordination is tional and domestic nongovernmental organi- also strengthened by the presence of a govern- zations (NGOs) and the private sector, compete ment-owned strategy and development plan, as for the available talent in the civil service by is the case in health, education, and PFM. The offering salaries and benefits often many times Bank’s contribution is also enhanced when the those provided by government, thereby deplet- task manager is stationed in the field office, as ing the capacity that they are trying to build. in health and PFM. In infrastructure, despite This issue is clearly recognized but, despite the division of responsibilities across several resolutions at successive CGs to end such ministries, the TWG provides an effective forum activity, the problem persists. 13 14 Chapter 3 15 A marketplace in Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 16 Outcome in Areas of Bank Support Macroeconomic Stabilization through Public Sector Financial Management Reforms Background D uring their time in power the Khmer Rouge destroyed all institutions of financial management in the country. These institutions were gradually restored but in the first half of the 1990s, the existing systems for financial planning and budgeting, accounting and auditing, debt management, payment systems (relying entirely on cash for receipts and payments), and procurement, remained extremely rudimentary and weak. The Bank began supporting PFM in 1994 under a multisector TA project. Project design was complex and gov- ernment ownership was weak outside of the Ministry of Economy and Finance (MEF). It became a problem project and was restructured. At closing, although it did introduce a national budget and other useful functions—such as economic analysis and debt units in the MEF—it was considered to have fallen short of its objectives and was rated unsatisfactory in the implementation completion re- port and its subsequent review. Meanwhile, the IMF supported reforms in public revenues and in the financial system (along with the ADB).1 Bilateral donors also provided assistance in revenue and expenditure management. However, progress on both public revenues and expenditures was slow and disappointing. This lack of substantial progress continued well into the CAE period, including the limited impact of the 2001–03 multidonor Technical Cooperation Assistance Program, in which the Bank did not participate.2 A Bank/IMF assessment of Cambodia’s PFM system in 2003–04 found that Cambodia rated poorly against the averages for heavily indebted poor countries. In 2003 Cambodia met only 3 out of 15 benchmarks, versus an average of 8 out of 15 benchmarks for twenty-four heavily indebted poor countries; and in 2004 Cambodia met only 5 of 16 benchmarks 17 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 versus an average of 6–7 for twenty-six heavily two waivers were required for second-tranche indebted poor countries. release. The Economic and Public Sector Capacity Building project—which continued Bank Objectives and Program some aspects of TA support for PFM reform that Throughout this CAE period the Bank gave high had been started under the earlier TA project— priority to PFM, especially expenditure manage- has also experienced significant problems, ment, focusing on the budget, expenditure reallo- including an eight-month delay in effectiveness, cation, procurement reform, internal audits, and implementation delays. The project was and establishment of a National Audit Author- restructured in 2005 and has been rated unsatis- ity. The Bank provided policy advice through a factory during most of its life, including the most PER (1999), the IFAPER, and a country economic recent supervision report at the time of writing. memorandum. While the government did little However, support for the government’s PFMRP to implement the recommendations of the first through the Bank’s Public Financial Manage- PER, the situation improved markedly following ment and Accountability Project is producing the joint Bank/ADB IFAPER, as described below. more positive results. Further lending support was provided through Outcomes and Bank Contribution the operations listed in table 3.1. The Structural The Bank and allied donors have begun to see Adjustment Credit (SAC) and the Demobiliza- genuine progress in PFM. The significant differ- tion and Reintegration project supported reallo- ence is that while the essentials of the program cation of public expenditures from defense and are based on the recommendations of the security to health, education, and rural develop- IFAPER, the program has been designed by the ment. Unfortunately, the demobilization project government, and the pace of implementation is was closed because of misprocurement before set by the government. Also, the government has the full demobilization program could be carried a voice in the selection and terms of reference out. The SAC was a multisector operation with of consultants employed under the program. multiple objectives, which experienced signifi- Launched in December 2004, the program is cant difficulties and delays. Program completion to be carried out in four stages (“platforms”) required almost four years, as compared with over 10 years. It is supported by 11 donors,3 the two and a half years originally envisioned. 4 of whom have contributed US$17 million to a The closing date was extended five times and Bank-managed Multi-Donor Trust Fund. Table 3.1: IDA Projects Dealing with Public Financial Management Reform Fiscal year Name Amount (US$m) Status IEG outcome rating 1995 Technical assistance 17.0 Closed 12/31/01 Unsatisfactory 2000 Structural adjustment 30.0 Closed 12/31/03 Moderately satisfactory 2002 Demobilization and 18.4 Closed 12/31/04 Unsatisfactory reintegration 2002 Economic and public sector 5.5 Ongoing capacity building 2006 Public financial 14.0 Ongoing management and accountability Source: Appendix table A.3c. 18 Outcome in Areas of Bank Support Figure 3.1: Reorientation of Domestic Public Spending (as % of GDP) 4.0 3.5 3.0 2.5 Percentage of GDP 2.0 1.5 1.0 0.5 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year Defense Health Education Agr + RD Priority total Source: IFAPER, 2003, and country office updated database, July 2007. Progress under the PFMRP is regularly reviewed improvements in tax administration, has by an external advisory panel. 4 For 2006 the remained disappointing. While revenue policy panel found that 21 of 29 targets under platform has been primarily an IMF responsibility, the 1 had been met or partially met.5 (However, in Bank has supported the IMF’s efforts with fiscal the critical area of government procurement, revenue targets in the SAC and TA support for the panel reported that, while the necessary value-added tax and customs reforms. However, procedural steps were being taken—including the government has fallen short of the revenue decentralizing procurement to line ministries, targets set by the IMF and Bank. Under the new regulations, and adoption of a standard SAC the objective was to increase total revenue procurement manual—the reforms may not be from an estimated 11.2 percent of GDP in 1999 sustainable because of inadequate staff training.) (actual was 11.5  percent) to 13.2  percent in The panel concluded that there is strong govern- 2002. However, revenue in subsequent years ment commitment to the PFMRP in MEF, but low had remained at 10–10.5 percent of GDP until commitment in other ministries so far. However, reattaining the 11.5 percent level in 2006 (see they found that government-donor coordination table 3.2). Studies have shown that tax avoidance, is working well and that donors express strong attributable to poor records, a cash payment satisfaction with coordination arrangements and system, and corrupt practices, could account for with the role of the World Bank office and the the loss of 30–40 percent of potential revenues.6 Bank’s Multi-Donor Trust Fund coordinator. Also, Furthermore, collection of nontax revenues, as shown in figure 3.1, the progress on expendi- which account for one-fourth to one-third of ture reorientation supported by the SAC and the total revenues, is also well below potential. The Demobilization and Reintegration project has issue of tax avoidance is being partly addressed been sustained over the entire CAE period. by shifting tax collections from a cash basis to the banking system. Also, given strong growth in GDP In contrast to the above-mentioned achieve- in recent years, there has been substantial real ments, revenue performance, despite modest growth in government revenues. Nevertheless, 19 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Cambodia ranks near the bottom of all develop- costs for imports and exports. The government ing countries in revenue mobilization. Combining has passed over 20 of the 47 laws required for full the sustained, pro-poor reorientation of public compliance with World Trade Organization rules. spending supported by the SAC, and recent The government has also introduced measures to progress in the PFMRP, with the disappoint- support the small and medium enterprise (SME) ing results in revenue mobilization, the overall sector. However, the Cambodian private sector outcome in PFM is rated moderately satisfactory. still suffers from numerous constraints, including inadequate and high-cost infrastructure, low labor Private Sector Development productivity, a weak financial sector which limits Background access to finance, especially for rural investments, A few centers of private sector activity have been a weak judicial system and a still-restrictive regula- growing rapidly and are responsible for much of tory framework, and corruption.11 the dynamic growth in GDP over the past decade or more. Since 1994 the manufacturing sector has Bank Objectives and Program grown at an average annual rate of 17 percent, led The Bank recognized the importance of PSD in by the garment subsector, which expanded from the 2000 CAS. The 2005 CAS made an improved 1 percent of GDP in 1994 to 13 percent in 2006, environment for PSD (an important component and now accounts for 70  percent of manufac- for achieving improved governance) the leading turing output. Between 1994 and 2000 garment pillar for the CAS. Until recently, the Bank’s work output grew at an annual rate of over 50 percent, in PSD had been focused on TA, economic and and since 2000 annual growth has continued at sector work, and dialogue, although the Bank has 20 percent. Garments now account for almost also supported PSD indirectly through projects in 80  percent of Cambodia’s exports. The other infrastructure (especially energy and transport) source of rapid private sector growth is tourism. and more directly through support for agricul- Visitor arrivals have risen sixfold since 1998, and ture and rural development. The Bank partici- tourism revenue as a share of GDP has risen from pated in the fiscal 2001 Diagnostic and Trade 3.5 percent in 1998 to 13.4 percent in 2005, with Integration Study, which identified obstacles to continued high growth forecast.7 These sectors Cambodia’s integration into the global economy, have been responsible for stimulating a substan- and was the lead technical partner supporting tial inflow of foreign direct investment.8 However, Cambodia’s accession to the World Trade Organi- while these sectors have enjoyed spectacular zation. A fiscal 2003 “value-chain analysis” quanti- growth and generated substantial employment fied the high administrative costs and market (an estimated 325,000 in the garment sector in barriers facing the private sector. A fiscal 2005 2006), they have provided few backward linkages Investment Climate Assessment (a joint report or spread effects to the rest of the economy, of the Bank, IFC, Mekong Project Develop- other than to the construction industry. ment Facility, and the Public-Private Infrastruc- ture Advisory Facility) identified the regulatory The government has repeatedly affirmed the reforms required to provide adequate incentives importance of the private sector for growth and for private sector investment and supplied the poverty alleviation and the need to improve the analytical basis for the fiscal 2005 Trade Facilita- environment for PSD.9 Positive steps the govern- tion project, the primary Bank lending in direct ment has taken include accession to the Associa- support of PSD.12 The Bank also provided TA tion of Southeast Asian Nations (ASEAN) and to support for development of several new laws, the World Trade Organization, and adherence to including the Concessions Act, Customs Law, and fair labor standards under the International Labour the law on Special Economic Zones. Organization “better factories” program, which have benefited the garment industry in particu- Under the Trade Facilitation project the govern- lar.10 The garment industry has also benefited ment committed to reducing the number from reductions in clearance times and transaction of agencies involved in clearing imports and 20 Outcome in Areas of Bank Support exports, to adopt a single administrative Outcomes and Bank Contribution document and “single window” for customs In recent years the government has begun to clearance, and a “one-stop” clearance procedure improve the PSD climate but progress remains for (duty-free) Special Economic Zones. slow. As mentioned earlier, over half of the laws Progress has been slow and difficult and the required for World Trade Organization compli- project has faced delays in effectiveness (six ance have been passed, including a customs law months) and implementation. Implementation and a concessions law, and the commercial code progress was rated satisfactory until 2007 but is in the final stages of drafting.15 The govern- the project rating has now been downgraded ment, at the Bank’s urging, adopted a 12-point to moderately unsatisfactory. The government plan to improve the investment climate and trade has not accepted the Bank’s proposal that the facilitation (reduced from a 24-point plan). Half single window should be managed by a joint of the elements in the plan have been adopted, public-private agency outside of the Customs with some progress on others, but despite the Department, arguing that the consultant advice appearance of government ownership, some provided on the single window proposal was not officials informed IEG that they felt the plan had relevant to Cambodia’s situation. As a result, the been imposed by the Bank. There has been some project has been restructured to shift funding limited progress in customs reforms; a survey that was originally intended to support the done for the Bank in 2005 found a reduction in single window to support implementation of the time required for import clearances from 30 days Automated System for Customs Data documen- in 2003 to 10.5 days in 2005, and for export transac- tation system.13 tions from 6.6 days in 2003 to 20 hours in 2005. There were corresponding reductions in transac- IFC has been active in supporting PSD since tion costs and even in informal fees. The Bank/ Cambodia joined the IFC in 1997. (See appendix IFC Doing Business 2007 survey found that, since B for details on the IFC program in Cambodia.) 2003, the cost of starting a business, as a percent- Through the Mekong Private Sector Develop- age of income per capita, has decreased by over ment Facility (MPDF) IFC has assisted SMEs with 50 percent. However, the cost is still 236 percent management training, business support services, of income in Cambodia versus 45  percent in and financing through the Mekong Enterprise Vietnam, and 17 percent in Lao PDR. Fund. MPDF has also focused on improving the general business environment. Other IFC depart- Despite this limited progress, Cambodia still ments have also provided advisory services to the ranks as one of the least competitive countries government and the private sector. Since 2002 in its region. In the Bank/IFC Doing Business IFC has coordinated the government-Private 2007 report, Cambodia ranks 159th out of 175 Sector Forum, which is the principal mechanism countries on time and effort required to start for direct government/private sector dialogue. a business, 151st on closing a business, and The forum has been instrumental in achiev- 159th on dealing with licenses. The Institu- ing consensus on a number of issues including tional Investors’ Credit Risk Report classifies commercial legislation, financial sector reforms, Cambodia as “high risk.” IFC’s assessment is and trade facilitation, as well as permitting that the investment climate has improved very open discussion of issues such as corruption.14 little in recent years. Finally, IFC has developed a small portfolio of investment projects. The most notable of these While the Bank’s AAA and policy advice is the ACLEDA Bank, which has grown from a provided useful analysis, the Bank and other microcredit institution, with outstanding loans of donors have, so far, made only a limited contri- US$10 million in 1998, to a full-service commer- bution to progress in PSD. Progress in the Trade cial bank, with 164 branches across the country Facilitation project has been downgraded to and a portfolio of almost US$160 million in June moderately unsatisfactory. The most notable 2007, while still providing SME financing. achievement has been IFC’s contribution to 21 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 improving the dialogue between the govern- 9 percent per year, and over 11 percent for the ment and the private sector. Undoubtedly the past three years, raising per-capita incomes Bank and its main interlocutors attempted an to over US$500 in 2006.16 Growth has been overly ambitious program of legal and regula- led by garment manufacturing and tourism, tory reforms in terms of scope and timing, and as discussed in the previous section. These substantially more time will be required for sectors have, in turn, supported a growth rate some of the program’s goals to be achieved. of 12 percent in the construction industry. The The overall outcome in PSD to date is judged agricultural sector has grown at an average rate moderately unsatisfactory. of 4 percent per year, but with wide year-to- year fluctuations. The dollar value of exports Economic Growth has increased almost fourfold since 1998, and Background the share of exports in GDP has doubled, with Cambodia began the 1990s as one of the poorest garments accounting for 80 percent of export developing countries. In response to the value. Imports have increased at a comparable economic liberalization measures introduced by rate, but the balance of payments deficit has the government, the economy grew at an average remained manageable due to aid inflows. The rate of 6 percent over 1994–98. The agricultural share of investment in GDP has doubled since sector, a source of livelihood for an estimated 85 the early 1990s and foreign investment, after percent of the population, grew at over 4 percent, slumping in 2002–04, reached new highs in on average, during this period but with sharp 2005–06. Inflation, measured by the Consumer year-to-year fluctuations in crop production. Price Index, which had reached annual levels of over 100 percent in the early 1990s, has been held Bank Strategy and Program to single digits since 1999. In terms of economic Sustained economic growth and poverty performance against monitorable indicators, reduction were objectives in all three CASs in all cases, except US$ per capita income, SAC during the CAE period. The Bank’s program targets for 2002 were exceeded and the trends and policy advice were focused on develop- since 2002 have remained positive.17 The overall ing the base for growth and poverty reduction outcome of the Bank’s efforts in support of through improvements in the environment economic growth is judged satisfactory. The for PSD, in governance, and delivery of social Bank has contributed to establishing some of the services, reorientation of public spending, and preconditions for sustained growth—macroeco- rehabilitation of physical infrastructure (topics nomic stability, human resource development, treated elsewhere in this report). The Bank and infrastructure rehabilitation—and, in the also carried out analytical work on the determi- government’s view, the Bank should continue to nants of growth and poverty reduction (that is, a support reforms promoting growth as the most country economic memorandum, Cambodia at important contribution to poverty reduction. the Crossroads: Strengthening Accountability to Reduce Poverty, and two poverty assessments). Poverty Reduction Other growth-related AAA and lending included Background two PERs focused on improving the effective- A 1994 household survey estimated that 47 ness of public expenditures, three reports on percent of Cambodians lived below the poverty the environment for PSD, secure land tenure as line, with 88 percent of the poor living in rural a basis for productivity gains in agriculture, and areas. By the late 1990s there was growing improving government services for farmers. concern, based on subsequent surveys, that Cambodia’s rapid growth was not generating Outcomes significant poverty reduction. While inadequate Overall economic performance during the attention to data quality and comparability in CAE period has been strong, as shown in table these later surveys made comparisons to the 3.2. GDP growth in 1999–2006 averaged over 1994 baseline survey invalid (see box 3.1), these 22 Outcome in Areas of Bank Support Table 3.2: Economic Indicators for Cambodia, 1998–2006 Indicator 1998 1999 2000 2001 2002 2003 2004 2005 2006a GDP real growth rate 5.0 11.9 8.8 8.0 6.5 8.5 10.0 13.5 10.8 GDP per capita, current US$ 253 281 288 301 326 349 392 454 513 Agricultural sector growth rate 5.2 2.2 –0.4 3.6 –2.5 10.5 –0.9 15.7 5.5 Industrial sector growth rate 6.2 21.2 31.2 11.2 17.1 12.0 16.6 12.7 18.3 Manufacturing growth rate 15.2 19.7 30.3 15.2 14.4 12.3 17.7 9.7 17.4 Investment/GDP 12.4 15.9 16.9 18.5 19.7 21.5 17.5 19.7 Foreign direct investment/GDP 7.8 6.6 4.1 3.8 3.4 1.8 2.5 6.1 6.5 Govt. revenue/GDP 8.9 11.5 10.2 10.0 10.5 9.7 10.3 10.3 11.5 Govt. expenditure/GDP 13.8 14.7 15.0 15.2 16.8 16.7 14.9 13.7 13.5 Exports/GDP 25.8 32.1 38.2 39.6 41.4 45.5 49.2 47.0 Imports/GDP 37.6 45.3 53.0 52.7 55.2 58.1 62.1 63.4 Current account balance/GDP –5.6 –5.4 –3.8 –2.8 –2.6 –5.1 –3.5 –5.7 Consumer prices—annual increase 13.3 –0.5 –0.8 0.7 3.7 0.5 5.6 6.7 2.8 Source: Cambodia National Institute of Statistics, National Accounts of Cambodia, June, 2007; World Bank database; IMF staff reports. a. Preliminary. Box 3.1: Measuring Results: Data Quality and Comparability Are Key Three household surveys implemented by Cambodia’s National coordinated inputs with other development partners. The Bank’s Institute of Statistics (NIS) in the late 1990s, to measure con- support for the CSES benefited from its enlarged field capacity for sumption and poverty, provide important lessons on the critical poverty analysis. The 2004 CSES, combined with the rediscovery need for data quality and comparability over time. These sur- of the misplaced data from the 1993/4 sample, allowed the first veys, including two partly supported with Bank-executed trust reliable analysis of poverty trends in Cambodia. An expert working funds, paid inadequate attention to data comparability, result- with NIS stressed that Bank support was well used by NIS and was ing in differing questionnaire designs, sampling frameworks, crucial in helping NIS achieve this result, but that further support and/or implementation procedures. These problems, combined would be needed to build NIS’ capacity. A SWAP currently under with misfiling of key data from the 1993/4 survey, prevented consideration to assist in NSDP implementation and monitoring meaningful comparisons with the baseline survey, delaying the could potentially provide such support. government’s ability to monitor poverty trends for several years.a Cambodia’s experience demonstrates that poverty surveys Bank support to the NIS from 2003 was far more effective, and need to be comparable over time, well documented, and archived. included assistance in implementing the 2004 Cambodia Socio- The World Bank and other donors need to coordinate their support Economic Survey (CSES) and in preparing a Statistical Master for statistics carefully to ensure continuity, comparability, and a Plan for NIS’ overall institutional development. The Bank organized focus on agreed priorities. These lessons extend beyond poverty sustained technical input for the CSES, including specialists in analysis and apply as well to measuring results over time in other survey design and interviewer training, supported special efforts areas—efforts that will intensify as Cambodia and its development to make this survey as comparable as possible to the baseline, and partners move to a more results-based approach. a For a discussion of these surveys and their various issues, see Cambodia, Halving Poverty by 2015? – Poverty Assessment 2006, World Bank, February 2006, p. 19, as well as NIS technical reports on the specific surveys. 23 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 flawed comparisons nevertheless did focus government ownership was weak, contact with attention on the need for a more pro-poor other donors was limited, and the NPRS was not development strategy. linked with the budget or with sector strate- gies.19 On the positive side, the process did Bank Assistance Strategy and Program establish limited consultation with civil society Poverty reduction has been a key objective in and brought poverty reduction more explicitly all three CASs in the CAE period, with broad- into the overall development strategy. based, sustainable growth and improved access for the poor to better quality health and The NPRS experience made it clear that a education services seen as the main drivers of much better approach to supporting a poverty poverty reduction. The Bank has issued two reduction strategy would be required in the poverty reports (1999 and 2006) and contrib- future, with coordinated backing for the govern- uted to producing a consistent time series on ment’s strategy—the NSDP. This was reflected poverty incidence. The Bank also supported the in the specific objective stated in the fiscal 2005 government’s work on the Poverty Reduction CAS—to strengthen government focus on poverty Strategy Paper (in Cambodia it is referred to reduction “through a consolidated national plan as the 2003–05 National Poverty Reduction with increased country ownership . . .” and to Strategy). Unfortunately, the NPRS competed provide a basis for joint action and monitoring with an alternative strategy, the Socio-Economic through “high-quality poverty analysis.”20 Development Plan, supported by ADB. Despite the government’s request to combine the Outcomes and Bank Contribution NPRS and Socio-Economic Development Plan The poverty rate in Cambodia declined from approaches, the Bank and ADB did not agree.18 47  percent to 35 percent between 1994 and In addition to this duplication of effort, the NPRS 2004 (see figure 3.2), falling more rapidly than process allowed inadequate time for consul- in 15  of 18 countries analyzed in the 2006 tation, drafts were produced only in English, Annual Review of Development Effectiveness Figure 3.2: Decline in Poverty 10 5 Annualized changes in poverty 0 (%) –5 –10 –15 Cameroon Burkina Faso Senegal Cambodia China Brazil Sri Lanka Nigeria Malawi Jordan Dom. Rep. Zambia Turkey Bolivia Peru Honduras Madagascar Pakistan Uruguay Source: 2006 Poverty Assessment for Cambodia; 2006 Annual Review of Development Effectiveness for comparators. 24 Outcome in Areas of Bank Support and more rapidly than targeted in the NPRS.21 trust fund.24 The team continues to work with Robust economic growth was the main reason government and donors through the TWG for for this decline in poverty. Moreover, growth Planning and Poverty Reduction. The Bank has was relatively efficient in reducing poverty— also collaborated with other donors and United each 1 percent of annual growth in real GDP per Nations agencies in a number of studies on capita was associated with a decline in poverty of gender issues, social protection, child labor, and over 0.5 percent. Continued high growth since women in the garment industry.35 2004 has undoubtedly led to a further decline in poverty. However, evidence of rising inequality The Bank’s analysis, policy advice and lending in consumption between 1994 and 2004 led the have been relevant for poverty reduction and Bank to analyze equity issues in a 2007 report.22 particularly effective in the second half of the While this report found that the rise in inequal- CAE period. Through the Bank’s work, poverty ity took place almost entirely between 1993 and reduction objectives and programs are now 1997, it cautioned against complacency since a central theme in national planning, and are there are weaknesses in the data and widespread particularly well integrated in education and perceptions of rising inequality. Consequently, health plans. The outcome for the Bank’s poverty the report recommends careful monitoring and reduction efforts over the entire CAE period is specific policies and programs to broaden the judged moderately satisfactory. benefits of growth. Overall Outcome Rating Beginning in 2003 the Bank installed a “poverty The overall rating, balancing the positive team” in the country resident mission to work outcomes in economic growth, expenditure together with headquarters staff on poverty reorientation and poverty reduction, and the analysis, leading to a high-quality poverty recent progress in PFM, against the limited assessment, improved donor coordination, and progress in PSD and the unsatisfactory perfor- effective support for the NSDP.23 DFID funded mance in revenue mobilization, is moderately much of this Bank activity through a US$2 million satisfactory. 25 26 Chapter 4 27 A handicapped woman attempts to walk with an artificial leg in the Veterans International Center, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 28 Delivery of Social Services Education Background A t the beginning of the CAE period, education indicators were still far below regional averages and were much worse for the poor and for women. Efforts were made to restore the basic education system following its near eradication by the Khmer Rouge, but resource constraints, political instability, and lack of security limited progress. By 1997/98, fewer than 63 percent of adults were literate (55 percent for women). The net pri- mary enrollment rate was rising but was still below 80 percent and the rate in lower secondary school had reached only 16 percent. Rates were lower still for the poor, for girls, and in remote areas. Nearly half of the primary schools offered fewer than six grade levels, and only about 9 percent of primary school teachers were educated beyond the lower secondary level. Drop-out and repetition rates were extremely high. Public spending on education was only 1 percent of GDP in the early 1990s. Virtually no funds were available for operating expenses and instructional materials, and teachers’ compensa- tion, like all government salaries, was abysmally low. Spending had risen to 2.3 percent of GDP by 1996–98 but over 60 percent was financed by donors. Bank Assistance Strategy and Program access to basic education, and to improve its Improving social services has been an objective quality and efficiency. A substantial increase in in all three CASs during the evaluation period. public spending on primary and lower second- In education the Bank’s strategy was relevant ary education, improvements in institutional and closely aligned with the government’s capacity, and decentralized management were strategy, which was developed in the late seen as essential for achieving these objectives. 1990s—to expand, and make more equitable, The government also sought improved donor 29 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 coordination to reduce fragmentation of efforts The Education Quality Improvement Project and to increase aid effectiveness. Sector analysis (a Learning and Innovation Loan), focused on and TA, particularly from ADB, UNICEF, and raising quality and efficiency in three of the most UNESCO, and government dialogue with donors, densely populated provinces, benefiting over including the Bank, led to the 2001–05 Education 20 percent of Cambodia’s primary students. It Strategic Plan (ESP) and the associated Cambodia introduced school-based quality improvement Education Sector Support Project (CESSP), plans and piloted learning assessments. Two which is now updated annually based on govern- independent evaluations gave highly positive ment-led reviews with donors.1 The plan, with assessments of this program’s impact.3 an explicitly pro-poor focus, includes school construction in underserved areas, incentives The ongoing CESSP focuses on improving quality for teachers to work in remote areas, quality and access in basic education, applying the main improvement programs, provision of textbooks, lessons of Education Quality Improvement use of budget funding to replace school fees, and Project throughout the country, especially in scholarships for disadvantaged children in lower underserved areas. It is also introducing a system secondary schools. of national standardized learning assessments. It is coordinated with other donors through a Bank Operations SWAP-like arrangement led by the government.4 Bank projects in education are listed in table Implementation progress has been satisfactory. 4.1. The Bank’s early interventions in education The CESSP also provides limited support for were through the first and second Social Fund higher education, but concerns that accredita- projects, which financed small-scale social and tion procedures are not sufficiently independent economic infrastructure, mainly in underserved have postponed broader engagement in higher rural areas. Primary schools were the greatest education by the Bank. source of demand for these funds; during fiscal 1995–2005 these projects built or renovated AAA 1,144 primary schools. Following devastating Both the PER and the IFAPER demonstrated floods in 2000, the Flood Emergency Rehabili- how education expenditures could be increased tation Project built or rehabilitated 376 schools. and made more effective, while the two poverty Together, these three operations built or rebuilt assessments and Bank support for the NPRS and nearly 25 percent of Cambodia’s primary NSDP focused on how these expenditures could schools.2 better assist the poor. Other analytical work Table 4.1: IDA Projects in Education or with Education Components Fiscal year Project name Amount (US$m) Status IEG outcome rating 1995 Social Fund I 20.0 Closed 6/30/00 Satisfactory 1999 Social Fund II 35.0 Closed 3/31/05 Moderately satisfactory 2000 Education Quality 5.0 Closed 3/31/04 Satisfactory Improvement 2001 Flood Emergency 35.0 Closed 6/30/05 Satisfactory Rehabilitation 2005 Education Sector Support 28.0 Ongoing Source: Appendix table A.3c. 30 De l i v e r y o f S o c i a l Se r v i ce s included a report documenting how the cost of poorest income quintile, although disparities in education borne by households still limits access access remain significant for poor students and by the poor, even though increased government in disadvantaged areas. Both the percentage of funding and abolition of school fees substan- complete primary schools (offering all six grade tially reduced cost barriers. A public expenditure levels) and the availability of early childhood tracking survey in primary education measured education have also increased. Literacy rates the extent to which reforms in public expendi- have risen—more rapidly for women and for ture management have resulted in greater those in rural areas—with the largest improve- availability and more timely releases of funds ments among ages 15–24, the group most to the primary level. Policy and program impact affected by the recent enrollment expansion. 6 assessments included Getting Girls in School: Over time, the National Learning Assessments Evidence from a Scholarship Program in (being introduced through the CESSP) will Cambodia and Quality Basic Education for All, provide more direct evidence on trends in which provided much of the analytic underpin- learning outcomes. The one round available to ning for the CESSP .5 date found that average performance of grade- three students is below the intended level.7 Outcomes and Bank Contribution While this is not an unexpected result—given Education sector outcomes in the CAE period the recent rapid expansion in enrollment, which have been strongly positive as shown in table 4.2. included a larger share of children less likely to be prepared for school—it signals an important Cambodia’s primary enrollment and adult literacy future challenge. Another concern is the student/ rates have risen faster than the low-income teacher ratio, which rose sharply, peaking in country average and narrowed the gap with other 2001 before subsiding to levels that are still East Asia and Pacific Region countries. Equity in quite high. However, the average education primary school access has improved, with enroll- level of primary teachers has increased consider- ment rates rising faster than average for girls, for ably. With enrollment of the school-age popula- students in remote areas, and for students in the tion now stabilized, and much of the growth in Table 4.2: Education Outcomes Baseline Outcome Indicator (1997–98) (2005–06) Primary gross enrollment rate 88.3% 124.0% Primary net enrollment rate (NER) 77.8% 91.3% Lower secondary NER 16.3% 31.3% Ratio of female NER to total NER (primary) .93 .98 Ratio of female NER to total NER (lower secondary) .76 .97 Ratio of primary NER in remote areas to total NER .55 .92 Ratio of primary NER of poorest 20% to richest 20% .69 .74 Primary teachers with secondary or higher education 9.3% 25.7% Adult literacy rate (1998 and 2004) 63% 74% Percent of domestic budget for education (1996/98 and 2004/06) 9.2% 15.8% Source: Appendix table A.2b. 31 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 primary enrollment rates completed, it should NGO/government partnerships. The Bank’s be increasingly possible to see the impact of analytical work, which put education issues interventions embodied in the ESP and CESSP in the broader context of public expenditure on learning outcomes. management, civil service reform, and poverty reduction, supported budget reallocations to These outcomes were underpinned by a signifi- finance higher levels of education spending, cant increase in public spending on education, particularly for basic education and scholarship particularly basic education, with an increase in programs for disadvantaged students. A number resources reaching the school level. The shift in of these activities were later incorporated into resources supported by the SAC was crucial for the government’s countrywide Priority Action achieving this result. As indicated in figure 3.1 and Program, and are being reinforced and further in appendix table A.2b, spending on education developed through the CESSP. The Bank has rose as a share of GDP , during a period of rapid supported a flexible SWAP-like approach that GDP growth, increasing more than 50 percent integrates project support with assistance from in real per-capita terms. The share of education donors providing budget support. There has spending financed domestically rose from 38 been important progress in building a national percent to over 56 percent, reducing the reliance school assessment system and a useful focus on on donor financing. The share of public education monitoring and evaluation in both operations spending allocated to basic education rose from and analytic work. Institutional development has an estimated 54 percent in the mid-1990s to been substantial. While significant challenges about 80 percent in the mid-2000s. The increased remain, particularly in raising quality and learning resources financed expansion of the system, outcomes after the massive increase in access, a particularly in previously underserved areas, and process of strategic planning by government and funded a larger share of school operating costs, donors has evolved, which seems sustainable including textbooks, and permitted the elimina- and capable of meeting future challenges. Bank tion of nearly all formal school fees, which had assistance in introducing learning assessments been a barrier to entry for children from poor is providing an essential tool for improving families. Analysis in the Bank’s 2006 poverty learning outcomes over time. The Bank’s contri- assessment indicates that spending on primary bution to these outcomes has been substantial, education has been strongly pro-poor, and more and the CESSP is well structured to assist in recent analysis suggests that the pro-poor focus meeting the continuing challenges. Continu- may have further intensified, with the share of ity of Bank staff involvement in education has spending on specifically pro-poor programs rising been high, with well-qualified staff posted in the from 45 percent in 2002 to 66 percent in 2006.8 field. Government and other donors interviewed While budget releases were often delayed and expressed strong appreciation for the Bank’s sometimes lower than expected, this situation role as an effective and collaborative partner in has apparently improved, although funding the education sector. The overall outcome in delays were still being reported in early 2007. education is rated satisfactory. The government’s ESP provided a coherent Health framework within which the Bank, other donors, Background and the government worked effectively. Bank As in education, efforts were made to reestab- operations met priority needs in the ESP, both lish health services, which had been system- in expanding access to underserved groups and atically destroyed by the Khmer Rouge. Gradual in raising quality, while testing new community improvements were achieved, but health indica- and school-based approaches and learning tors remained stubbornly poor well into the assessments, which provided valuable, field- 1990s. By 1998, the infant mortality rate was based experience on how to improve access and about the same as the average for low-income quality. The Bank also built highly effective donor/ countries but was more than twice the East 32 De l i v e r y o f S o c i a l Se r v i ce s Asia and Pacific Region average. Life expectancy Bank Operations was about 55 years, lower than the low-income The Disease Control and Health Development country average of 58, and far below East Asia Project (see table 4.3) supported a network of and Pacific Region’s 68 years. HIV prevalence had district health centers and referral hospitals in risen to 3.3 percent of the adult population by 11 provinces, as well as three national disease- 1997, the highest in Asia at that time. Total public control programs—for HIV/AIDS (includ- spending on health was only 1.9 percent of GDP ing a small grants program administered by a in 1996–98, with three-fourths funded by donors. Cambodian NGO), malaria, and tuberculosis. Health system coverage was limited geographi- The project fit within the government’s health cally, with only 13 percent of Ministry of Health strategy and with other donor programs. It staff posted in rural areas. shared a joint Project Management Unit with an ADB project and the two organizations agreed Bank Assistance Strategy and Program on a division of the provinces covered. The The Bank’s objectives in health were to expand project funded a major increase in health system access, make health services more equitable, access (by 2.8 million people, or 21 percent and improve quality and efficiency. A significant of the population). 9 The Implementation increase in public spending was seen as essential Completion Report and Project Performance for extending health services to the poor and to Assessment Report (PPAR) had noted method- underserved areas. These objectives were highly ological flaws in the end-of-project evaluation relevant for Cambodia and closely aligned with survey that prevented direct comparisons government strategies for health and poverty with the baseline survey. However, the 2005 alleviation. By the mid-1990s the Ministry of Demographic and Health Survey (DHS) shows Health, with support from WHO, UNICEF, and improving trends in indicators consistent with other donors, had adopted a National Health the PPAR’s assessment of substantial positive Development Plan to reform the delivery outcomes.10 Important lessons included the system by establishing a countrywide network need for training in procurement and financial of community-level primary health centers management, and showed that a relatively backed up by district, provincial, and national complex project can be implemented success- hospitals. Over time, and in consultation with fully if there are explicit implementation plans, donors and other stakeholders, the Ministry with adequate prioritization, capacity building, of Health initiated a sector-wide management and donor coordination. The PPAR also drew approach, leading to articulation of the Health attention to the importance of monitoring and Sector Strategic Plan, 2003–07. This plan moved evaluation to guide implementation decisions, beyond the initial concentration on construc- assess the impact of pilots, and track results tion and rehabilitation of public health facilities over time. The project received an IEG Good to improved service delivery, with a greater focus Practice Award for institutional development on reaching the poor. impact in 2005. Table 4.3: IDA Projects in Health Fiscal year Project name Amount (US$m) Status IEG outcome rating 1997 Disease Control and Health 30.4 Closed 12/31/02 Satisfactory Development 2003 Health Sector Support 27.0 Ongoing Source: Appendix table A.3c. 33 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 The ongoing Health Sector Support Project date to December 2008, is expected to achieve its (HSSP)11 supports the government’s Health development objectives. Sector Strategic Plan, within a multidonor framework. The HSSP partners and other AAA donors active in the health sector participate While the Bank’s analytic work on health has been in annual government-led, SWAP-like reviews limited, it has focused on priority issues and on of sector progress and Health Sector Strategic areas of the Bank’s comparative advantage.14 As in Plan financing needs for the coming year. The education, the Bank has integrated health issues HSSP components include: with the macroeconomic framework, the public sector reform agenda, and poverty through its i. Improving health service delivery, especially economic analysis, PERs, poverty assessments and for the poor, by ensuring adequate health dialogue. By highlighting the linkages between centers and referral hospitals, especially in poverty and health through AAA the Bank helped underserved areas; improving the quality of ensure the integration of the Health Sector services through training, upgraded standards Strategic Plan in the poverty reduction strategy and procedures, and essential equipment, and provided the analytic underpinnings for with an increasing focus on maternal and child interventions to lower health costs for the poor. health issues; increasing affordability for the Several health and education donors highlighted poor through equity funds; and continuing ex- this as an important contribution of the Bank. periments with contracting service provision Following the IFAPER, the health and education (see below) as a mechanism to raise efficiency ministries were selected to pilot the public and effectiveness; financial management reforms being developed ii. Strengthening key public health programs to by the MEF. Bank analytic work has also included improve nutrition and control disease (notably a health financing study, which analyzed pro-poor malaria, dengue, tuberculosis, and STDs and financing policies. A draft health public expendi- HIV/AIDS); and ture tracking survey (being finalized in 2007) iii. Further strengthening health sector manage- analyzes budget resource flows to health facilities ment, particularly policy, legal and regulatory to determine the extent to which resources reach frameworks, sector planning and program co- the front line and to identify areas for improve- ordination, financial management, and moni- ment in resource management.15 toring and evaluation. Outcomes and Bank Contribution The HSSP also supports contracting out health Most health indicators have improved signifi- services to qualified international NGOs in cantly and some more rapidly than in low-income selected operational districts, an innovation countries, on average (see table 4.4). The 26 first introduced in an ADB project in 1998. Early percent drop in infant mortality has moved results are positive and an HSSP-funded evalua- Cambodia from above the low-income country tion is assessing sustainability and replicability of average to well below it. The eight-year rise in contracting.12 life expectancy has put Cambodia well above the low-income country average and signifi- The HSSP is a complex project which started cantly narrowed the gap with the East Asia and slowly. Several factors may explain this, includ- Pacific Region average. Progress has been made ing excessive turnover in Bank task team leader- in increased condom use among groups at high ship—four task team leaders in less than three risk of contracting HIV/AIDS. years.13 This problem was resolved by posting a senior health specialist in Phnom Penh in January The improvement in health outcomes has been 2006. Based on the October 2006 midterm associated with a substantial increase in public review, the operation now appears to be making spending and a greater pro-poor focus, due in good progress and, with extension of the closing part to commitments under the SAC (see figure 34 De l i v e r y o f S o c i a l Se r v i ce s 3.1 and appendix table A.2c). Total spending in funds assisted nearly 100,000 cases in 2005, and real per-capita terms more than doubled from are targeted to reach 400,000 in 2007. Though still 1996–98 through 2004–06, while the share to experimental, health equity funds have led to a health in the domestic budget increased by dramatic increase in use of health facilities by the over 90 percent. Domestic financing rose from beneficiaries, while (unlike with fee exemption 25 percent of expenditures at the start of the CAE schemes) providing incentives to health staff and period to over 30 percent by 2004–06. However, funds for facility operations. despite the strong upward trend in spending, there have been persistent shortfalls and delays Despite substantial progress, indicators of in the disbursement of funds at the facility disease and mortality are still high, as are level, leading to inefficiencies and cutbacks in disparities across socioeconomic levels. The activities.16 Furthermore, little of the increased availability of maternal health services and use spending has been allocated to civil service of health facilities by women have increased salaries, and, as in other sectors, civil service pay substantially and the maternal mortality rate is reform will be critical for sustaining and improv- well below the levels of the mid-1990s. Even so, ing health service access and quality. the maternal mortality rate has not improved since 2000, and is still four times higher than Access to public health services has improved, the East Asia and Pacific Region average, clearly especially in more remote areas, as the number indicating the need to maintain a focus on of health centers, and the number of centers maternal health. Moreover, while HIV/AIDS was offering complete services, has risen. Improve- initially concentrated among sex workers and ments in some indicators, including child uniformed personnel, new cases are emerging immunization and professional prenatal care, in the general population. Fertility and popula- have been more rapid in rural areas than in urban tion growth have declined more slowly in recent ones. Out-of-pocket costs declined by 28 percent years and remain high in comparison with East between 2000 and 2005, mainly due to increased Asia and Pacific Region averages; a more rapid public funding. Health equity funds have been decline in fertility would reduce both maternal introduced to pay user fees for the poor. These mortality and poverty. However, even with these Table 4.4: Health Outcomes Baseline Outcome Indicator (1997–98) (2004–05) Infant mortality (per 1,000 live births) 89 66 Maternal mortality (per 1,000 live births) (1995 and 2005) 6.5 4.7 Percentage of live births with professional prenatal care 34.3% 69.3% Life expectancy at birth for total population (years) 55 63 Child immunization rate for DPT3 46% 78% Consistent condom use by sex workers (1997 and 2003) 42% 96% Number of patients assisted by equity funds (2002 and 2005) 5,234 99,800 Out-of-pocket health spending (US$ per capita, 2000 and 2005) 20.70 14.90 Percentage of domestic budget spent on health (1996–98 and 2004–06) 5.0% 9.7% Source: Appendix table A.2c. 35 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 caveats, the improvements in health outcomes scale that had a countrywide impact. The Bank can be rated satisfactory. has contributed to institutional development and has supported the Ministry of Health’s efforts to Assessing attribution for outcomes in health improve donor coordination. Operations and is difficult, not only because many donors are analytical work have had an adequate focus on involved in the sector, but also because health results monitoring and evaluation. outcomes are not the result of public health programs alone. Nevertheless, it is clear that the The outcome for the Bank’s contributions in Bank’s program has made an important contribu- both the health and education sectors over the tion to outcomes. The program was supportive of CAE period is judged satisfactory, and the Bank’s the government’s strategy, operated through the significant contributions to institutional and Ministry of Health, and provided resources on a human resource capacity building are also noted. 36 Chapter 5 37 A man employs two oxen to plough a rice field, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 38 Agriculture, Rural Development, and Natural Resource Management Background T he Cambodian agricultural sector is comprised largely of smallholder farms devoted to subsistence rice production. After the disastrous col- lectivization program of the Khmer Rouge, the government, during the 1980s, abolished collective farming, restored private ownership of land, and established free markets for agricultural trade. However, given the disruptions of the past, agricultural productivity remains well below other East Asia and Pacific Region countries (see table 5.1). Limited irrigation infrastructure, poor irrigation water management, and low use of purchased inputs are the main causes of low productivity.1 The agricultural sector growth rate has been posi- tive—4 percent per year during the CAE period—but production is subject to significant weather-related fluctuations.2 The main natural resource issues that Cambodia of extraction, if continued, would totally exhaust faces are: establishing sustainable and equitable Cambodia’s forests within one or two decades. utilization of forest resources; control and distri- bution of the water supply for agriculture, fisher- Bank Assistance Strategy and Program ies and other uses; establishing security of land With 85 percent of the population living in the tenure; and protection of significant biodiver- rural areas, and 90 percent of the poor, the Bank sity resources. With respect to Cambodia’s clearly saw the priority of focusing on agricul- valuable timber reserves, lack of security in ture and rural development. However, given previous decades had the effect of preserv- lack of knowledge of the sector, the Bank was ing the forests. However, with political stabil- not well placed initially to move quickly into ity restored, uncontrolled extraction of timber operational support, nor was the Bank the lead became rampant, with annual off-take estimated donor for agriculture. The Bank nevertheless to be four to eight times the sustainable yield, began work with an agriculture sector memoran- while the government received only 20 percent dum to identify constraints and priority needs; of the estimated value of royalties on the timber the report was discussed with government and harvested. It was widely recognized that this rate other donors and incorporated into the 1997 39 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table 5.1: Productivity of Selected Crops in Southeast Asian Countries (2001 tons/hectare) Ricea Maize Cassava Soybeans Cambodia 2.07 (90%) 2.76 10.5 0.85 Vietnam 4.29 (62%) 2.96 12 1.24 Thailand 2.62 (57%) 3.73 17.5 1.42 Lao PDR 3.13 (80%) 2.55 4 0.9 China 6.15 (n/a) 4.7 16 1.62 Indonesia 4.39 (38%) 2.84 12.9 1.22 Malaysia 3.14 (12%) 3.05 10 n/a Source: Food and Agriculture Organization of the United Nations, as quoted in Rural Sector Strategy Note, World Bank, June 20, 2005. a. Figure in parentheses is rice share of total cultivated area. CAS and the first lending operation. Also, the From fiscal 1999 through December 2006 the Bank worked with UNDP and FAO on a sustain- Bank committed funding for a project in Land able forestry policy. The 1997 CAS emphasized Management, Learning and Innovation Loans in that “revenues from the exploitation of natural Forest Concession Management and biodiver- resources, most notably forestry, should flow sity protection, a Flood Emergency Rehabilita- transparently and fully into the national budget.” tion project (following the devastating floods The fiscal 2000 CAS emphasized the need to of 2000), and small-scale rural development develop rural infrastructure, and the fiscal 2005 projects—Social Fund II, Northeast Village CAS highlighted support for the government’s Development, Rural Investment and Local program of decentralization and the continued Governance (see table 5.2). The small-scale need to improve NRM. rural development projects supported the government’s initiatives in decentralization and Bank Operations enhanced the capacity of local governments The first operation in the agricultural sector was to plan and oversee development activities. the fiscal 1997 Agricultural Productivity Improve- (Because these rural development projects ment Project, which closed in fiscal 2006, and the Social Fund projects also funded rural 42 months after the original closing date. The infrastructure they are also listed in table 6.1) project focused on improving the capacity of the The NVDP operated through the Ministry of Ministry of Agriculture, Forestry, and Fisheries Rural Development to support projects at the to deliver services to improve farmers’ produc- village level, rather than directly participating tivity. The project contributed to some capacity in the government’s Seila program, which was building within the ministry, and adoption of supported by other donors, although the Bank improved practices in small-scale irrigation, pest provided some grant support to Seila in parallel management, and animal health, but did not with the NVDP. 3 However, in line with the succeed in developing a sustainable system for government’s decision to concentrate support delivering the full range of services to farmers. at the commune level rather than the village Following a mid-term review, greater efforts were level, following elections for commune councils made to establish links to farmers but without in 2002, the Bank adopted the Seila approach success. The outcome was judged moderately in the fiscal 2003 Rural Investment and Local unsatisfactory. Governance project. The Bank is now aligned 40 Ag r i c u lt u r e , R u r a l De v e l o p m e n t, a n d N at u r a l Re s o u r ce M a n a ge m e n t Table 5.2: IDA Projects in Agriculture, Rural Development, and Natural Resource Management Fiscal year Name Amount Status IEG outcome rating 1995 Social Fund I 20.0 Closed 6/30/00 Satisfactory 1997 Agricultural Productivity Improvement 27.0 Closed 12/31/05 Moderately unsatisfactory 1999 Social Fund II 35.0 Closed 3/31/05 Moderately satisfactory 1999 Northeast Village Development 5.0 Closed 6/30/04 Satisfactory 2000 Forest Concession Management 4.8 Closed 12/31/05 Unsatisfactory 2000 Biodiversity and Protected Areas Mgt. 1.9 Ongoing 2001 Flood Emergency Rehabilitation 35.0 Closed 6/30/05 Satisfactory 2002 Land Management and Administration 24.3 Ongoing 2003 Rural Investment and Local Governance 22.0 Ongoing with an approach to rural development that has divergent views within the Bank.4 Also, the Bank strong government support. and the Directorate of Forest Administration in the Minstry of Agriculture, Forestry, and Fisher- In the Land Management and Administration ies were caught between powerful political and Project the Bank is collaborating with several financial interests: those wishing to maintain donors to support the government’s land titling the virtually unsupervised concession system, program, considered essential for establishing and civil society organizations that viewed any secure land tenure. Quality-at-entry was rated phased or negotiated program of improve- satisfactory and strategic relevance was rated ments in the concession system as an unaccept- highly satisfactory by the Quality Assurance able compromise. In January 2005 the Bank’s Group. The project’s objective is to issue one external Inspection Panel received a request for million titles during its implementation period. By inspection from the Cambodian NGO Forum, January 31, 2007 (11 months before the expected representing indigenous communities said to closing date) 880,000 titles had been issued. While have been adversely affected by the project, and this is obviously a successful program, at the same specifically by the failure of the Bank to apply time, land-grabbing under a variety of pretexts has its own safeguard measures in the design and become a major problem (see box 5.1 ). implementation of the project. Upon conclu- sion of a year-long investigation, the Inspection In NRM the biodiversity project has focused on Panel’s major conclusions were the following: strengthening the capacity of the Ministry of Environment to develop and manage protected i. The focus on concessions was at the expense areas. Implementation has gone well and a of other aspects of forestry that could have second project is under preparation. The Forest been more responsive to the Bank’s poverty Concession Management Project, based on the objectives; collaborative sector work mentioned above, ii. Deferring a social impact assessment did, in was linked to the conditions for improved forest fact, contribute to detrimental effects of the management in the SAC. While the Bank’s effort project on vulnerable communities; and to bring control to the forestry sector addressed iii. The Bank should not have undertaken such a a high-priority problem, the project faced sensitive and controversial operation without 41 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Box 5.1: Economic Land Concessions Land titling issues are not uniform across Cambodia. In more active. Seventy percent of these concessions are on land officially settled lowland areas, there are fewer disputes over claims. designated as forest land. While there is an official requirement that However, in highland areas, waves of dislocations over the the Ministry of Agriculture, Forestry, and Fisheries must approve a past 30 years have seriously disrupted traditional land-holding use plan for all concessions, this is not rigorously enforced. Plans systems. It is here that economic land concessions are being do not include a declaration of intent to maintain forests, and there granted and informal land-grabbing is taking place. is negligible follow-up once exploitation has begun. Intended originally for the development of agribusiness enter- Provincial governors have the authority to approve conces- prises, the government began granting economic land concessions sions of less than 1,000 ha each and there has been a rapid in 1992. To date, some 96 contracts have been negotiated with the increase in the number and coverage of these smaller conces- Ministry of Agriculture, Forestry, and Fisheries, for concession in sions in recent years. There is presently no reporting system to excess of 1,000 ha each. Thirty contracts have since been can- maintain accurate records on the scope of this type of concession celled, 9 remain unsigned, and 57, covering some 943,000 ha, are countrywide. broader support and participation from the and provided a basis for dialogue between donors donor community. and government, but it did not reach conclusions or propose a course of action. A recent Bank Bank management accepted the Panel’s finding analysis of the agrarian structure is a timely initia- on the social impact assessment5 but dissented on tive inasmuch as elements within the govern- the other findings. The suspension of logging on ment are advocating large-scale agricultural all concessions, pending government approval of production units, despite widespread evidence management plans, and a ban on log exports did that productivity is generally maximized under reduce substantially the rate of forest depletion. small-scale production. The Value Chain Analysis However, after two delays in the closing date, and mentioned earlier identified the constraints to a finding of misprocurement by the Bank, the expanding the production of cotton, rice, and project closed without any approved concession tobacco.6 The 2004 country economic memoran- management plans or a forest crime monitoring dum made the highly significant point that, up and prevention capability. A new National Forest until that time, only 8 percent of donor support Management Plan is still pending and the govern- had gone to agriculture and forestry. Overall, the ment and Bank have not reached agreement on a Bank made effective use of AAA resources but way forward in the sector. the level of resources did not appear to be in line with the importance of the sector. AAA The plan in the fiscal 1997 CAS was to allocate Outcomes and Bank Contribution more than one‑third of the Bank’s administra- Positive results are being achieved in land tive resources to nonlending services. However, titling, which indicates that where there is solid in that CAS period no work was budgeted in government commitment to an objective, the agriculture, and only a limited amount in forestry, resources and expertise of the Bank can be used to continue work with UNDP and FAO. The 2000 effectively to generate significant positive results. CAS proposed a number of nonlending services (However, this progress is being made in the face that would contribute to analysis and capacity of widespread land-grabbing in other regions). building in the rural sector, mainly support Progress is also being made in safeguarding for the NPRS. A 2005 rural sector strategy note biologically valuable resources through the assessed conditions and constraints in the sector protected-areas program under the Ministry 42 Ag r i c u lt u r e , R u r a l De v e l o p m e n t, a n d N at u r a l Re s o u r ce M a n a ge m e n t of Environment, supported by the Biodiversity a limited impact; the organizational and techni- project. While the Bank studied Cambodia’s cal issues that limit the provision of services, agricultural sector in the fiscal 1997 agricultural and therefore agricultural productivity gains, sector memorandum, the fiscal 2005 rural sector remain largely unresolved and the Bank has strategy note, and the recent analysis of agrarian not developed an effective course of action to structure, analysis of several issues such as water address them. In forestry the Bank and other resources availability and usage, markets for donors collaborated on a thorough analysis of agricultural production, and the possibilities for issues and options for the sector and developed shifting from dependence on rice cultivation to a rational approach, which the government a more diversified production system has been officially committed to implement, but the deficient. The Bank has not defined a country- effort ground to a halt in the face of pressure wide strategy for supporting rehabilitation and from vested interests and became a flashpoint expansion of irrigation systems or supporting for public opinion. Balancing all of these quite crop diversification and productivity improve- diverse outcomes from Bank programs in agricul- ments.7 Capacity-building efforts in the Minstry ture, rural development, and NRM during the of Agriculture, Forestry, and Fisheries and the CAE period, the overall evaluation is moderately Ministry of Rural Development have had only unsatisfactory. 43 44 Chapter 6 45 Slum area, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 46 Infrastructure Background D ecades of conflict and neglect took a heavy toll on Cambodia’s in- frastructure. Some emergency rehabilitation work had been carried out, but the country’s physical infrastructure was in extremely poor condition when Bank support began in the mid-1990s. Roads were badly deteriorated, with some sections impassable in the rainy season. Land mines and unexploded ordinance hindered reconstruction efforts, especially in areas of recent conflict. Phnom Penh, which had been well served with power and water in the 1960s, experienced regular power and water shortages; only 25 percent of residents received piped water and only for 10 hours per day. Even where electricity was available, large-scale industrial and commercial enter- prises often generated their own power because of low reliability and the high cost of electricity from the power grid. Despite these shortcomings, Phnom Penh was much better served than smaller towns and rural areas. Bank Assistance Strategy and Program investment in delivery of infrastructure services. Infrastructure rehabilitation was an objective of The 2005 CAS saw infrastructure improvement as the 1997 CAS, with the focus on urban infrastruc- a key intermediate outcome supporting private ture (power in Phnom Penh and water supply in sector development and meeting the Millenium Phnom Penh and Sihanoukville) and the national Development Goals. highway system. While rural infrastructure was mentioned under the objective, “enhance rural Bank Operations development and natural resource manage- Projects in infrastructure or with infrastructure ment,” aside from the Social Fund projects, there components are shown in table 6.1. The first was no direct funding of rural infrastructure in phase of Bank involvement in infrastructure this early period. In the 2000 CAS, emphasis included the Phnom Penh Power Rehabilitation began to shift to rural infrastructure and to project and the Urban Water Supply project (for developing the policy environment for private Phnom Penh and Sihanoukville), both approved 47 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 prior to this CAE period, and the fiscal 1999 Road wells, and latrines in rural areas. The Northeast Rehabilitation project, which focused on national Village Development project (a Learning and and urban roads. Innovation Loan) tested participatory approaches at the village level for rehabilitating economic The Bank’s infrastructure focus subsequently infrastructure. The Rural Investment and Local shifted to supporting infrastructure rehabilita- Governance project, building on the experience tion and development outside the urban centers. of the Northeast Village Development project, The Provincial and Peri-Urban Water and Sanita- funds infrastructure at the commune level in 15 tion project extends water supply to low-income provinces. The Flood Emergency Rehabilitation communities in the peri-urban areas of Phnom project funded rehabilitation of flood control and Penh and to the provinces. This project is also irrigation works, rural roads, schools, and other piloting a program in which private operators rural infrastructure. finance, build, and operate water systems with Bank financing of connections for low-income As table 6.1 shows, all completed projects have households. The Provincial and Rural Infrastruc- been rated moderately satisfactory to highly ture project is funding rehabilitation and mainte- satisfactory and two have received awards, either nance of secondary roads in four provinces.1 The for design or for performance of the project Rural Electrification and Transmission project agency. In addition to meeting physical targets, includes a pilot rural electrification fund in these projects supported institutional develop- addition to financing a transmission line from ment and the policy framework in the water and the Vietnamese border to Phnom Penh, which is electricity subsectors. While it is not yet possible strategically important for lowering energy costs. to make a full evaluation of the more recent, Other projects with infrastructure components small-scale and widely scattered investments include the Social Fund projects, which funded under the ongoing rural infrastructure projects, primarily rural schools but also bridges, culverts, the Rural Investment and Local Governance Table 6.1: IDA Projects in Infrastructure or with Infrastructure Components Fiscal year Name Amount (US$m) Status IEG rating 1995 Social Fund I 20.0 Closed 6/30/00 Satisfactory 1996 Phnom Penh Power Rehabilitation 40.0 Closed 6/30/00 Satisfactorya 1998 Urban Water Supply 31.0 Closed 3/31/04 Highly satisfactoryb 1999 Social Fund II 35.0 Closed 3/31/05 Moderately satisfactory 1999 Road Rehabilitation 45.3 Closed 9/30/06 1999 Northeast Village Development 5.0 Closed 6/30/04 Satisfactory 2001 Flood Emergency Rehabilitation 35.0 Closed 6/30/05 Satisfactory 2003 Provincial and Peri-Urban Water and Sanitation 19.9 Ongoing 2003 Rural Investment and Local Governance 22.0 Ongoing 2004 Rural Electrification and Transmission 40.0 Ongoing 2004 Provincial and Rural Infrastructure 20.0 Ongoing a. The Phnom Penh Power Rehabilitation Project received an IEG Good Practice Award in 2006. b. The ADB awarded the Phnom Penh Water and Sewer Authority its “Water Prize” in 2004, an award given to exemplary project agencies. 48 Infrastructure and Rural Investment projects have been rated ture and improving service delivery, although moderately satisfactory or satisfactory in from an extremely low base. It is estimated Implementation Status Reports.2 The Provincial that vehicle operating costs were reduced by and Rural Infrastructure and Provincial Water 45–78  percent under the Road Rehabilitation Supply projects were also rated satisfactory until project, although government’s lack of commit- both were suspended by Bank management in ment to maintenance is a problem flagged in mid-2006, following the Department of Institu- Country Portfolio Performance Reviews. The tional Integrity (INT) investigations. Phnom Penh water project resulted in a doubling of output and connections and a reduction of Some infrastructure projects have experi- 70  percent in lost water.3 The power project enced delays in preparation, effectiveness, and enabled the national power company, Électricité implementation. Bank Country Portfolio Perfor- du Cambodge (EDC) to triple output and double mance Reviews have identified slow implemen- the number of users, to reduce system losses by tation as a key issue, with lack of counterpart 50 percent, and to improve administration, but funding as one of the main causes. Project closing finances remain weak, largely due to the high dates have generally been extended by at least six cost of imported fuel. months. One weakness in the Bank’s assistance for infrastructure has been lack of attention Another important outcome has been the to monitoring and evaluation. Past CASs have increasing regulation (and accompanying quality proposed indicators, sometimes numerous and control) of private suppliers in electricity and conflicting (in the 2000 CAS), sometimes qualita- water supply. While the main public utilities have tive and vague (in the 2005 CAS). Because the Bank concentrated on improving and expanding service has now moved into the rural areas with numerous in Phnom Penh and provincial capitals, private small-scale activities, monitoring and evaluating operators, primarily small local enterprises, have these efforts has become more challenging and begun to expand service outside the main urban deserves greater focus and resources. centers. Over 100 licensed power producers supply power in smaller towns, accounting for AAA approximately 30 percent of electricity consum- The Bank has assisted the government in ers nationwide, and they generate 70 percent of developing strategies and policies for infrastruc- total output, most of which is sold to EDC for ture development through sector work and TA. distribution in Phnom Penh. The government In energy, a power sector strategy report, the has taken steps to strengthen private participa- 2002 report Private Solutions for Infrastruc- tion in infrastructure, enacting an electricity law ture in Cambodia , and nine Public-Private and creating the autonomous Electricity Author- Infrastructure Advisory Facility grants assisted ity of Cambodia in 2001. The authority issues the government in strengthening sector policies licenses for power operators, regulates tariffs, and management and in developing an electric- and provides assistance to smaller operators to ity law and electricity authority. An update of the improve their operational efficiency. energy sector strategy is currently under way as a joint exercise of the government, the Bank, ADB, In water, 25 private operators have been JICA, and other donors. In the water sector, the licensed to supply water in towns not covered Bank has provided policy advice and prepared an by the 15 public providers. The government has implementation strategy for urban water supply drafted, but not yet enacted, a Water Supply and in 2006. In transport, the Bank has advised on Sanitation Regulatory Law, which would outline maintenance budgeting and road management. the principles and regulatory framework for private provision of water supply and sanitation Outcomes and Bank Contribution services. The government has also contracted Significant progress has been made in rehabilitat- with private sector operators for other services.4 ing/reconstructing urban and national infrastruc- However, many of these early contracts were 49 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 negotiated directly, without competition and Nevertheless, given the notable progress made transparency, and may not have obtained the over the CAE period, the overall outcome can be most advantageous outcomes for the country. considered to be, on balance, satisfactory. In order to maximize the economic benefits from public-private partnerships, the govern- The Bank has contributed to these positive ment has developed a private participation outcomes. Bank projects have improved quality in infrastructure policy with support from the and access to electricity, water supply, and Bank, Public-Private Infrastructure Advisory transportation services in urban areas, thus Facility, and United Nations Industrial Develop- improving human welfare and the environment ment Organization, and has adopted a Law on for PSD. The Bank has also contributed to institu- Concessions. tional strengthening of EDC and the Phnom Penh Water Supply Authority, and supported Despite this notable progress, the country the introduction of a regulatory framework still lags well behind neighbors, as shown in for private investment in the electricity and table 6.2. Furthermore, national averages mask water supply sectors. The Bank has assisted the wide disparities between different regions and government in setting up a Rural Electrification between urban and rural areas. For example, Fund to provide financing for smaller private some 75 percent of the primary road network has power operators. The Bank is now beginning to been paved, while only 2 percent of provincial address the imbalances in infrastructure services roads are paved. Regional differences in access between the major urban centers and the rest of to water and electricity are shown in table 6.3. the country. Table 6.2: International Comparisons of Infrastructure Services (2003 or latest available year) Cambodia Lao PDR Thailand Vietnam Power Households with electricity connection (%) 17 58 84 81 Residential electricity tariffs (US$/ kilowatt hour) 0.08–0.14 0.04 0.06 0.05 Water and sanitation Access to improved water (%) 44 58 93 49 Access to improved sanitation (%) 22 30 98 25 Roads Percentage of paved roads 4 14 91 n.a. Source: Asian Development Bank, Japan Bank for International Cooperation, and World Bank 2005, Connecting East Asia: A New Framework for Infrastructure, appendix A. 50 Infrastructure Table 6.3: Distribution of Land, Population, and Selected Infrastructure Characteristics by Region: 1998, 2004 (in percent) Households with piped water & tube/ Households with Land Population pipe wells electricitya 1998 1998 2004 1998 2004 1998 2004 Phnom Penh >1 9 8 51 74 80 92 Plains (excluding Phnom Penh) 14 43 41 25 42 9 11 Tonle Sap 38 31 33 11 21 10 13 Coastal 10 7 7 8 16 18 15 Plateau and mountain 38 10 11 17 28 8 7 Total 100 100 100 21 34 16 18 Source: 1998, Population Census; 2004, Inter-Censual Population Survey, National Institute of Statistics. a. Includes households with access to city power and generators. 51 52 Chapter 7 53 People help to push a car across a river next to a bridge that was destroyed in 1970, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 54 Governance Background T he traumatic disruptions that Cambodia suffered over many years, and the resulting loss of human resources and social cohesion, virtu- ally destroyed governmental institutions and any public confidence in them. Rebuilding public trust in government requires time. However, widespread public perceptions exist that shortcomings in governance and corruption, both large and small scale, are commonplace and may in fact be increasing. While the links between corruption and development outcomes are not always easy to define and measure—and Cambodia is among those countries that have experienced high economic growth despite high corrup- tion—it seems evident that there are heavy economic and social costs for Cambodia. This is particularly true for PSD, where despite high growth there has been little foreign investor interest except in the garment and tourism sectors. The extent of corruption and its impact on development outcomes have been documented in Bank reports and in surveys by Cambodian NGOs.1 A 2005 survey found that the legal/judicial system Petty corruption can be partly attributed to was considered to be the most corrupt entity extremely low civil service wages, averaging only in the government,2 followed by the police and US$45 per month in 2006. If civil servants cannot the taxation and customs services. The judicial support their families on their government system, like the general civil service and the salaries they will be forced to hold multiple jobs, education system, was devastated by the Khmer to be absent, or to use their position for private Rouge. Rebuilding has been slow and capacity is gain. Other problems in the public service arise still severely limited. In addition, the executive from the way in which the service was rebuilt branch has restricted the independence of the following the Khmer Rouge era—largely through judiciary. sharing government appointments among politi- 55 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 cal factions, rather than through a merit-based Bank’s support for governance reforms has system. included PFM, forestry, land management, PSD, and delivery of social services. These aspects The government has repeatedly stated that good of the Bank’s program have been discussed in governance is a high priority and has repeatedly previous chapters. This chapter concentrates on confirmed its intention to issue regulations, Bank activities in the governance areas of civil pass laws, and implement reforms. The program service reform, legal and judicial reform (LJR), for decentralization and deconcentration of and anticorruption. government responsibilities to the provinces and communes is a central pillar of the govern- Civil service reform has been a focus of Bank ment’s plan for improved governance. As stated efforts since the mid-1990s, with limited progress in chapter 5, the Seila program for rural develop- to date. The fiscal 1995 TA project included ment has been the testing ground for determin- support for civil service reform—to include a ing local-level capacity to design and carry out census of the civil service and preparation of development projects and programs. Passage of a plan for downsizing, which the government the Law on Commune/Sangkat Administrative did not believe was necessary—but there was Management in 2001 and the commune council no follow-up action on the part of the govern- elections in 2002 represented concrete steps in ment. The SAC called for development of a the devolution of governmental authority. The military demobilization plan, a functional review government and donors view the decentraliza- of ministries, and “an action plan to rationalize tion carried out to date as a success. However, the size and functions of the civil service.” The the government’s plans have yet to be fully demobilization program was begun but not developed and the law on decentralization still completed, and the civil service activities were awaits passage. The government is also clearly not implemented. A proposed Public Sector committed to improving governance and Reform project was dropped. Under the fiscal service delivery in health and education services 2005 CAS, and in the series of Poverty Reduction and PFM. and Growth Operations (PRGO) begun after the review period for the CAE, the Bank has taken Bank Assistance Strategy and Program a more focused and selective approach to civil The Bank and other donors are fully aware service reform, concentrating on the merit-based of these governance problems. Donors have pay initiative introduced under the PFM reform increased governance conditionality in their program. assistance programs and have set benchmarks for governance reforms at CG meetings since 2000. Legal and judicial reform (LJR) was also seen as a The 2006 CG set targets for approving the anticor- priority by the Bank. Limited support for LJR was ruption law, completing other pending laws and provided in the TA project but with little result. regulations, improving pay in the civil service, In fiscal 2003 a trust fund grant of US$228,000 improving PFM, developing a national forest was proposed for a legal and judicial needs program, developing a land management policy, assessment, but there was a timing problem and and submitting the draft law on concessions to agreement was not reached on the use of these the National Assembly. In between CG meetings, funds. A multidonor SWAP operation for LJR also donor representatives meet with the govern- did not proceed. The Bank does not provide ment on a quarterly basis to review progress any support for specific elements of LJR at the against the CG benchmarks on these and other present time. There is a TWG for LJR but it has targets. To date, many of these benchmarks from experienced difficulty in obtaining commitments past CGs have not been met. of donor resources. However, the Bank and other donors continue to focus on LJR issues through The Bank has given increasing emphasis to the Joint Monitoring Indicators agreed at each governance issues in each succeeding CAS. The CG meeting. 56 G o v e r n a n ce Box 7.1: The Bank’s Fiduciary Report and Investigation of Misprocurement in IDA Projects In early 2003 INT investigated allegations of fraud and corruption in pursuing these problems. However, concerns were voiced about in the fiscal 2002 Demobilization and Reintegration Project. The the lack of information provided to either the government or the investigation led to a finding of misprocurement, suspension of public on the findings of the investigation or the basis for some of the project, repayment by government of US$2.8 million, and the Bank’s follow-up actions.b The government argued that it was sanctioning of individuals and firms, including the consulting extremely difficult for the MEF to accept some of the INT conclu- firm assisting the government with demobilization. The Bank sions and to convince implementing ministries of their validity, or then carried out a Fiduciary Review of a sample of contracts to explain what specific remedial actions ministries should take, under four other IDA credits—a collaborative exercise involv- and why some project funds were cancelled. The government ing the East Asia and Pacific Region, INT and the government. designated the Ministry of National Assembly-Senate Relations The findings were discussed in a workshop with government in and Inspections to carry out follow-up investigations, and the September 2005 and were made available to the public. Suffi- ministry has received some technical assistance, but its capacity cient evidence was found to justify a full INT investigation of two is very limited and little progress has apparently been made. of these projects and complaints were subsequently received The Bank, in order to reduce fiduciary risks in future, has set up about five other projects which were also investigated.a The final an internal anticorruption committee to assist Bank project staff in outcome was a finding of fraudulent practices in 49 contracts applying anticorruption measures in ongoing and future Cambo- in seven projects. The Bank declared misprocurement on 43 dian operations, and has assigned a procurement specialist to the contracts in five of these projects, cancelled US$11.9 million Phnom Penh office. The Bank and government have also agreed of project funds and demanded repayment of US$7.6 million. that the government will employ an independent procurement Three projects were suspended; the last of these suspensions agent to handle virtually all procurement in IDA projects until the was not lifted until February 2007, following agreement between outcome of ongoing activities to strengthen the government’s pro- the Bank and government on remedial action plans. curement system is judged satisfactory. While these actions, and It is apparent that this investigation had a damaging impact on the remedial action plans in individual projects, are positive steps, Bank-country relations. In discussions with IEG, the government, the question remains whether the process of investigation and donors, and other stakeholders agreed that the Bank was justified the release of findings could have been handled more effectively. a. An investigation differs greatly from a Detailed Implementation Review due to differences in methodologies, processes and objectives. An investigation is conducted as a result of a specific allegation involving fraudulent and/or corrupt practices in relation to a Bank-financed project. If the allegation is supported by the evidence, the firm and/or individuals are sanctioned. As a secondary objective, the Bank shares information with the member government concerned in order for the government to undertake its own criminal and/or administra- tive investigation. This referral is made within the framework of the Bank’s disclosure policies and procedures, including those regarding protection of confidential witnesses. A DIR, previously referred to as a Fiduciary Review, is a proactive diagnostic tool used to assess the risk of fraud, corruption and mismanagement in Bank-financed projects. It is specifically designed to review projects in the absence of any prior allegations or evidence that wrongful activity may have taken place. A DIR is coordinated through the country office, and involves an intensive review of project documentation and contracts. The focus is on identifying indicators of fraud, collusion and corruption in the procurement and disbursement processes, in contract management, and in the implementation stage of projects. The results of a DIR can be followed up in a variety of ways, including through referral for possible further investiga- tion by INT, or by relevant national authorities. Risk mitigation strategies are adapted and implemented by the Bank’s operational staff as a result of the DIR process. Misprocurement can also be declared by the Bank based on the findings of a DIR. b. At the Bank-Fund Annual Meetings in September 2006 the government said in its official statement, “The Royal Government of Cambodia welcomes the stronger focus of the Bank on results. However, we call on the Bank to reform its investigative procedures and modalities, which, we note with dismay, have in the recent past tended to violate the principles of fairness and ethics.” Until allegations of misprocurement were raised AAA in the Demobilization and Reintegration project The Bank has produced several reports with a in 2002, the Bank did not have concrete evidence focus on governance. These include the PER, of any misuse of IDA funds, although concerns IFAPER, a Country Financial Accountability had been brought to the attention of the MEF Assessment carried out as part of the IFAPER, a from time to time. The ensuing investigation country procurement assessment report (fiscal and its outcome have had a serious impact on 2005), a “Note on Civil Service Pay and Employ- Bank operations and Bank-country relations ment Reform” (2000),“Cambodia: Governance (see box 7.1 ). and Corruption Diagnostic: Evidence from 57 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Citizen, Enterprise and Public Official Surveys” In LJR, progress toward creation of an effective (fiscal 2000), which provided the basis for the judicial system has been slow. In the 1994 government’s Governance Action Plan in 2001 “National Program to Rehabilitate and Develop prepared with Bank assistance, a Legal/Judicial Cambodia” the government set out a vision for assessment (fiscal 2004), four Country Portfolio LJR and an implementation plan was issued in Performance Reviews (the last one jointly with 1995. A judicial reform council was established ADB) and a Fiduciary Review. Other reports in 2000, later known as the Council for Legal and concerned with governance included the 2004 Judicial Reform, with a Permanent Coordinat- economic report, “Cambodia at the Crossroads: ing Body for LJR under the council. In 2003 the Strengthening Accountability to Reduce government adopted a comprehensive strategy Poverty,” and the reports on constraints to PSD for LJR and circulated an implementation plan. cited in chapter 3.3 The Bank has collaborated In December 2003 a national workshop on with other donors in several of these initiatives. implementation of the strategy was held. Then However, the impact of this analytical work on a Project Management Unit was set up under the governance reforms has been limited. Permanent Coordinating Body, which in 2004 refined the draft action plan into a program of Outcomes and Bank Contribution short-term and medium-term priorities. Several The government has taken some steps to address critical laws on the status of judges and prosecu- weak governance and corruption, but these have tors, on the organization and functioning of the been primarily procedural, with little impact on courts, and civil and criminal codes were to be the overall environment. Little has been done adopted within three years under the plan. The to implement the 2001 Governance Action Plan. government committed to producing a Commer- While in 1999 the Ministry of National Assembly- cial Code under the SAC but there was no Senate Relations and Inspections was created progress at that time. At the 2006 CG the govern- to investigate allegations of corruption and ment promised to deliver additional legislation an anticorruption unit was established in the during 2006—the Penal Procedure Code, Penal Council of Ministers, neither of these bodies is Code, Civil Code, Law on the Status of Judges, a independent of the executive branch of govern- law on concessions (for private participation in ment and both lack capacity and resources. infrastructure), and the Law on Court Organiza- The government began working on an anticor- tion and Functioning—and to establish a time ruption law in 1995 but the law has yet to be frame for completing the remaining laws and passed. Some important goals of the NSDP have regulations required for World Trade Organi- still not been accomplished, such as “fast-track zation accession. The civil procedure code, passage of a comprehensive anticorruption law, penal procedure code and civil code have been setting up an independent and effective body to adopted. The Commercial Code is still under fight corruption, and development and enforce- preparation at the Ministry of Commerce which ment of a code of ethics for the public sector.” is also drafting a law for the establishment of a The anticorruption law has become one of the commercial tribunal. key monitoring benchmarks at successive CG meetings. At the 2006 meeting, the government The government has also made little progress on agreed to finalize and approve the anticorruption civil service reform. The Bank has had difficulty law by June 2006, and to prepare an implementa- developing an effective working relationship with tion plan for the new law by October 2006, but the Council for Administrative Reform, which is neither was done. Only a few corruption cases responsible for civil service reform. A census of have been brought to court. There are no rules the civil service was carried out in 2000, which on conflict of interest, and ministers, parlia- resulted in the elimination of 6,091 “ghost” mentarians, and other officials are not required workers. The Bank supported this census but to disclose assets. There are also no rules on the results have not been shared with the Bank. funding of political parties. Five studies related to civil service staffing and 58 G o v e r n a n ce compensation are to be carried out under an 2006, for implementation beginning by the end Institutional Development Fund but only one has of 2006, but these targets were not met. been completed and its findings have not been shared with the Bank. In 2000 the government In the areas of public sector management and announced a National Program for Administra- governance evaluated here, progress has been tive Reform for 2002–06. Under this program, weak to negligible. This is reflected in various average civil service wages have been raised by governance indicators. Cambodia compares 10–15  percent per year but are still far below poorly with other East Asia and Pacific Region the poverty level for families of three or more. countries in World Bank Institute governance However, limited progress has been made with indicators, and these indicators deteriorated incentive pay schemes developed by donors. A between 1996 and 2005 in government effective- Priority Mission Group system, developed by ness, rule of law, regulatory quality, control of ADB, was adopted by the government in 2003. corruption, and voice and accountability.4 While It presently covers some 2,000 civil servants but Cambodia’s Country Policy and Institutional has a limited time frame. The merit-based pay Assessment rating has improved over time and initiative, developed under the PFMRP, began is now comparable to the IDA average at 3.2 in 2005 and was funded by the multidonor trust in 2006, the Country Policy and Institutional fund. It provides for increasing the monthly Assessment governance indicators are signifi- salaries of selected senior staff from US$200–300 cantly lower, at 2.5 in 2005 and 2006.5 Cambodia to US$500–700. Initially the scheme covered also ranks low in the Transparency International only 300 employees of the MEF, but it is being Corruption Perceptions Indices.6 The Bank is extended to other ministries; the intention is to now approaching these broader governance expand coverage to 700–800 senior civil servants issues through alliance with the entire donor across the government. Obviously, for a civil community via the CG Joint Monitoring service estimated at 165,000–170,000 employees, Indicators, rather than through specific Bank these programs are only a small start in address- operations. While the Bank deserves credit for ing the general problem of inadequate compensa- continuing to focus on governance issues, for tion. And there has been resistance even to these adopting a more focused approach to these limited programs from the Council for Adminis- problems under the fiscal 2005 CAS, and for the trative Reform. At the 2006 CG the government limited progress achieved, for example, in the agreed to develop a new merit-based human merit-based pay inititative, the outcome of the resource management system and a medium- Bank’s program over the entire CAE period is term strategy for pay and redeployment by June judged unsatisfactory. 59 60 Chapter 8 61 A student explains to her class how to prevent HIV/AIDS, Cambodia. Photo by Masaru Goto, courtesy of the World Bank Photo Library. 62 Conclusions, Lessons, and Recommendations Overall Assessment T he Bank’s assistance strategy was relevant, focusing initially on recon- struction, then on strengthening the basis for sustained growth and poverty reduction, in particular through improved access and quality of education and health, and, more recently, on governance. In addition, the focus on rural development and natural resource management was relevant, given the high incidence of rural poverty. In this regard, the increased focus on rural infrastructure in the latter part of the CAE period was also an ap- propriate shift. Under the first pillar—macroeconomic to 35 percent in 2004. Balancing sustained stability, sustainable growth, and poverty macroeconomic stability and the high rate of reduction—outcomes have been mixed. growth, the pro-poor reorientation of public To support macroeconomic stability, the Bank spending and the significant reduction in has been providing TA on PFM since 1994. poverty, and recent progress in PFM, against Progress was slow through 2004, but has lack of progress in revenue mobilization and improved significantly since then. However, the limited results in PSD, the overall outcome low ratio of public revenues to GDP , for which of Bank support for these reforms is judged the IMF has taken the lead role with limited moderately satisfactory. Bank involvement, has not improved during the CAE period, and this is an area that needs Under the second pillar—delivery of social greater focus. Limited progress has been made services—quantitative measures show in improving the environment for PSD, but notable progress in both the health and Cambodia still lags behind most countries in education sectors over the CAE period, East Asia and Pacific Region in competitiveness. including improved access to these services On growth and poverty reduction, Cambodia for the poor. This progress is the result of has sustained a high rate of aggregate economic government commitment and ownership of growth over the past decade, and the incidence sector strategies and well-coordinated support of poverty declined from 47 percent in 1994 from the Bank and other donors. The outcome 63 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 of the Bank’s program of support for the social in service delivery by the EDC and the Phnom sectors is satisfactory. Penh Water Supply Authority and in linking the major urban centers. The outcome of the Bank’s The results of Bank interventions in the third contribution was satisfactory. In recent years the pillar—agricultural productivity improve- Bank has appropriately shifted emphasis to rural ments, rural development initiatives, and infrastructure through several projects whose support for sustainable use of natural full impact has not yet been evaluated. resources—have been mixed. The Bank’s initial lack of knowledge of the sector, limited Finally, outcomes for the Bank’s program in capacity of government agencies, absence of a the critical area of governance have, so far, clear strategy, and, until the late 1990s, insecurity been unsatisfactory. While some reforms have in some rural areas, inhibited Bank support. The been made, primarily in PFM, in the merit-based Bank’s support of local governance and small-scale pay inititative, and in the social sectors, underly- rural infrastructure were important contributions ing weaknesses in governance and control of to the development of rural areas, but its efforts to corruption remain. address low agricultural productivity had limited impact. The Bank’s support for land titling and Balancing these diverse outcome ratings for the for protection of threatened, biologically diverse major areas of Bank strategic focus over three areas is producing positive results, while efforts, CAS periods, three areas are positive (rated with other donors, to establish sustainable exploi- satisfactory or moderately satisfactory) and two tation of forest concessions were unsuccessful. areas are negative (rated moderately unsatis- The Bank has carried out sector analysis in recent factory or unsatisfactory). Giving weight to years, which has served as an agenda for TWGs, Cambodia’s extremely difficult past history and but has not led to a clear Bank strategy for future the progress made in many areas, IEG judges engagement in agriculture and forestry. The the overall outcome of the Bank’s program in overall outcome for this area of Bank assistance is this CAE period moderately satisfactory. This rated moderately unsatisfactory. rating of moderately satisfactory, in contrast with a rating of satisfactory in the previous CAE, The Bank has made a significant contri- should not be interpreted as an overall decline in bution as one of the major lenders for the effectiveness of the Bank’s interventions, but infrastructure. The Bank’s initial involvement rather that the Bank has taken on a much more in urban power and water, and national road challenging set of objectives in this CAE period construction, led to marked improvements than in the earlier period. A summary of IEG’s Table 8.1: Overall Outcome Ratings Objectives Outcome ratings Macroeconomic stability, sustainable economic growth, and poverty reduction Moderately satisfactory Improved delivery of social services Satisfactory Improved agricultural sector performance, rural development, and improved natural Moderately unsatisfactory resource management Infrastructure rehabilitation, reconstruction and expansion Satisfactory Improved public administration and governance, strengthened anticorruption efforts Unsatisfactory Overall Moderately satisfactory 64 C o n c l u s i o n s , Le s s o n s , a n d Rec o m m e n d at i o n s evaluation of Bank program outcome ratings is Risks to Development Outcome shown in table 8.1. There are several risks to the sustainability of the outcomes of the Bank’s and other donors’ Institutional Development Impact programs and to future growth in Cambodia. As stated earlier, an estimated 40 percent of donor The first is that civil service performance will not assistance to Cambodia has been for TA, through improve, and corruption will not be reduced, free-standing projects and in components if government salaries are not raised signifi- of investment projects. Much of this TA has cantly and made performance-based, and other involved the employment of long-term advisors measures are not taken to combat corruption. to perform essential functions while training A second risk is that the leading industrial sector, local counterparts. Many of these “conven- garment manufacturing, could lose its competi- tional” TA programs, including the Bank’s initial tive advantage. To date the sector has been able TA project, have yielded disappointing results, to compete effectively in the global market— leaving the government with a negative percep- despite Cambodia’s low labor productivity, high tion of donor-funded TA. Some advisers are poor electricity and transport costs, and institutional trainers, some see counterparts as competitors bottlenecks—because of low wages, the country’s for positions that they wish to retain, and the special trade relationships with the United States government often has no voice in the choice of and European Union, and limits imposed on consultants. However, in the case of TA for PFM, China’s garment exports to these markets. The where the Bank is supporting, with other donors, removal of limits on China’s exports, scheduled a program of reforms that has strong government for the end of 2008, could impact Cambodia’s ownership, and in which the MEF has a voice in position in these markets.2 A third risk is the the selection of consultants as well as the pace possibility of “donor fatigue”—that is, while of reforms, measurable progress is being made. Cambodia remains heavily aid dependent in the near term, donors that have supported Cambodia The Bank has also provided TA through projects in the past could reduce their support because and project preparation grants, which have had they become increasingly disillusioned with slow a significant positive impact on the performance progress in governance reforms. However, there of the Phnom Penh Water Supply Authority, has been no evidence of such an effect to date. EDC, and the Electricity Authority of Cambodia.1 Offsetting this risk is the prospect that China’s Bank analysis, TA, and lending have assisted the support could substitute for any decline in aid Ministries of Health and Education in implement- from other donors. Fourth, while expected ing effective medium-term sector strategies. income from oil and gas could, like Chinese In agriculture, the Bank had little success in aid, offset any decline in resource inflows from developing the capacity of the Ministry of Agricul- traditional donors, there are risks that, without ture, Forestry, and Fisheries. And in overall civil continued sound macroeconomic manage- service reform, the Bank’s program, particu- ment, these royalties could have a destabilizing larly the training provided by the Economic and effect, such as a negative “Dutch Disease” impact Public Sector Capacity Building project, has had on other productive sectors. Furthermore, if little impact. Also, until the donor community is these resources are not managed in a transpar- willing to invest the necessary resources to build ent manner they could result in an upsurge in capacity within government, instead of resorting corruption and waste of public resources. Given to PIUs, which only sustain a “brain drain” out all of the above concerns, overall risks are consid- of government, and until the government adopts ered significant. an adequate compensation system for all civil servants, institutional development will remain Contributions to Outcomes a long-term problem. The overall impact of the IDA Bank’s program on institutional development is Assessing the Bank’s contributions differs rated modest. from assessing the outcomes of the assistance 65 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 program. Bank performance is an input to the donors have pooled their resources in SWAP or process, and thus distinct from outcomes, which SWAP-like arrangements. The Bank collaborates are influenced by a variety of factors. The assess- closely with the ADB in all areas of joint activity, ment of Bank performance involves looking at dividing leadership roles between the two institu- issues such as the relevance of the strategy, consis- tions. As mentioned earlier, the Bank, ADB, DFID, tency between the planned and actual assistance, and the UNDP have produced a unified country program and project design, efficiency of lending, strategy. Another example of close collaboration is quality of nonlending assistance and linkages DFID’s funding for the Bank’s poverty team in the with lending, and effectiveness of partnerships. country office. In addition to the CG, which meets on an annual basis, the local donor coordination In several areas the positive impact of the Bank’s system operates through 18 government-led contribution is measurable. The Bank’s focus on Technical Working Groups, each with a designated poverty reduction through lending and analytical lead donor and government counterparts. Lead work has helped concentrate government and responsibilities are divided among donors, and donor attention on the problem and has contrib- the Bank participates actively in several working uted to the reduction in poverty. The Bank groups where other donors occupy the lead has made a major contribution to the progress role. At times, NGO representatives and other achieved in the health and education sectors by stakeholders participate in TWG meetings. The supporting the development of government- focus now should be to ensure that the efforts of owned strategies and action programs, a signifi- TWGs do not become preoccupied with process cant increase in the share of budget resources at the expense of development actions. allocated to these sectors, emphasis on basic education and primary health care, and expansion The Bank has worked closely with the IMF of access for the poor. The Bank played a key role throughout the period of Bank support to in strengthening institutions in the power and Cambodia. During the CAE period the IMF had water sectors and in helping the government one program, a Poverty Reduction and Growth develop policies and a regulatory framework for Facility for 58.5 million Special Drawing Rights, the power sector. In village development and approved in October 1999, which was closely biodiversity, the Bank has been willing to experi- coordinated with the Bank’s 2000 SAC. The ment with innovative approaches through small Poverty Reduction and Growth Facility program pilot operations. The Bank’s analytical work has focused on improving tax collection, reforms been of good quality and was useful for support- in the financial sector, customs reforms, tariff ing operations. The Bank’s recent contributions rate reductions, governance, and environmen- have been significant in PFM. tal management reforms, all of which closely paralleled or were linked with Bank programs. In other areas, the Bank’s contributions have The proceeds were fully drawn and the facility been inadequate. For example, although the was closed in 2003. Cambodia has had no further agricultural sector has experienced a high drawings from the IMF.3 Despite the absence growth rate in the past three years, it is difficult to of a program, the IMF has maintained its policy attribute this to any actions by the Bank, and the dialogue and has continued to provide TA to Bank still lacks a coherent strategy for agricultural Cambodia on financial sector issues, revenue development in Cambodia. In the forestry sector, administration, statistics, and public expenditure demobilization, and various areas of governance, management, working closely with the Bank. the Bank’s well-intentioned interventions did not generate the anticipated outcomes. The Government The government’s commitment to the reforms Other Donors supported by IDA was uneven across sectors Donor coordination has improved significantly and issues. On the positive side, for more than over the past three years. In several sectors, a decade the government has maintained a 66 C o n c l u s i o n s , Le s s o n s , a n d Rec o m m e n d at i o n s stable macroeconomic environment, holding Bank assistance to postconflict countries is the public expenditures in line with limited domestic need to establish a strong, early presence in the resources and donor assistance, and resisting field. This would have been especially applica- recourse to domestic borrowing. The govern- ble to Cambodia, a country with no previous ment has also refrained from external commercial experience working with the Bank. The Bank borrowing and, with most aid highly conces- maintained a minimal field presence throughout sional, the ratio of external debt to GDP has been the 1990s and early 2000s.4 However, beginning reduced to half of its 1998 level. In PFM the level in 2003 the Bank expanded and strengthened of government commitment, at least in the MEF, is staffing in Phnom Penh, and located other staff now high and this is reflected in significant recent with responsibility for Cambodian projects in progress. The government has also demonstrated neighboring countries. This has greatly improved strong commitment to improving the education the ability of the Bank to interact with the and health systems and to supporting community- government on a continuous basis and has led to driven development projects. Land titling and a substantial improvement in the Bank’s collabo- expansion of infrastructure services to the rural ration with other field-based donors and NGOs. areas are other programs that have evident govern- ment backing. Conversely, in governance, includ- The Bank’s program has produced satisfac- ing LJR, civil service reform, and anticorruption tory outcomes in several areas during the CAE efforts, government commitment has been poor. period—in education and health, poverty analysis While the government supports the establish- leading to an increased poverty focus in govern- ment of secure land titles for small farmers, it has ment programs, small-scale rural infrastructure, not taken steps to stop the unregulated issuance and, recently, in public financial management. of land concessions that lead to timber harvest- ing—despite the ban on logging in the former Recommendation: The Bank should continue forest concessions and to establishment of large to focus on these areas in its operations program. commercial landholdings—so that the landless population is increasing. Also, corruption in tax The Bank’s efforts to improve governance in a revenue collection and in the customs department number of areas, including LJR, broad civil service is a major problem that is not being adequately reform, forestry, and demobilization, were not addressed, and without significantly improved successful. Largely as a result of poor ratings on revenue performance, including the utilization of governance, Cambodia’s IDA allocation has been future oil and gas revenues, it will be difficult for significantly reduced under the performance- Cambodia to reduce its aid dependence. based allocation system. Exogenous Factors Recommendation: The Bank should continue An important exogenous factor for Cambodia to pursue reforms in governance, through policy is the weather. Cambodia is more dependent dialogue, AAA, and Bank operations such as on rain-fed agriculture than other East Asia and the Poverty Reduction and Growth Operations Pacific Region countries, given the limited extent (PRGOs), and in concert with other donors of irrigation systems, and its vulnerability to through the CG Joint Monitoring Indicators and flooding, which has generated sharp year-to-year follow-up meetings. In the absence of reason- fluctuations in output. Other exogenous factors able progress, the Bank should reexamine the include the global market for garment manufac- feasibility of proceeding with the planned series turing (discussed earlier) and the volume of of PRGOs. future oil and gas production, and prices in the global petroleum market. Although the Bank has carried out analytical work in the agricultural sector, several critical Summary Findings and Recommendations areas have received inadequate attention—water An important lesson drawn from IEG analysis of resources, agricultural markets, and the scope 67 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 for diversification. Also, the Bank has not defined The Bank’s investigation into possibilities of a countrywide strategy for supporting rehabili- corruption in the IDA portfolio was carried out tation and expansion of irrigation systems or only after the allegations of fraud and corrup- supporting crop diversification and productivity tion in the Demobilization and Reintegration improvements. Project were verified, but remedial measures have now been put in place. At the same time, Recommendation: While the Bank is not the the way in which the follow-up to these investi- lead donor in the agricultural sector, it should gations was handled left a legacy of govern- work with other donors to carry out the needed mental ill-will toward the Bank and weakened diagnostic work and develop a strategy that the position of reformers within the govern- identifies the main constraints and priorities for ment. The resulting disruptions to operations donor intervention. and policy dialogue have been an important factor limiting the impact of the Bank’s efforts A number of Bank operations had multiple in Cambodia during the last years of the objectives, such as the SAC, and multiple activi- review period. In this regard the findings and ties, such as the TA project. This dispersion has recommendations of the Volker Commission often led to delayed implementation and difficul- are particularly relevant. ties in supervision. Other operations also experi- enced significant delays in effectiveness and in Recommendation: The Bank should continue implementation. Future Bank operations should to focus careful attention on the risks of corrup- focus carefully on limited objectives and specific tion in its own portfolio. implementation steps to achieve those objectives. 68 Appendixes 69 70 Appendix A: Statistical Supplement Tables A.1 Cambodia at a Glance A.2a Cambodia: Economic and Social Indicators A.2b Education Outcomes A.2c Health Outcomes A.3a External Assistance to Cambodia, Total Net Official Development Assistance Disbursement, 1999–2004 A.3b Cambodia: World Bank IBRD/IDA Commitments, by Sector Board, FY1998–2006 A.3c Cambodia: List of IBRD/IDA Approved Projects, CY1993–2006 A.4 Cambodia: Analytical and Advisory Work, 1998–2006 A.5a Portfolio Status Indicators: Cambodia and Comparisons, FY1998–2006 A.5b Cambodia and Comparator Country IEG Ratings A.6 Common Portfolio Problems A.7 Cambodia: Bank Budget, by Cost Category, FY1999–2006 A.8 World Bank Senior Management for Cambodia, 1999–2007 A.9 Cambodia: Millennium Development Goals 71 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.1. Cambodia at a Glance East Asia Low- Cambodia & Pacific income POVERTY and SOCIAL, 2004 Population, mid-year (millions) 13.6 1,870 2,338 Development diamonda GNI per capita (Atlas method, US$) 350 1,280 510 Life expectancy GNI (Atlas method, US$ billions) 4.8 2,389 1,184 Average annual growth, 1998–04 Population (%) 1.9 0.9 1.8 Labor force (%) 2.4 1.1 2.1 GNI Gross Most recent estimate (latest year available, 1998–04) per primary Poverty (% of population below national poverty line) 36 — — capita enrollment Urban population (% of total population) 19 41 31 Life expectancy at birth (years) 54 70 58 Infant mortality (per 1,000 live births) 97 32 79 Child malnutrition (% of children under 5) 45 15 44 Access to improved water source Access to an improved water source (% of population) 34 78 75 Literacy (% of population age 15+) 74 90 61 Cambodia Gross primary enrollment (% of school-age 124 113 94 Low-income group population) Male 130 113 101 Female 117 112 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1984 1994 2003 2004 Economic ratiosa GDP (US$ billions) — 2.8 4.3 4.9 Trade Gross capital formation/GDP — 11.8 25.2 25.8 Exports of goods and services/GDP — 25.8 58.6 64.7 Gross domestic savings/GDP — –1.1 16.0 14.7 Gross national savings/GDP — 5.4 22.7 18.7 Domestic Capital Current account balance/GDP — –5.6 –2.4 –5.4 savings formation Interest payments/GDP — 0.1 0.2 0.2 Total debt/GDP — 68.5 72.2 68.7 Total debt service/exports — 0.3 0.9 0.8 Present value of debt/GDP — — — 50.2 Indebtedness Present value of debt/exports — — — 71.6 1984–94 1994–04 2003 2004 2004–08 Egypt, Arab Rep. Average annual growth Lower-middle-income group GDP — 7.0 7.0 7.7 6.0 GDP per capita — 4.1 5.2 6.1 4.3 Exports of goods and services — 18.4 9.1 22.4 — STRUCTURE of the ECONOMY (% of GDP) 1984 1994 2003 2004 Growth of capital and GDP (%) Agriculture — 47.6 35.1 32.9 100 Industry — 14.4 27.8 29.2 Manufacturing — 9.3 20.5 21.5 50 Services — 38.0 37.1 37.9 Household final consumption expenditure — 94.2 78.4 80.4 0 General gov't final consumption expenditure — 6.9 5.6 4.9 Imports of goods and services — 38.7 67.8 75.8 –50 99 00 01 02 03 04 GCF GDP Note: 2004 data are preliminary estimates. a The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 72 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Table A.1. Cambodia at a Glance East Asia Low- Cambodia & Pacific income 1984–94 1994–04 2003 2004 Growth of exports and imports (%) Average annual growth 60 Agriculture — 2.7 12.2 –2.0 40 Industry — 15.7 11.9 16.1 Manufacturing — 18.8 12.1 17.4 20 Services — 6.6 0.2 9.2 0 Household final consumption expenditure — 4.4 –0.6 7.2 General gov't final consumption expenditure — 5.8 5.3 –6.5 –20 99 00 01 02 03 04 Gross capital formation — 14.9 41.7 14.1 Exports Imports Imports of goods and services — 13.8 9.8 21.1 Inflation (%) PRICES and GOVERNMENT FINANCE 15 1984 1994 2003 2004 Domestic prices 10 (% change) Consumer prices — 4.2 0.5 5.6 Implicit GDP deflator — –4.4 1.1 5.3 5 Government finance (% of GDP, includes current grants) 0 Current revenue — 8.3 10.1 11.2 Current budget balance — –1.2 –0.6 1.5 –5 Overall surplus/deficit — –5.9 –7.6 –5.0 99 00 01 02 03 04 GDP deflator CPI TRADE (US$ millions) 1984 1994 2003 2004 Export and import levels (US$ mill.) Total exports (fob) — 490 2,027 2,479 Rubber — — 98 115 4,000 Logs and sawn timber — — 23 18 Manufactures — 20 1,640 2,048 3,000 Total imports (cif) — 737 2,560 3,228 Food — — 80 140 2,000 Fuel and energy — — 413 603 Capital goods — — 750 963 Export price index (2000=100) — — — — 1,000 Import price index (2000=100) — — — — Terms of trade (2000=100) — — — — 0 98 99 00 01 02 03 04 Exports Imports BALANCE of PAYMENTS (US$ millions) 1984 1994 2003 2004 Current account balance to GDP (%) Exports of goods and services — 544 2,553 3,246 0 Imports of goods and services — 884 2,950 3,705 Resource balance — –340 –397 –460 Net income — –47 –183 –226 –2 Net current transfers — 230 475 423 Current account balance — –157 –105 –262 Financing items (net) — — 171 341 –4 Changes in net reserves — — –66 –79 Memo: Reserves including gold (US$ millions) — — 799 890 –6 Conversion rate (DEC, local/US$) — 2,545.3 3,980.0 4,019.0 98 99 00 01 02 03 04 73 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.1. Cambodia at a Glance East Asia Low- Cambodia & Pacific income EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) 1984 1994 2003 2004 Composition of 2004 debt (US$ mill.) Total debt outstanding and disbursed 5 1,909 3,139 3,356 IBRD 0 0 0 0 IDA 0 39 400 467 G: 242 B: 467 Total debt service 0 2 25 26 C: 97 IBRD 0 0 0 0 IDA 0 0 2 5 Composition of net resource flows Official grants 8 163 188 — D: 484 Official creditors 0 58 155 156 Private creditors 0 0 0 0 Foreign direct investment (net inflows) 0 82 87 137 Portfolio equity (net inflows) 0 0 –8 –8 E: 2,066 World Bank program Commitments 0 17 76 40 A – IBRD E – Bilateral Disbursements 0 38 63 48 B – IDA F – Private Principal repayments 0 0 0 1 C – IMF G – Short-term Net flows 0 38 63 46 D – Other multilateral Interest payments 0 0 2 4 Net transfers 0 38 60 42 74 Table A.2a. Cambodia: Economic and Social Indicators Average Series Name 1998 1999 2000 2001 2002 2003 2004 2005 Cambodia Bangladesh Lao PDR Thailand Vietnam East Asia GDP growth (annual %) 5 13 8 8 6 9 10 13 9 5 6 3 7 7 GNI per capita, Atlas method (current US$) 280 280 280 300 300 330 380 430 323 399 335 2168 445 1,109 GNI per capita, PPP (current international $) 1,400 1,550 1,670 1,810 1,900 2,050 2,270 2,620 1,909 1,760 1,579 6,826 2,286 4,364 GDP per capita growth (annual %) 3 10 6 5 4 6 8 11 7 3 4 2 6 6 Agriculture, value added (% of GDP) 46 43 38 37 34 34 33 34 37 23 50 10 23 14 Exports of goods and services (% of GDP) 31 40 50 53 55 57 65 65 52 15 30 65 57 37 Imports of goods and services (annual % growth) –2 38 24 10 15 14 20 18 17 7 19 7 16 11 Industry, value added (annual % growth) 6 21 31 11 17 12 16 12 16 7 11 4 10 8 Services, etc., value added (% of GDP) 36 37 39 40 40 39 40 39 39 51 25 48 39 41 Current account balance (% of GDP) –6 –5 –4 –2 –3 –5 –4 –6 –4 0 –1 6 0 Total debt service (% of exports of goods, services and 1 2 2 1 1 1 1 1 1 7 8 18 6 11 income) External debt (% of GNI) 81 73 74 70 71 73 68 59 71 33 144 56 51 28 Gross domestic savings (% of GDP) –1 4 5 10 11 11 10 11 8 18 32 27 38 IBRD loans and IDA credits (PPG DODa, current US$ million) 156 180 207 238 306 400 467 — 279 7,288 467 2,095 1,646 42,020 Gross national expenditure (% of GDP) 113 113 112 109 108 110 107 109 110 106 92 105 Cash surplus/deficit (% of GDP) — — — — –3 –4 –2 0 –3 0 2 –2 Inflation, consumer prices (annual %) 15 4 –1 –1 3 1 4 6 4 5 37 3 4 Immunization for DPT3 (% of children ages 12–23 months) 48 49 78 62 84 50 97 93 83 Improved water source (% of population with access) — — — — — — 41 — 41 74 51 99 85 79 Life expectancy at birth, total (years) 55 — 56 — — 63 60 63 55 70 70 70 Population ages 65 and above, male (million) 0.13 0.14 0.14 0.14 0.15 0.15 0.16 0.16 0.15 2 0 2 2 54 Population growth (annual %) 2 2 2 2 2 2 2 2 2 2 2 1 1 1 Population, total (million) 12 12 13 13 13 14 14 14 14 133 5 62 80 1,829 School enrollment, preprimary (% gross) 5 6 6 8 9 8 9 9 9 15 8 88 46 36 School enrollment, primary (% gross) 90 100 110 125 118 120 120 124 121 109 116 96 102 113 School enrollment, secondary (% gross) 17 16 17 18 22 26 29 — 24 49 40 79 69 66 Urban population (% of total) 16 16 17 17 18 19 19 20 19 24 19 31 25 38 75 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Sources: World Development Indicators as of July 17, 2007, and tables A.2b and A.2c. a PPG DOD = public and publicly guaranteed debt outstanding and disbursed. 76 Table A.2b. Education Outcomes Baseline Achievement Indicator (1997–98) (2005–06) Comment Enrollment rates:a Primary (yrs. 1–6) 88.3% 124.0% • Rapid enrollment increase after 1997, though slowing recently. Major implications for poverty a) gross 77.8% 91.3% reduction and labor market preparation. b) net 23.7% 55.3% • Rapid increase at secondary level as primary completions and transition rates grew. Lower secondary (yrs. 7–9) 16.3% 31.3% a) gross b) net Ratio: Female to total net enrollment rates (NER): • Significant reductions (75% in primary and 88% in lower secondary) in gap between female a) primary: .93 .98 and total enrollment rates. b) lower secondary: .76 .97 Ratio: Remote area primary NER to total .55 .92 • Enrollment rates grew faster in remote areas. Ratio: Poorest 20% to richest 20% primary NER:b .69 [‘97] .74 [‘04] • Enrollment rates grew faster for the poor. c • Promotion rates (PRs) rose and dropout and repetition rates fell up to 2000/01 but stabilized Promotion rates (per grade average) a) primary 65.0% 77.5% since. PRs for girls now above average. b) lower secondary 66.4% 74.4% Completion rates, primary leveld 44.8% [‘01] 79.5% [‘06] Up from 14.6% in mid-1990s. e Primary school teachers: a) % with upper secondary education or higher 9.3 25.7 • Substantial increase in education levels of primary teachers. b) % female 36.5 41.7 • High S/T ratio, but down from peak (56.8 in 2001/02). c) student-teacher ratio 46.5 50.8 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Early childhood education enrollments 43,282 75,699 • Big increase, but still a small % of target group. f 49.4% 27.4% • Important for access to full primary education. Incomplete primary schools (% of total) g • Establishment of regular national assessments a key institutional step. Initial findings that Learning assessments: Grade 3: % correct answers: Khmer language NA 40.9% grade 3 students not performing at intended level. Math NA 37.5% Literacy ratesh adult total 62.8%[‘98] 74.4%[‘04] • Relative gains for females and rural population, which should accelerate over time given Ratio: Female to total lit .88 .91 recent enrollment expansion. Rural to total .96 .98 (continued on next page) Table A.2b. Education Outcomes (continued) Baseline Achievement Indicator (1997–98) (2005–06) Comment i • Substantial increase, especially in domestic financing, basic education, and for the front line; Public spending on education (annual avgs.) a) total as % of GDP 2.3% [‘96–98] 2.6% [‘04–06] and to reduce the burden on parents. b) of which, domestically financed .86% [‘96–98] 1.5% [‘04–06] • Domestic financing rose from 38% of education spending to 56%, and real per capita c) total ($ million) $75.6 [‘96–98] $162.6 [‘04–06] spending grew more than 50%. But uneven and unpredictable releases reduced efficiency. d) of which, domestically financed ($ million) $28.5 [‘96–98] $91.2 [‘04–06] e) % of domestic budget spent on education 9.2% [‘96–98] 15.8% [‘04–06] f) per capita spending in 2000 prices in (US$) $6.7 [‘96–98] $10.2 [‘04–06] a. Enrollment rates and gender ratios are from MoEYS, EMIS 1997–98 and 2005–06 reports. As in many countries, these data, based on administrative reports, have generally been higher than those based on HHS data. However, HHS data show a similar improvement, and the differences between the sources have narrowed over time. An EMIS data quality assessment survey [cited in Appraisal of Basic Education Component of Cambodia’s ESP, for EFA FTI Secretariat, Phnom Penh, Oct 2006, p.14.] found differences between EMIS and HHS in total enrollment were only 0.7 percent in 2006. b. CSES 1997 and 2004, figure 6.5, p.100 of 2006 Poverty Assessment. c. Source: EMIS for 1997/98 and 2005/06. d. Cambodia Education Sector Performance Analysis 2006, EC Technical Advisory Team, November 2006, p. 33., UIS method (grade-6 completions of population aged 11). Rapid increase may reflect impact of influx of overaged students that entered after fees were abolished. e. EMIS 1997/98 and 2005/06. To some extent, multiple shifting reduces impact of high student-teacher ratios. f. Percent of primary schools with fewer than 6 grades. EMIS 1997/8 and 2005/6, table 4.2. g. Student Achievement and Education Policy: Results from the Grade Three Assessment, Final Report, October 2006. Cambodia Education Sector Support Project, National Assessment Component. h. Literacy rates and ratios from 1998 Census and 2004 Cambodia Intercensal Population Survey , NIS (www.nis.gov.kh/SURVEYS/CIPS2004/TABLE4.HTM). The impact of recent improvements in access to primary education can be seen only indirectly in the aggregate adult literacy figures in table 4.2, but literacy data from the 2004 CSES disaggregated by age group show that the 15–24 age group has substantially higher literacy rates, and smaller gender and rural/urban gaps than the older age groups. See Education: Subject Matter Report for the CSES 2004, June 2005, NIS in cooperation with Statistics Sweden, table 2004.1.5. i. Revised data based on Integrated Fiduciary Assessment and Public Expenditure Review, World Bank 2003, chapter 2; updated July 2007 by the Cambodia country office to include more recent years and to reflect revisions in GDP. Three-year averages used to smooth out annual fluctuations. GDP deflator for government spending used to calculate spending in constant prices. 77 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t 78 Table A.2c. Health Outcomes Baseline Achievement Indicator (1997–98) (2004–05) Comment Infant mortality (per 1,000 live births)a 89 [‘98] 66 [‘05] Substantial (28%) drop: brings Cambodia well below the low-income country average, and narrows gap with regional average. Similar drop in under-5 mortality. Life expectancy at birth (years) 55.0 [‘98] 62.6 [‘04] Total Populationb Incidence of stunting in children under 45% [‘00] 37% [‘05] Reduction exceeded poverty reduction strategy paper’s target slightly. 5 yrs.c Child immunization rate for DPT3, (%)d 46% [‘97] 78% [‘05] 66.7% are fully immunized against TB, polio, and measles, as well as DPT3; increase between 2000 and Ratio of rural to average: .98 [‘00] 1.00 [‘05] 2005 for rural children more rapid than for urban. Maternal mortality: 6.5 [‘95] 4.72 [‘05] a) Improvement since 1995, and below the low-income average (6.84 in 2000), but no improvement from a) per 1,000 live birthse 0.55 [‘00] 0.50 [‘05] the 4.37 estimated in 2000,g and still far above East Asia and Pacific Region average of 1.17.h b) per 1,000 women age 15–49f b) Improvement reflects, in part, decline in fertility. Total fertility rate (per woman 15–49)i 4.0 [‘00] 3.4 [‘05] Improving, but still nearly 70% above the East Asia and Pacific Region average. Population growth ratesj 2.25 [‘98] 1.96 [‘05] Nearly triple the East Asia and Pacific Region average of 0.7% % of women using modern contraceptionk 18.5 [‘00] 27.2 [‘05] Use of all methods rose from 24% to 40% % live births with professional prenatal carel 34.3% [‘98] 69.3% [‘05] Increase between 2000 and 2005 for rural mothers more rapid than for urban. Ratio of rural to average: .90 [‘00] .98 [‘05] % live births delivered by trained medical 34.0% [‘98] 43.8% [‘05] Same as above staff HIV/AIDS prevalence, % of adultsm 3.3% [‘97] 0.9% [‘07] Prevalence is ambiguous as an indicator of progress. C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Consistent condom use by sex workersn 42% [‘97] 96% [‘03] Significant reduction in high risk behavior. Consultations per capita: 0.3 [‘98] 0.5 [‘05] Improved, but still below WHO guideline of 0.6 for rural areas and 1.0 for urbanp a) all patientso 0.54 [‘02] 0.92 [‘05] Rapid increase for under-5 age group. b) children under 5q Number of patients assisted by equity 5,234 [‘02] 99,801 [‘05] fundsr Out-of-pocket health spending ($/capita)s $20.7 [‘00] $14.90 [‘05] (continued on next page) Table A.2c. Health Outcomes (continued) Baseline Achievement Indicator (1997–98) (2004–05) Comment Public spending on health (annual avgs.): t 1.9% [’96–98] 2.9% [’04–06] Substantial increase, especially in domestic financing, which nearly doubled as a percent of GDP. But a) total as % of GDP 0.46% [’96–98] 0.90% [’04–06] uneven and unpredictable releases reduced efficiency. b) of which, domestically financed $61.7 [’96–98] $180.8 [’04–06] c) total ($ million) $15.5 [’96–98] $56.4 [’04–06] d) of which, domestically financed ($ 5.0% [’96–98) 9.7% [’04–06) million) $5.48 [’96–98] $11.37 [’04–06] e) % of domestic budget spent on health f) per capita spending in 2000 prices in US $ a. Infant mortality: for 1998 from National Health Survey; and for 2005 from 2005 Cambodian Demographic and Health Survey (DHS). The 2000 Cambodian DHS showed generally higher infant and child mortality rates than the 1998 survey, and implies a larger and more rapid decline by 2005. b. Life expectancy: 1998 from Census; 2004 from Cambodia Intercensal Population Survey. c. DHS 2005, p. 169. d. For children ages 12–23 months. Source HNPStats for 1998, 2000 and 2005 DHS for 2000 and 2005. e. The MMR for 1995 is from a 1995 household survey, Knowledge, Attitude and Practice Survey on Fertility and Contraception in Cambodia, Ministry of Health, 1995, as cited in Asian Development Bank, Report and Recommendation … on a proposed loan to the Kingdom of Cambodia for the Basic Health Services Project [RRP:CAM 27410], May 1996, p. 3. MMR for 2005 is from 2005 DHS, p. 120. f. Maternal mortality rate per 1,000 women aged 15–49 from DHS 2000 (p. 117) and 2005 (p.120). g. The lack of progress since 2000 is a concern, but in part reflects both large sampling errors typical of MMR estimation (+/– 1.34 on the 4.72 estimate for 2005, so it is statistically the same as the 2000 estimate) and the fact that the MMR is calculated ex-post, on the maternal deaths occurring in the 7 years before the survey. Consequently, the full impact of any interventions (for example, the large increases in prenatal care, etc., since 1997) will be seen only with a lag. h. Low-income country and East Asia and the Pacific averages are for 2000, the most recently recorded data in the World Development Indicators/Development Data Platform. i. DHS 2005, p. 10. j. DDP database. k. 2000 and 2005 DHS. l. 1998 from National Health Survey as cited in DC&HD PPAR; 2000 and 2005 from DHS. Same sources for percentage of births assisted by trained medical staff. m. 1997 data from NCHADS, cited in DC&HD PPAR, p. 17; 2007 data from Ministry of Health Expert Panel press release, 28 June 2007. For the limitations of this indicator see Committing to Results: Improving the Effectiveness of HIV/AIDS Assistance, IEG 2005, p.35. n. Cambodian Behavioral Survey 2003, NCADS, June 2005, p. 77. o. Data for 1998 and 2005 from Ministry of Health, National Health Statistics, p. 64; Data from Health Public Expenditure Tracking Survey (p. 100) indicate Basic Health Service consultations per capita at 0.56 in 2003 and 0.63 in 2004, and are some- what higher than the Ministry of Health data for those years. p. 2006 Joint Annual Performance Review, Ministry of Health Dept of Planning and Health Information, March, 2006, p.8. q. WHO guideline as cited in 2005 CASCR, p. 57. r. Ministry of Health, Joint Annual Performance Review 2006. p. 52. s. Sources: for 2000, DHS-2000, p. 37; for 2005, DHS-2005, p. 37. Based on out-of-pocket spending on transport and health care from all sources by household members who were ill in the 30 days prior to the survey. t. Revised data based on Integrated Fiduciary Assessment and Public Expenditure Review, WB 2003, chapter 2; updated July 2007 by Cambodia country office to include more recent years and to reflect revisions in GDP. Three-year averages used to smooth out annual fluctuations. GDP deflator for government spending used to calculate spending in constant prices. 79 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t 80 Table A.3a. External Assistance to Cambodia, Total Net Official Development Assistance Disbursement, 1999–2004 (in US$ million) Donor 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Arab Agencies 0.47 0.28 4.33 2.61 4.87 2.54 Arab Countries 2.21 AsDF (Asian Dev.Fund) 16.36 45.42 32.06 10.74 29.33 26.16 50.83 48.35 79.05 74.13 78.75 85.67 Australia 14.31 25.83 28.24 23.95 21.91 16.74 25.69 15.75 21.61 19.88 25.01 28.39 Austria 0.81 0.19 0.23 0.06 0.37 0.36 0.42 0.08 –0.01 0.01 0.01 0.04 Belgium 2.57 4.99 5.58 2.9 2.18 3.31 3.12 2.79 3.14 5.33 5.7 11.81 Canada 3.15 4.23 2.12 5.31 3.4 1.19 2.56 7.98 4.94 8.97 8.48 8.48 Czech Republic 0.02 0.02 0.17 0.03 Denmark 1.3 2.03 0.9 2.4 0.68 2.48 1.97 4.87 6.64 6.33 10.46 9.22 European Community 11.39 33.02 52.58 32.93 32.9 27.49 26.14 24.19 27.78 15.38 11.79 20.25 Finland 0.02 0.4 0.57 1.35 2.3 2.13 3.65 2.75 2.7 3.88 4.2 4.27 France 28.41 53.43 52.1 27.09 21.43 22.1 21.52 21.44 24.64 25.76 25.64 30.12 G-7, Total 131.6 275.16 182.02 150.17 166.55 117.9 178.05 202.55 205.99 248.89 209.4 254.92 GEF 0.15 0.22 0.21 0.32 0.3 1.12 Germany 12.22 19.63 14.17 17.01 17.85 21.62 19.4 18.72 18.44 21.98 22.5 24.81 Global Fund (GFATM) 6.49 5.51 18.85 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Hungary 0.15 0.06 IDA 38.23 24.62 45.6 30.41 19.18 26.78 36.57 39.55 47.25 63.78 47.39 35.5 IFAD 0.1 0.52 2.16 4.04 3.07 4.29 4.8 4.45 Ireland 1.57 2.2 1.71 1.32 1.04 1.1 1.24 0.87 0.43 0.69 1.22 1.07 Italy 0.31 2.16 2.01 1.76 0.1 0.46 0.87 0.04 1.79 0.07 0.66 1.92 Japan 64.52 152.04 71.34 61.63 81.4 50.87 99.21 120.21 98.58 125.88 86.37 100.62 Korea 0.01 0.22 1.78 0.3 0.25 0.66 1.13 22.71 10.76 23.88 17.77 Luxembourg 0.14 0.2 0.16 0.35 0.04 0.5 0.19 0.14 0.17 0.13 (continued on next page) Table A.3a. External Assistance to Cambodia, Total Net Official Development Assistance Disbursement, 1999–2004 (in US$ million) (continued) Donor 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Netherlands 11.02 11.77 8.39 11.52 9.31 6.29 7.38 8.16 9.27 7.2 8.7 8.04 New Zealand 0.18 0.75 1.07 1.3 1.45 1.45 1.13 1.44 1.76 2.23 2.99 3.83 Norway 4.99 4.5 5.84 8.82 7.23 6.34 6.15 5.62 3.12 2.5 3.31 3.65 Other Bilateral Donors 0.05 0.1 0.05 0.07 0.08 0.1 0 0.01 Poland 0.02 0.01 0.02 0 0.01 0 Portugal 0.18 0.05 0.08 0.1 SAF+ESAF+PRGF (IMF) 20.04 42.5 9.55 5.49 13.47 10.76 –0.06 –10.37 –8.67 Slovak Republic 0.2 Spain 0.12 0.02 0.03 0.06 0.07 0.12 0.06 0.65 Sweden 10.08 10.92 15.99 22.98 14.28 7.55 16.79 16.92 14.53 18.71 22.64 14.78 Switzerland 2.22 2.17 1.95 1.46 2.9 1.46 1.84 2.97 3.23 3.19 3.54 3.63 Turkey 0.03 UNDP 17.81 19.06 18.12 17.54 9.83 7.88 3.11 3.87 3.12 4.18 6.26 4.52 UNFPA 0.59 1.37 2.28 3.92 6.74 3.29 3.23 3.05 3.6 3.79 2.78 1.96 UNHCR 3.59 1.75 0.38 0.41 0.1 0.11 2.59 0.76 1.13 0.45 0.72 UNICEF 10.92 10.74 8.79 3.91 3.56 3.51 3.61 3.56 3.51 3.34 4.07 4.84 United Kingdom 6.99 10.67 12.28 7.37 9.9 7.51 13.03 11.72 13.2 15.01 17.61 21.47 United States 16 33 28 30 32.47 14.11 21.46 22.44 44.4 51.22 48.14 67.5 UNTA 1.18 3.55 1.59 2.95 1.28 2.18 2.63 2.13 1.66 2.56 2.07 2.55 WFP 10.03 27.74 2.37 2.15 3.6 2.34 10.19 8.39 3.19 3.07 3.12 1.23 Non-DAC Bilateral Donors,Total 2.22 0.27 1.88 0.32 0.31 0.75 1.21 22.84 10.78 24.44 17.86 DAC EU Members, Total 75.62 118.71 113.93 95.92 79.84 74.97 89.92 88.42 95.11 105.33 119.57 128.33 DAC Countries, Total 180.99 341.23 252.49 228.39 230.6 167.1 247.96 264.83 272.75 319.2 297.41 344.43 Multilateral, Total 130.14 209.77 163.77 105.06 106.52 109.8 147.17 151.86 188.66 184.33 161.34 175.53 All Donors, Total 313.35 551 416.53 335.33 337.44 277.3 395.88 417.9 484.25 514.31 483.19 537.82 81 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Source: Organisation for Economic Co-operation and Development, DAC data. C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.3b. Cambodia: World Bank IBRD/IDA Commitments, by Sector Board, FY1998–2006 (in US$ million) % of Total 1998 1999 2000 2001 2002 2003 2004 2005 2006 Total commitment Economic Policy 30 30 7 Education 5 28 33 8 Energy and Mining 40 40 9 Health, Nutrition & 27 27 6 Population Private Sector Development 10 10 2 Public Sector Governance 5.5 14 19.5 5 Rural Sector 5 6.7 35 24.3 22 93 22 Social Development 18.4 18.4 4 Social Protection 25 10 35 8 Transport 45.31 20 65.31 15 Water Supply & Sanitation 30.96 19.9 50.86 12 Total 30.96 75.31 41.7 45 48.2 68.9 60 38 14 422.07 1 Source: World Bank database. 82 Table A.3c. Cambodia: List of IBRD/IDA Approved Projects, CY1993–2006 Latest Fiscal Project Approval Latest Latest Risk Proj Date, Rev IBRD/IDA IEG IEG IEG ID Year Project Name ID # Date DO IP Rating Stat Closing Sector Board Amt Outcome Sustainability Impact 1999 KH-Road Rehab P004030 03/23/1999 MS S # Active 09/30/2006 Transport 45 2000 KH-Bio & Protec P065798 02/08/2000 S S # Active 12/31/2006 Rural Sector 2 Areas M 2002 KH-Land Management P070875 02/26/2002 U U # Active 12/31/2007 Rural Sector 24 and Administration 2002 KH-Eco. & PS Capacity P071247 06/25/2002 U U # Active 12/31/2007 Public Sector 6 Building Project Governance 2003 KH-Health Sector P070542 12/19/2002 S S # Active 12/31/2007 Health, Nutrition 27 Support Project and Population 2003 KH-Rural Investment & P071146 04/22/2003 S S # Active 06/30/2007 Rural Sector 22 Local Governance 2003 KH-Prov & Peri-Urb P073311 04/22/2003 MU MU # Active 06/30/2008 Water Supply and 20 Water Sanitation 2004 KH-Rural Electrif. & P064844 12/16/2003 S MS # Active 06/30/2009 Energy and Mining 40 Transmn 2004 KH-Provl & Rural Infra P071207 09/11/2003 U U # Active 09/30/2007 Transport 20 2005 KH-Cambodia Education P070668 05/12/2005 S S # Active 12/31/2010 Education 28 Sector Support 2005 KH-Trade Facilitation & P089196 06/02/2005 MS MU # Active 12/01/2009 Private Sector 10 Competitiveness Development 2006 KH-Public Fin. Mgmt. & P087945 06/27/2006 S # Active 01/15/2012 Public Sector 14 Accnt. Governance 1994 Emergency Rehab P004036 10/26/1993 S S # Closed 12/31/1996 Private Sector 63 Moderately Uncertain Modest Development Satisfactory 1995 KH-Technical P034755 12/06/1994 S S M Closed 12/31/2001 Economic Policy 17 Unsatisfactory Unlikely Modest Assistance Project 1995 KH-Social Fund (Project P037088 06/08/1995 HS HS N Closed 06/30/2000 Social Protection 20 Satisfactory Likely Substantial closed) (continued on next page) 83 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t 84 Table A.3c. Cambodia: List of IBRD/IDA Approved Projects, CY1993–2006 (continued) Latest Fiscal Project Approval Latest Latest Risk Proj Date, Rev IBRD/IDA IEG IEG IEG ID Year Project Name ID # Date DO IP Rating Stat Closing Sector Board Amt Outcome Sustainability Impact 1996 Phnom Pehn Power Reh P004032 09/28/1995 S S S Closed 06/30/2000 Energy and Mining 40 Satisfactory Likely Substantial 1996 Economic Rehab. Cr. P004035 09/28/1995 S S M Closed 06/30/1997 Economic Policy 40 Moderately Uncertain Modest Satisfactory 1997 KH-Agricultural P004033 02/28/1997 MS MU # Closed 12/31/2005 Rural Sector 27 Productivity Improvement 1997 KH-Disease Control & P004034 12/24/1996 S S M Closed 12/31/2002 Health, Nutrition 30 Satisfactory Likely High Heal and Population 1998 KH-Urban Water Supply P045629 02/17/1998 S S M Closed 03/31/2004 Water Supply and 31 Highly Highly Likely Substantial Sanitation Satisfactory 1999 KH-Social Fund II P050601 03/23/1999 S S M Closed 03/31/2005 Social Protection 25 Moderately Nonevaluable Modest Satisfactory 1999 KH-Northeast Village P058841 05/18/1999 S S M Closed 06/30/2004 Rural Sector 5 Satisfactory Unlikely Modest 2000 KH-Education Quality P059971 08/31/1999 S S S Closed 03/31/2004 Education 5 Satisfactory Nonevaluable Substantial Improvement 2000 KH-Cambodia SAC P058544 02/29/2000 S S S Closed 12/31/2003 Economic Policy 30 Moderately Nonevaluable Modest Satisfactory 2000 KH-Forest Concession P060003 06/05/2000 U U # Closed 12/31/2005 Rural Sector 5 Unsatisfactory # # C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Mgt & Control Pilot 2001 KH-Emergency Suppl Cr P073310 06/19/2001 # # # Closed # Social Protection 10 for Social Fund II 2001 KH-Flood Emergency P073394 03/13/2001 S S # Closed 06/30/2005 Rural Sector 35 Satisfactory Likely Substantial Rehabilitation Proj 2002 KH-Demobilization and P071445 08/23/2001 U HU H Closed 12/31/2004 Social 18 Unsatisfactory Unlikely Negligible Reintegration Development Source: World Bank database. Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Table A.4. Cambodia: Analytical and Advisory Work, 1998–2006 Document Title Year Country Assistance Strategy Cambodia – Country Assistance Strategy 2005 Cambodia – Country Assistance Strategy 2000 Cambodia – Country Assistance Strategy 1997 Country Assessment Fiduciary Review 2005 Cambodia – Country Procurement Assessment Report 2004 Economic Report Cambodia – Halving Poverty by 2015 – Poverty Assessment 2006 2006 Cambodia at the Crossroads: Strengthening Accountability to Reduce Poverty 2004 Cambodia – Seizing the Global Opportunity : Investment Climate Assessment and Reform Strategy for Cambodia 2004 Towards a Private Sector-led Growth Strategy for Cambodia: A Value Chain Analytic 2003 Cambodia – Enhancing Service Delivery through Improved Resource Allocation and Institutional Reform: Integrated 2003 Fiduciary Assessment and Public Expenditure Review Cambodia – Integration and Competitiveness Study 2001 Note on Civil Service Pay and Employment Reform 2000 Cambodia: Governance and Corruption Diagnostic 2000 Cambodia – Poverty Assessment 1999 Cambodia – Public Expenditure Review: Enhancing the Effectiveness of Public Expenditures 1999 Poverty Reduction Strategy Paper Cambodia – National Strategic Development Plan (NSDP), 2006–10 and Joint Staff Advisory Note 2006 Cambodia – Poverty Reduction Strategy Paper (PRSP) annual progress report and joint assessment 2004 Cambodia – Poverty Reduction Strategy Paper (PRSP) and joint assessment 2003 Cambodia – Poverty Reduction Strategy Paper (PRSP) Preparation Status Report and joint assessment 2002 Cambodia – Interim poverty reduction strategy paper and assessment 2000 Sector Report Children’s Work In Cambodia: A Challenge for Growth and Poverty Reduction 2006 Cambodia – Women and Work in the Garment Industry 2006 Getting Girls into a School: Evidence from a Scholarship Program 2006 Implementation Strategy for Urban Water Supply Policy 2006 Justice for the Poor? An Exploratory Study of Collective Grievances over Land & Local Governance in Cambodia 2006 Managing Risk and Vulnerability in Cambodia: An Assessment and Strategy for Social Protection 2006 Gender Mainstreaming and Decentralization: An Assessment 2006 Cambodia – Public Expenditure Tracking Survey in Primary Education 2005 (continued on next page) 85 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.4. Cambodia: Analytical and Advisory Work, 1998–2006 (continued) Document Title Year Cambodia – Rural Sector Strategy Note: Toward A Strategy for Rural Growth, and Poverty Reduction 2005 Cambodia – Quality Basic Education for All 2005 A Fair Share for Women: Cambodia Gender Assessment 2004 Balancing the Books: Household Financing of Basic Education in Cambodia 2004 Economic Analysis of Electric Power Supply Options to Siem Reap, Cambodia 2004 A Fair Share of Women – Cambodia Gender Assessment 2004 Civil Service Reform: Strengthening World Bank and IMF Collaboration 2002 Health Financing Study 2002 Private Solutions for Infrastructure in Cambodia 2002 Cambodia – Power Sector Strategy 1999 Power Trade Strategy for the Greater Mekong Subregion 1999 Source: World Bank database. 86 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Table A.5a. Portfolio Status Indicators: Cambodia and Comparisons, FY1998–2006 % Commit at Country # Projects Net Comm Amt % Proj At Risk # Proj At Risk Comm At Risk Risk Bangladesh 220 21,196 41 19 3,811 18 Cambodia 107 2,373 22 21 457 19 Lao PDR 100 1,977 16 16 405 21 Thailand 69 7,356 9 13 799 11 Vietnam 234 24,066 20 9 1,790 7 LAC Average 2,605 203,899 449 17 33,827 17 Bank-wide 12,892 943,400 2,226 17 152,379 16 Source: World Bank database. 87 88 Table A.5b. Cambodia and Comparator Country IEG Ratings Inst Dev Impact % Overall Bank Perf % Overall Borr Perf % Total Evaluated Outcome % Satisfactory Substantial Sustainability % Likely Satisfactory Satisfactory Sector Net Comm Net Comm By Net Comm By Net Comm By Net Comm By Net Comm By Board Country ($million) By Number ($million) Number ($million) Number ($million) Number ($million) Number ($million) Number Economic Cambodia 46.3 2 65.5 50.0 0 0.0 0.0 0.0 50.0 65.5 65.5 50.0 Policy Lao PDR 19.3 1 0.0 0.0 0 0.0 0.0 0.0 100.0 100.0 Thailand 612.5 2 2.0 50.0 100 100.0 100.0 100.0 100.0 100.0 2.0 50.0 Vietnam 398.3 3 100.0 100.0 34 66.7 75.4 50.0 100.0 100.0 100.0 100.0 Bangladesh 425.9 3 100.0 100.0 47 33.3 100.0 100.0 100.0 100.0 94.0 66.7 EAP 4,383.4 12 62.5 58.3 63 41.7 98.2 62.5 83.3 99.2 63.0 66.7 Bank-wide 20,866.3 138 57.1 66.9 33 35.1 67.5 71.2 79.0 84.1 58.0 67.9 Education Cambodia 4.9 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 Lao PDR 16.2 1 100.0 100.0 0 0.0 0.0 0.0 100.0 100.0 100.0 100.0 Thailand 208.8 3 100.0 100.0 100 100.0 100.0 100.0 66.7 75.5 100.0 100.0 Vietnam 67.1 1 100.0 100.0 0 0.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 263.4 4 100.0 100.0 41 50.0 100.0 100.0 100.0 100.0 100.0 100.0 EAP 3,207.5 48 91.4 91.5 72 65.1 83.4 70.7 81.3 85.8 87.0 85.4 Bank-wide 15,629.6 245 86.3 82.4 56 48.7 85.1 74.6 78.7 81.9 80.7 77.0 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Energy and Cambodia 35.1 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Mining Lao PDR 69.5 2 100.0 100.0 50 50.0 49.5 50.0 100.0 100.0 50.5 50.0 Thailand 605.2 9 100.0 100.0 44 44.4 100.0 100.0 100.0 100.0 100.0 100.0 Vietnam 307.9 2 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 265.8 3 41.7 33.3 42 33.3 67.2 66.7 66.7 74.5 41.7 33.3 EAP 6,172.0 48 80.5 76.1 61 57.8 67.5 68.2 91.7 92.3 88.3 83.3 Bank-wide 21,066.7 213 74.1 71.2 53 50.7 67.7 65.8 79.2 81.3 70.6 66.2 (continued on next page) Table A.5b. Cambodia and Comparator Country IEG Ratings (continued) Inst Dev Impact % Overall Bank Perf % Overall Borr Perf % Total Evaluated Outcome % Satisfactory Substantial Sustainability % Likely Satisfactory Satisfactory Sector Net Comm Net Comm By Net Comm By Net Comm By Net Comm By Net Comm By Board Country ($million) By Number ($million) Number ($million) Number ($million) Number ($million) Number ($million) Number Environment Thailand 90.5 2 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 148.4 2 100.0 100.0 0 0.0 100.0 100.0 50.0 100.0 100.0 50.0 EAP 807.1 12 63.1 58.3 43 33.3 93.0 75.0 75.0 67.5 67.5 75.0 Bank-wide 3,987.6 146 67.2 74.8 44 52.9 76.3 74.0 72.6 67.2 69.0 69.9 Financial Thailand 759.8 3 1.3 33.3 1 33.3 100.0 100.0 66.7 53.9 47.4 66.7 Sector Vietnam 40.2 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 169.8 3 100.0 100.0 80 50.0 100.0 100.0 100.0 100.0 72.6 66.7 EAP 6,505.4 17 81.1 52.9 3 25.0 92.3 64.3 58.8 87.3 88.5 70.6 Bank-wide 19,486.3 128 88.5 72.8 60 55.4 90.6 77.9 78.0 90.0 91.5 76.4 Gender and Bank-wide 3.1 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Development Global Infor- Lao PDR 27.0 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 mation/ Communica- EAP 776.4 6 100.0 100.0 41 33.3 100.0 100.0 83.3 98.5 100.0 100.0 tions Tech- nology Bank-wide 1,488.1 25 100.0 100.0 58 62.5 100.0 100.0 96.0 99.2 99.3 96.0 Health, Cambodia 26.8 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Nutrition and Population Lao PDR 17.3 1 100.0 100.0 0 0.0 0.0 0.0 0.0 0.0 100.0 100.0 Vietnam 44.6 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 462.3 3 40.8 33.3 0 0.0 100.0 100.0 66.7 51.9 51.9 66.7 EAP 1,079.7 24 81.8 70.8 62 50.0 81.8 65.2 70.8 86.5 92.1 79.2 Bank-wide 11,201.8 192 75.1 67.2 53 46.1 76.1 65.9 67.5 67.3 68.2 67.5 (continued on next page) 89 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t 90 Table A.5b. Cambodia and Comparator Country IEG Ratings (continued) Inst Dev Impact % Overall Bank Perf % Overall Borr Perf % Total Evaluated Outcome % Satisfactory Substantial Sustainability % Likely Satisfactory Satisfactory Sector Net Comm Net Comm By Net Comm By Net Comm By Net Comm By Net Comm By Board Country ($million) By Number ($million) Number ($million) Number ($million) Number ($million) Number ($million) Number Poverty Vietnam 106.7 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Reduction EAP 106.7 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bank-wide 1,630.9 15 82.7 86.7 35 50.0 90.6 91.7 93.3 97.6 89.8 86.7 Private Lao PDR 19.6 1 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Sector Development Bangladesh 85.2 2 34.8 50.0 0 0.0 0.0 0.0 100.0 100.0 34.8 50.0 EAP 122.7 8 61.5 50.0 21 12.5 30.8 25.0 62.5 74.8 61.5 50.0 Bank-wide 6,445.2 137 81.8 64.2 61 37.2 85.1 67.5 72.8 82.4 79.9 58.8 Public Sector Thailand 400.0 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Governance Bangladesh 306.7 1 100.0 100.0 0 0.0 100.0 100.0 100.0 100.0 EAP 1,793.3 16 59.0 75.0 53 62.5 75.2 76.9 81.3 59.8 64.9 81.3 Bank-wide 13,656.1 194 85.1 75.9 51 48.4 90.0 77.8 78.2 86.4 86.1 73.1 Rural Sector Cambodia 46.4 3 89.9 66.7 89 50.0 88.8 50.0 66.7 89.9 89.9 66.7 Lao PDR 35.6 4 49.7 50.0 0 0.0 44.2 25.0 50.0 49.7 49.7 50.0 Vietnam 311.8 4 100.0 100.0 66 66.7 100.0 100.0 75.0 92.9 92.9 75.0 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Bangladesh 225.6 9 79.2 77.8 23 25.0 26.6 33.3 55.6 71.0 81.4 77.8 EAP 7,141.9 75 94.9 82.2 77 55.1 91.0 72.3 74.3 91.3 93.6 79.5 Bank-wide 19,557.4 387 81.7 74.1 57 46.6 74.0 62.9 68.7 75.2 76.0 67.4 Social Cambodia 0.7 1 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Development EAP 0.7 1 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Bank-wide 577.9 18 49.4 62.5 45 46.7 94.3 69.2 61.1 46.1 48.8 55.6 (continued on next page) Table A.5b. Cambodia and Comparator Country IEG Ratings (continued) Inst Dev Impact % Overall Bank Perf % Overall Borr Perf % Total Evaluated Outcome % Satisfactory Substantial Sustainability % Likely Satisfactory Satisfactory Sector Net Comm Net Comm By Net Comm By Net Comm By Net Comm By Net Comm By Board Country ($million) By Number ($million) Number ($million) Number ($million) Number ($million) Number ($million) Number Social Cambodia 18.4 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Protection Lao PDR 9.7 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Thailand 253.5 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 EAP 1,129.3 13 100.0 75.0 45 41.7 66.2 55.6 69.2 99.9 99.9 90.9 Bank-wide 10,018.3 160 88.0 82.3 53 47.7 81.9 66.1 81.3 88.3 86.3 82.3 Transport Lao PDR 101.4 3 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Thailand 232.4 2 100.0 100.0 32 50.0 100.0 100.0 100.0 100.0 100.0 100.0 Vietnam 446.8 5 100.0 100.0 7 25.0 100.0 100.0 100.0 100.0 94.1 80.0 Bangladesh 921.9 6 90.6 83.3 39 33.3 94.3 80.0 83.3 90.6 85.4 66.7 EAP 7,208.5 51 95.5 96.1 76 73.5 94.8 91.3 98.0 96.3 96.4 94.1 Bank-wide 20,680.6 234 91.3 89.5 61 63.3 87.4 81.4 93.5 93.3 88.3 85.7 Urban Bangladesh 31.0 1 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Development EAP 1,432.2 19 74.6 68.4 44 31.6 53.0 50.0 78.9 81.3 80.1 78.9 Bank-wide 7,239.2 135 84.4 75.2 44 38.8 71.4 63.6 75.4 81.4 84.9 73.1 Water Cambodia 30.1 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Supply and Sanitation Vietnam 60.3 1 100.0 100.0 100 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Bangladesh 46.7 1 0.0 0.0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 EAP 1,604.3 19 94.5 89.5 63 63.2 75.0 78.9 94.7 94.8 94.5 89.5 Bank-wide 6,896.6 121 73.2 72.3 40 43.1 55.9 59.6 73.3 72.5 66.8 68.3 Source: World Bank database. Note: EAP = East Asia and Pacific Region. 91 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.6. Common Portfolio Problems Fiscal Year 1999 2000 2001 2002 2003 2004 2005 2006 Average % Cambodia % Safeguards 0 9 0 0 0 0 8 8 3 % Slow Disb 11 0 8 14 19 0 8 0 8 % Proc Prob 11 9 8 14 19 21 8 25 14 % Mgt Prob 11.1 9.1 0.0 0.0 18.8 14.3 7.7 25.0 11 % Field 0.0 18.2 8.3 14.3 6.3 7.1 0.0 8.3 8 Managed East % Safeguards 3 4 5 2 4 4 1 1 3 Asia and % Slow Disb 19 9 12 14 14 13 13 14 14 Pacific Region % Proc Prob 12 9 7 11 11 10 3 6 9 % Mgt Prob 10.6 5.8 4.6 8.1 4.8 5.1 4.8 6.9 6 % Field 0.0 25.9 26.5 33.3 32.0 28.5 29.2 30.9 26 Manageda Bank-wide % Safeguards 2 2 2 2 3 3 2 3 2 % Slow Disb 25 13 14 14 13 12 11 11 14 % Proc Prob 9 7 7 11 11 11 7 6 9 % Mgt Prob 9.0 7.8 5.7 6.4 6.2 6.6 6.8 6.4 7 % Field 0.0 14.7 15.7 17.9 17.3 15.8 16.2 15.3 14 Managed Source: World Bank database. a. Not available prior to fiscal 2000. 92 Table A.7. Cambodia: Bank Budget, by Cost Category, FY1999–2006 (in US$ thousands) Fiscal year FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Bus Proc Actuals Actuals Actuals Actuals Actuals Actuals Actuals Actuals Total Services 1,605 2,630 3,125 3,869 4,376 5,178 5,364 4,969 31,115 Client services 1,560 2,546 3,028 3,756 4,149 4,953 4,973 4,754 29,718 Country services 1,555 2,531 3,016 3,741 4,015 4,756 4,616 4,152 28,383 Project supervision 544 849 807 937 1,221 1,478 1,613 1,485 8,933 Supervision 544 792 799 880 1,067 1,236 1,270 1,136 7,723 Portfolio management 0 57 8 57 154 241 343 350 1,209 Lending 614 626 1,552 1,542 1,269 809 1,035 1,123 8,569 Lending 614 626 1,552 1,541 1,229 734 957 1,097 8,349 Prepare loans/grants 614 543 1,552 1,541 1,229 734 957 1,097 8,266 Lending development 83 0 83 Lending by country 0 0 0 LEN DEV- KH 0 0 0 Legal services for operations 1 40 75 78 26 220 Legal for operations 1 40 75 78 26 220 Country economic & sector work 280 473 441 786 852 1,788 1,432 1,156 7,209 Econ.& sector work 156 240 227 621 730 1,200 1,004 954 5,132 Econ.& sector work 156 88 77 440 634 1,113 831 744 4,083 Country monitoring 152 150 181 96 88 172 210 1,049 Technical assistance 20 168 92 126 113 514 318 151 1,502 Aid coordination 104 65 122 39 10 74 111 50 575 Country program support 13 544 209 463 657 661 508 379 3,433 Support Country Ops 280 71 149 328 348 339 373 1,889 Form/Monitor CAS 168 7 129 293 153 1 750 (continued on next page) 93 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t 94 Table A.7. Cambodia: Bank Budget, by Cost Category, FY1999–2006 (in US$ thousands) (continued) Fiscal year FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 Bus Proc Actuals Actuals Actuals Actuals Actuals Actuals Actuals Actuals Total PFP Assistance 13 97 33 0 143 PRSP Preparation 105 307 199 20 16 5 652 Client Training 104 39 7 14 16 20 28 9 238 Deliver Client Trg 104 39 7 14 16 20 28 9 238 Sector and Global Se 1 13 11 4 134 193 292 269 918 Knowledge Management 18 77 –2 94 Professional Standard 14 14 Sector Strategy 1 21 2 24 Quality Assurance 23 23 External Partnership 11 4 126 42 76 72 331 Business Development 13 30 43 Council and Sector B 8 44 77 101 230 Research 55 61 45 160 Other Operational Su 3 2 11 4 42 299 360 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Country Risk Assessm 4 2 7 12 Anti Corruption 2 2 Operational Legal Se 3 11 40 292 346 ACS Support to Produ 0 23 34 57 Support Services 45 84 98 113 226 225 391 215 1,397 Receive Training 55 53 5 14 126 Administrative Servi 7 42 13 3 47 155 35 302 Corporate Services 45 77 56 100 168 125 231 166 969 Source: World Bank database. Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Table A.8. World Bank Senior Management for Cambodia, 1999–2007 Resident Representative/ Year Vice President Country Director Country Manager 1999 Jean-Michel Severino Ngozi N. Okonjo-Iweala Bonaventure Mbida-Essama 2000 Jamil Kassum Ngozi N. Okonjo-Iweala Bonaventure Mbida-Essama 2001 Jamil Kassum Ian C. Porter Bonaventure Mbida-Essama 2002 Jamil Kassum Ian C. Porter Bonaventure Mbida-Essama 2003 Jamil Kassum Ian C. Porter Nisha Agrawal 2004 Jamil Kassum Ian C. Porter Nisha Agrawal 2005 Jamil Kassum Ian C. Porter Nisha Agrawal 2006 Jeffrey Gutman Ian C. Porter Nisha Agrawal 2007 James Adams Ian C. Porter Nisha Agrawal 95 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table A.9. Cambodia: Millennium Development Goals 1990 1995 2000 2005 Goal 1: Eradicate extreme poverty and hunger Income share held by lowest 20% — 6.9 — 6.8 Malnutrition prevalence, weight for age (% of children under 5) — 47.4 45.2 36.0 Poverty gap at $1 a day (PPP) (%) — 9.7 — — Poverty headcount ratio at $1 a day (PPP) (% of population) — 34.1 — — Poverty headcount ratio at national poverty line (% of population) — 47 — 35 Prevalence of undernourishment (% of population) 43 46 — 33 Goal 2: Achieve universal primary education Literacy rate, youth total (% of people ages 15–24) 73 — — 83 Persistence to grade 5, total (% of cohort) — — 63 63 Primary completion rate, total (% of relevant age group) — 15 45 80 School enrollment, primary (% net) 69 78 84 91 Goal 3: Promote gender equality and empower women Proportion of seats held by women in national parliament (%) — 6 8 10 Ratio of girls to boys in primary and secondary education (%) — — 80 87 Ratio of young literate females to males (% ages 15–24) 81 — — 92 Share of women employed in the nonagricultural sector (% of total nonagricultural 53.5 52.8 51.9 51.3 employment) Goal 4: Reduce child mortality Immunization, measles (% of children ages 12–23 months) 34 55 77 Mortality rate, infant (per 1,000 live births) 89 95 66 Mortality rate, under-5 (per 1,000) 115 124 83 Goal 5: Improve maternal health Births attended by skilled health staff (% of total) — 34 32 44 Maternal mortality ratio (modeled estimate, per 100,000 live births) — — 450 — Goal 6: Combat HIV/AIDS, malaria, and other diseases Contraceptive prevalence (% of women ages 15–49) — 13 24 40 Incidence of tuberculosis (per 100,000 people) 582 555 530 506 Prevalence of HIV, female (% ages 15–24) — — — — Prevalence of HIV, total (% of population ages 15–49) — 3.3 — 0.9 Tuberculosis cases detected under Development Outcome Tracking System (%) — 40 49 66 Goal 7: Ensure environmental sustainability CO2 emissions (metric tons per capita) 0.0 0.0 0.0 0.0 Forest area (% of land area) 73 — 65 59 GDP per unit of energy use (constant 2000 PPP $ per kg of oil equivalent) — — — — (continued on next page) 96 Appe n d i x A : S tat i s t i c a l S u pp l e m e n t Table A.9. Cambodia: Millennium Development Goals (continued) 1990 1995 2000 2005 Improved sanitation facilities (% of population with access) — — — 17 Improved water source (% of population with access) — — — 41 Nationally protected areas (% of total land area) — — — 23.5 Goal 8: Develop a global partnership for development Aid per capita (current US$) 4 48 31 38 Debt service (public and publicly guaranteed and IMF only, % of exports of goods and 3.8 0.7 1.4 0.7 services, excl. workers’ remittances) Fixed line and mobile phone subscribers (per 1,000 people) 0 2 13 40 Internet users (per 1,000 people) 0 0 0 3 Personal computers (per 1,000 people) — 0 1 3 Total debt service (% of exports of goods, services and income) 4.0 0.7 1.6 0.7 Unemployment, youth female (% of female labor force ages 15–24) — — 12.0 — Unemployment, youth male (% of male labor force ages 15–24) — — 12.4 — Unemployment, youth total (% of total labor force ages 15–24) — — 12.2 — Other Fertility rate, total (births per woman) 5.5 4.8 4.0 3.4 GNI per capita, Atlas method (current US$) — 280 280 430 GNI, Atlas method (current US$) (billions) — 3.2 3.6 6.1 Gross capital formation (% of GDP) 8.2 14.4 16.9 19.7 Life expectancy at birth, total (years) 54 55 63 Literacy rate, adult total (% of people ages 15 and above) 62 63 — 74 Population, total (millions) 9.0 10.9 12.6 13.8 Trade (% of GDP) 18.9 77.7 91.0 109.8 Sources: World Development Indicators database, July 2007, and tables A.2b and A.2c. Note: Figures in italics refer to periods other than those specified. 97 98 Appendix B: IEG – IFC Country Evaluation Note Economic Growth and Private Sector focus.2 The government’s attempts to liberalize Development between 1998 and 2006 the economy brought initial successes between Cambodia had a fragile foundation for private- 1994 and 1996 in attracting foreign direct invest- sector led growth. Its legacy of conflict had ment. Resulting foreign direct investment project resulted in destroyed institutions and low capacity commitments exceeded US$ 2.2 billion, mainly in for economic activities. The country’s infrastruc- garments, construction, and the tourism sectors. ture was poor, reflecting not only its history of Such progress, however, halted in 1997 when conflict but also its low population density and the coalition broke up and international donors the low income of its population. What there was withdrew aid. Japan brokered a peace plan and of a Cambodian private sector was based primar- new elections were held in 1998, but political ily on the informal sector, such as unregistered violence between the two main parties—the farmers and rural micro and small enterprises.1 In Cambodian People’s Party (CPP) and the National 1993, a United Nations–negotiated peace settle- United Front for an Independent, Neutral, ment led to elections and a coalition govern- Peaceful, and Co-operative Cambodia (FUNCIN- ment came to power. Since then, private sector PEC)—continued until the next elections in development has been the government’s strategic 2003, when CCP gained the upper hand. Figure B.1: Cambodia’s Growth Has Been Higher Than the Regional Average Since 2003 14% 12% Annual percent GDP change 10% 8% 6% 4% 2% 0% 1999 2000 2001 2002 2003 2004 2005 2006P Year Cambodia East Asia Source: World Bank. 99 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Table B.1: Cambodia’s Key Economic Indicators Cambodia ($millions) 2000 2001 2002 2003 2004 2005 Tourism receipts 303 381 454 390 605 842 Garment exports (GSP before 2003) 1013 1188 1392 1601 1986 2206 GDP 3655 3970 4280 4585 5260 6287 % of GDP 36% 40% 43% 43% 49% 48% Source: IMF and World Bank. Note: GSP = Generalized System of Preferences. Cambodia’s current economy is narrowly based Paddy rice, Cambodia’s main staple food, experi- on three key sectors: agriculture, garment, and enced positive and negative growth, in turns, tourism, and increasingly in the latter two. The between 2001 and 2005. Such volatility has been garment and tourism sectors represented 36 attributed to the country’s vulnerability to weather percent of GDP in 2000; they made up nearly conditions, as well as the small scale and relative half of country GDP in 2005. Cambodia has had inefficiency of the entire production system. higher growth rates than East Asia averages in the last four years (see figure B.1). This growth is Cambodia’s business climate continues to be mainly export-led growth based on the garment difficult for private sector investment (see table and tourism sectors (table B.1). These two sectors B.2, figure B.2, and figure B.3). Despite the high grew strongly during the past decade: garments growth rates in the recent years, World Trade grew more than 20 percent per year, whereas the Organization accession, and the government’s number of tourists grew from 367,743 in 1999, eagerness to increase the private sector’s role, to 1,322,308 in 2006, with positive effects on the investment climate has not changed much in hospitality industry. However, the agriculture Cambodia. The Institutional Investor Country sector experienced high volatility in its output. Credit Rating (IICCR) began rating Cambodia’s Table B.2: Cambodia’s Governance and Business Environment Indicators Were Poor Cambodia 2006 2005 Transparency International Index (n=158 and 163 respectively) Corruption Perceptions Index ranking 151 130 WB/IFC Doing Business Indicators (n=175) Ease of doing business ranking 143 142 Start a business ranking 159 155 Dealing with licenses ranking 159 163 Getting credit 174 174 Sources: WB/IFC Doing Business Indicators and Transparency International index. 100 Appe n d i x B : I E G – IF C C o u n t r y E va l u at i o n N o t e Figure B.2: IICCR and WSJ/Heritage Ratings 70 60 50 40 Rating 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Heritage Index IICCR Figure B.3: World Bank’s CPIA Ratings 3.5 3 2.5 Cambodia CPIA 2 1.5 1 0.5 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year CPIA Source: IEG-IFC based on Transparency International, IICCR, Heritage Foundation, and World Bank data. Note: WSJ = Wall Street Journal; CPIA = Country Policy and Institutional Assessment. sovereign credit risk in March 2003. The score Freedom Overall Synthesis Rating, which has improved marginally through 2005 but then longer coverage than the IICCR, did not improve started to decline from 2006. Its best IICCR between 1999 and 2007. Similarly, the World score over the period was 21, which still scores Bank’s Country Policy and Institutional Assess- the country as high risk. The Wall Street Journal/ ment scores have been stagnant during the past Heritage Foundation’s Index of Economic five years, after some initial improvement when 101 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Figure B.4: Domestic Credit to Private Sector 70% Domestic credit to private sector (% of GDP) 60% 50% 40% 30% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 Cambodia Lao PDR Vietnam Figure B.5: Gross Capital Formation 40% 35% Gross capital formation (% of GDP) 30% 25% 20% 15% 10% 1999 2000 2001 2002 2003 2004 2005 Cambodia Lao PDR Vietnam Source: World Bank. Cambodia moved away from its conflict situation. The private sector’s shares of domestic credit The Doing Business survey shows no improve- and private capital formation in relation to GDP ment in Cambodia’s ease of doing business in Cambodia have not changed over the years, during the past two years of the exercise, and and financial intermediation remains low (see it also shows Cambodia as lagging behind other figures B.4 and B.5). When the domestic credit comparator countries. to private sector and the gross capital formation 102 Appe n d i x B : I E G – IF C C o u n t r y E va l u at i o n N o t e shares are compared with Vietnam and Lao PDR ment Facility (MPDF), a multidonor initiative for (two other countries targeted by IFC’s Mekong the Mekong region (Cambodia, Lao PDR, and Project Development Facility), Cambodia does Vietnam) led by IFC, has been the major vehicle not perform well, particularly in gross capital for IFC’s advisory operations in Cambodia. Nearly formation. half of advisory service projects in the country (45 percent by amount) were from MPDF. IFC’s IFC Operations in Cambodia other departments, many jointly with MPDF One of the key objectives in the country (which has had field representation since 2000), assistance strategies (CAS) for Cambodia has provided various advisory services to Cambodia. been promotion of private sector development The Grassroots Business Initiatives (GBI), which for poverty reduction. The 2005 CAS (prepared seeks to strengthen and scale up innovative jointly with the World Bank), for example, social enterprises at the grassroots level, was specified the objective of achieving broad-based the second most active provider of IFC advisory sustainable economic growth with equity, and operations, with 15 percent of projects (23 with the private sector playing the leading role. percent by amount). The Global Financial Market The CAS’s strategic agenda was in three areas: Department provided assistance to financial (1) promote export-led growth, (2) diversify the markets institutions. The Environment and Social sources of growth, and (3) improve private sector Department held seminars to promote sustain- delivery of public services. In supporting these able banking. The Foreign Investment Advisory CAS priorities, IFC put heavy weight on advisory Services undertook 10 projects to advise govern- services supplemented by selective investments ment to promote foreign direct investment and because of the country’s weak private sector and regulatory reforms. large informal sector, limited financial market, and challenging investment climate. There are three types of recipients of IFC’s advisory services: individual firms, intermediar- Advisory Services ies (which provide services to groups of firms), IFC’s advisory services to Cambodia totaled and government. In Cambodia, 85 percent of about $12 million between 1998 and 2006, advisory services were provided to the private financing some 75 projects, and equivalent to 40 sector, either directly to firms or through interme- percent of total IFC investment commitment to diaries, and only 15 percent were directed to Cambodia over the same period. (See table B.3.) the government. Almost half of the projects by This was substantially greater than the average for number (68 percent by volume) went to interme- advisory services to frontier countries over the diaries, followed by firms and then government. same period, at 0.5 percent of total IFC invest- Assistance to intermediaries was, in general, ment commitments. Since its establishment also larger in amount than that for firms and the in 1997, The Mekong Private Sector Develop- government. Average size was about $260,000, Table B.3: Distribution of Advisory Service Projects in Cambodia by Clients and Departments Clients Distribution of Projects (by number of projects) Government (15%) FIAS 55%, Advisory Services Dept 27%, MPDF 9%, others 9% Intermediaries (49%) MPDF 70%, Advisory Services Dept 8%, GBI 8%, others 13% Firms (36%) GBI 49%, MPDF 33%, Global Financial Market 7%, others 11% Source: IEG-IFC. Note: FIAS = Foreign Investment Advisory Service; MPDF = Mekong Private Sector Development Facility; GBI = Grassroots Business Inititiative. 103 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 while the average for firm-level assistance was More than half of the assistance to the government about half of intermediaries assistance. IFC was from the Foreign Investment Advisory Service assisted intermediaries such as business associa- (FIAS), followed by the Advisory Services Depart- tions and supported the government—Private ment and MPDF. Advice focused on legal reform Sector Forum. About 70 percent of the assistance and promotion of foreign direct investment. to intermediaries was from MPDF. In terms of the five business lines comprising IFC’s Most of the firms assisted were micro and advisory services, Value Addition to Firms, Access small enterprises, including nongovernmen- to Finance, and Business Enabling Environment tal organizations working toward commer- had almost equal shares, while there were few cializing operations. The Grassroots Business projects in Environmental and Social Sustainabil- Initiatives provided nearly half of the firm-level ity, and no advisory assistance dedicated solely to assistance, followed by MPDF (although this Infrastructure. (See table B.4.) line of business was reduced in line with the recommendations made by the IEG-managed In line with the CAS objectives, IFC’s advisory evaluation of MPDF in 2002) and industry and services emphasized: (1) support mechanisms environment departments. for improving businesses environment and voices Table B.4. Example of Advisory Services in Cambodia by Recipients and Line of Business Advisory Services Lines of Business Business Enabling Access to Value added Environment Infra- Environment Finance to firms and social structure Recipients: Government • Advise on • Leasing investment policy. registration, Legal reform, privatization of incentives Foreign Trade Bank Intermediaries • Business • Microfinance • “Business Edge” • Seminar on associations association, training sustainable • Alternative Institute of • Hotel association, financing, dispute resolution Banking , Bank • Garment sector Garment CSR Training Center CSR management • Craft network training • Corporate Citizenship Award Firms • Capacity • NGO building for commercialization MFIs, • Bank advisory, Corporate governance, AML-CTF Distribution by number of 32% 29% 33% 5% 0% projects Source: IEG-IFC. 104 Appe n d i x B : I E G – IF C C o u n t r y E va l u at i o n N o t e from the private sector; (2) support for deepen- IFC’s activities in the financial market, and IFC ing of the financial market; and (3) encouraging provided support not just at the firm level, but sustainable garment and tourism industries. also at the subsector level (through assistance to the microfinance association). IFC has been supporting the government- Private Sector Forum since 2002 as the princi- Advisory work to Cambodia’s microfinance sector pal mechanism for direct government-private contributed toward making it a well-managed sector discussions to built trust, improve part of the financial market. IFC’s assistance in business environment, and encourage regula- microfinance association helped the microfi- tory reforms. So far, the forum has considered nance institutions to improve operations and more than one thousand issues, many of which help them to become registered as financial ended with recommendations being made institutions. Although Cambodia’s financial to the government. According to an external sector is shallow, it has been growing steadily, evaluation commissioned by the IFC manage- especially in microfinance. In the past years, the ment, the forum was instrumental in achieving number of banks have increased from 14 in 2002, consultation on business-related laws and regula- to 19 in 2006, and registered microfinance institu- tions, reforms in the financial sector, and trade tions increased from 9 in September 2004, to 16 facilitation, as well as harnessing open discus- at the end of 2005.3 At the same time, the number sion on governance and corruption among the of registered nongovernmental organizations parties. Despite the improved dialogue between decreased from 31 to 23, in line with the central government and the private sector, govern- bank’s encouragement to transform NGOs into ment’s responses in reforming its regulations formal, licensed microfinance intermediaries. and improving the private sector development climate has been slow. IFC’s assistance in the garment sector ranged from training for managers to corporate social IFC has also been active in assisting various responsibility. It helped Cambodian firms to deal business associations. The original idea of with facing increased global competition after helping a business association was to improve expiration of the Multi-Fiber Agreement. IFC’s its service delivery to its members, as well as contribution was to mediate between businesses to make it a vehicle to represent businesses’ and other stakeholders (including the Interna- perspective to government and regulatory tional Labour Organization, which advocates bodies. However, compared with other advisory for workers rights), to present business cases services, IFC had difficulties in scaling up its on improving labor practices in the Cambodian activities to business associations. IFC found that garment business. IFC’s reputation as a many business associations had weak manage- business-like entity helped it to gain credibil- ment or governance structure. They were run ity with garment industry buyers. This helped part-time by busy private business owners who to establish cooperation between businesses could not make substantial time commitments and the International Labour Organization. The to them. IFC subsequently reshaped its approach organization then produced periodic reports on to business associations by focusing on sector- labor practices in the sector, and established a specific entities, with close scrutiny on institu- partnership with GAP, Inc. to sponsor manage- tional capacity. ment training for better labor practices in the garment-producing shops. Cambodia is now IFC assisted Cambodia’s financial market through regarded as a “sweatshop-free” country and this advisory services in the form of advice to the has been attractive to international buyers who government on privatization of the Foreign Trade pay attention to labor standards. Bank, training sessions for individual financial institutions, as well as support for a bank training However, the business training program center. Microfinance has been a main focus of (“Business Edge”) in Cambodia faced weak 105 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 demand and competition from other donor- million as of June 2007. Moody’s has begun subsidized small and medium enterprise (SME) rating the bank and its rating is the highest in management programs. MPDF subsequently Cambodia—higher than all the banks in Indone- discontinued this line of business in 2006. sia, and equal or better than all the banks in Thailand. ACLEDA successfully expanded its Investment Activities network of branches to the rural areas, with IFC’s direct investments in Cambodia during 164 branches and offices in all 24 Cambodia’s the same period were about $30 million (net provinces or towns. The bank also supports commitment), supporting five companies in women’s economic activities; 61 percent of the financial markets, transport, infrastructure, accounts are held by women. The bank is also a tourism, and food processing industries. IFC’s leader in terms of sustainability finance. existing investment portfolio is closely related to the advisory operations. Three out of five clients IFC provided a loan for the private concession with IFC investments had direct advisory support to modernize and expand airport operations in from IFC, while the other two were supported Phnom Penh and Siem Riep in 2004. The new through various kinds of sectorwide assistance. airports helped the tourism industry by increas- IFC supported relatively small projects (only two ing air traffic and passenger flows. Each airport projects had commitment amounts exceeding handled 1.3 million passengers in 2006. This $5 million), reflecting the size of private sector was the first private sector participation in a activities in the country. large transportation concession in Cambodia, and its success demonstrated the potential of Although only two out of seven investment private sector involvement in infrastructure projects reached early operating maturity as projects. The operator requested additional of 2006, IEG reviewed all seven projects based funding for the second phase of the project, on early and leading indicators of outcomes. to expand capacity to cope with the higher- Based on early results, the overall portfolio was than-expected growth in traffic, as well as performing in line with expectations or better in additional runways in the Sihanoukville Airport. achieving development outcomes. In contrast, IFC’s investment to assist commer- cialization of an NGO-sponsored project faced Three (out of seven) of IFC’s investment projects difficulties in achieving its business targets. IFC were with ACLEDA Bank, which was started as provided advisory service assistance at the time a microfinance NGO in 1993. MPDF started to of its commercialization and remains involved in help the bank by improving accounting practices helping the company to improve its viability. and organizational structures before IFC made its first equity investment in 2000. IFC increased Challenges its equity in ACLEDA through a rights issue IFC’s operations in Cambodia through both in 2003, when ACLEDA obtained a commer- advisory services and investments, overall, have cial bank license. This followed substantial IFC achieved positive outcomes. IFC activities in advisory assistance in identifying quality advisors, working through intermediaries to enhance sponsoring comprehensive training for staff and firms’ access to finance and improve business- managers, and improving information systems. enabling environment generated some positive After this capacity-building effort, IFC provided results. The airport project supported by IFC ACLEDA its first loan in 2004 for on-lending to contributed to the growth in tourism in the SMEs, and a second loan in 2006 after successful country. IFC has some limited success in enhanc- use of the first loan. ing the capacity of local small firms to grow into sustainable businesses using a combination of ACLEDA Bank has continued to be a successful advisory services and investment. However, the commercial bank in Cambodia. Its portfolio has primary constraints to realizing additional private grown from just $10 million in 1998, to $158.5 investment (following IFC’s demonstration of 106 Appe n d i x B : I E G – IF C C o u n t r y E va l u at i o n N o t e success) in Cambodia are still in the business and economic and regulatory constraints. The environment. (See figure B.6.) cost of corruption has been high. In this survey, private sector firms estimated that the magnitude According to World Bank investment climate of the informal (bribe) payments is more than survey findings, the most important factor hinder- 5 percent of annual sales revenue. Although ing Cambodian private sector development is two elements of financial constraints (access to corruption, followed by crime/theft, disorder, finance and cost of finance) were viewed as less Figure B.6: General Constraints to Private Sector Enterprise Operations and Growth in Cambodia (% respondents identifying the issue as a major or severe problem) Legal system/conf. resolutuion 60% 50% Access to finance Anti competitive informal practises 40% 30% 20% 10% Cost of finance 0% Crime theft disorder Economic and regulatory constraint Corruption Macroeconomic instability Sources: World Bank/IFC Doing Business Indicators and Transparency index. Box B.1: IFC Management Comment IEG–IFC’s positive assessment of IFC’s overall operations in improving the business environment will continue to be an Cambodia confirms the relevance and effectiveness of IFC’s important area of strategic focus. To widen its impact, IFC is strategic focus on supporting private sector development in addressing business environment constraints at the provin- frontier countries, through advisory services and investments. cial level, where most businesses engage with government. As one of the early movers into Cambodia following decades of Management is deepening the role of advisory services as an conflict, IFC provided targeted advisory services and pioneered important instrument for supporting private sector development investments in financial markets and infrastructure sectors. in Cambodia and as a mechanism for unlocking opportuni- Management shares the view that the main constraints to ties for investments in financial markets, infrastructure, and realizing additional private investment in Cambodia are still in agribusiness, among others. At the same time, management is the business environment. It also recognizes the challenges strengthening the focus on pursuing investment opportunities involved in scaling up IFC’s impact in the business-enabling in Cambodia and other frontier markets, as reflected in the environment at the aggregate level. In this context, deepening establishment of a frontier investment unit in the East Asia and the cooperation with the World Bank and the government on Pacific Department. 107 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 problematic, the survey response rates on these investment opportunities in infrastructure (such issues were low. as telecommunications, power, and transport), oil production, agriculture, and light manufac- Going forward, the key challenge for IFC is to turing. IFC needs to maintain emphasis on its scale up its impacts in business-enabling environ- advisory services as the main instrument of its ment to the aggregate level. Better business operations in Cambodia. environments and governance can open up IFC 108 Appendix C: Individuals and Organizations Interviewed A. Government of Cambodia Ministry of Economy and Finance H. E. Keat Chhon Senior Minister Aun Porn Moniroth Secretary of State Vongsey Vissoth Deputy Secretary General Sok Saravuth Manager, PFM Reform Committee Dr. Pen Siman Director General, Customs and Excise Department H.E. Hang Chuon Naron Secretary General Pen Thirong First Deputy Director, Dept. of Investment & Cooperation Seng Sreng Director, Economic and Finance Institute Chhay Vuth Director, Department of Public Procurement Huot Vathna Deputy Director, Department of Public Procurement National Bank of Cambodia H.E. Chea Chanto Governor Michael Dabadie Advisor National Audit Authority Uth Chhorn Auditor General Luk Nhep Secretary General Ministry of Industry, Mines, and Energy Ith Praing Secretary of State Tun Lean Director General, General Department of Energy Ministry of Land Management, Urban Planning, and Construction Im Chhun Lim Senior Minister Sareth Boramy Deputy Director, General Department of Land Management & Urban Planning; LMAP Deputy Director. Ministry of Planning, National Institute of Statistics H. E. Chhay Than Senior Minister Ou Orhat Secretary General Tuon Tavrak Director General Chea Chantum Director, Social Planning Department Dr. Hildegard Lingnau Advisor Keo Chettra Deputy Director, General Statistics Department 109 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Nor Vanndy Deputy Chief, National Accounts Statistics Bureau Andrew Pinney Statistics Advisor Ministry of Public Works and Transportation Tram Iv Trek Secretary of State Kang Phirith Road Rehabilitation Project Manager Ministry of Health H.E. Mam Bun Heng State Secretary H.E. Eng Hout State Secretary Dr. Char Meng Chour Deputy Director General for Health Dr. Lo Veasna Kry Director of Planning Dr. Uy Vengkry Executive Administrator, HSSP Dr. Youk Sambath Deputy Director General for Administration and Finances Lay Huorn Director Dr. Mao Tan Eang Center for TB and Leprosy Control Dr. Ou Vun World Bank Operations Unit Chief Dr. Doung Socheat Anti-Malaria/Dengue Program Director Referral Hospital, Kampong Thom Director Srayov Health Center, Kampong Thom Director Achar Leak Health Center, Kampong Thom Ministry of Rural Development Chan Darong Director General for Technical Affairs Touch Samnang Deputy Director, Community Development Department and PRIP Project Manager. Tunn Chandra Rural Roads Department, Director, PRIP-Ministry of Rural Development, Chief Planning Statistics Office. Kim Vuthana Former Project Director, NEVDP Cambodia Development Council Sok Chenda Sophea Secretary General Ministry of Interior Im Chhun Lim Senior Minister Leng Vy Deputy Director General Chamron Ngang Deputy Director General Ministry of Agriculture, Forestry, and Fisheries Chan Tong Yves Secretary of State Chea Sam Ang Deputy Director, Forest Administration Hang Sun Tra Forest Industry and Trade Development Department Ministry of Water Resources and Meteorology Veng Sakong Secretary of State Ministry of Education, Youth, and Sports H.E. Im Sethy Secretary of State H.E. Mak Vann Secretary of State (acting minister) 110 Appe n d i x C : I n d i v i d u a l s a n d O r g a n i z at i o n s I n t e r v i e w e d Dr. Nath Bunroeun Under Secretary of State Ou Eng Deputy DG of Education and CESSP Project Manager Lynn Dudley Chief Technical Advisor, CESSP Project Coordination Office Jeffery Marshall Technical Advisor, National Assessment Program Ung Sereydy Deputy Director, Provincial Education Office, Siem Reap Ministry of Women’s Affairs H.E. Khim Cham Roeun Secretary of State H.E. Keth Sam Ath Director General, Gender Equality and Economic Development Council for Administrative Reform Svay Sovannrith Director of Remuneration and Redeployment Policy Council for Legal and Judicial Reform Suy Mong Leang Director of PMU Electric Authority of Cambodia Ty Norin Chairman Electricte du Cambodge Yim Nolson Deputy Managing Director Chan Sodavath Executive Director, Corporate Planning and Projects Sok Sovann Deputy Director, Corporate Planning and Projects Department Peng Leang Chief of Office, PMO 2 Phnom Penh Water Supply Authority Ek Sonn Chan General Director Samreth Sovithia Director Planning and Technical Department Siem Reap Province Sou Phirin Governor Sok Leakhena Deputy Governor Ros Sar Director, Department of Rural Development Nhim Hak Senior Provincial Program Advisor, Sok Sunlin Director, Public Works and Transport Department Kang Chantra Deputy Director, Public Works and Transport Department Kong Choeurn Chief, Kampong Kdei Commune Council (with other commune council members) Thin Kim Ho First Commune Council Member, Samrong Commune Oum Chat Chief, Siem Reap Commune (with other commune council members) Heng Lak Chief, Dom Dek Commune Council (with other commune council members) Kem Sim Village Chief, Dong Hong (with other villagers, project beneficiaries) Men Vonn Village Chief, Banteay Srey (with other villagers, project beneficiaries) 111 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Kampong Chan Province Seng Khuy Chief, Angkor Ban Commune Council (with other commune council members) Chea Maly Chief, Peam Chi Kang Commune Council (with other commune council members) Ke Peng Eay Chief, Village No. 9 (Angkor Ban Commune) Tuy Bunleang Chief, Sambo Meas Village Eang Peng Heang Clean Water Group Meas Chheang Ly Managing Director, Simcam B. Donors ADB Arjun Goswami Country Director, Cambodia Resident Mission Purnima Rajapakse Deputy Head of Mission, Cambodia Resident Mission Nida Ouk Programs Officer, Infrastructure Vanndy Hem Programs Officer, Economics and Finance Sophea Mar Social Sector Officer Raikhan Sabirova Social Sector Specialist Alain Goffeau Operations Paul Van Im Agriculture/National Resource Management Specialist DfID Clare Moran Country Manager Helen Appleton Social Development Adviser & First Secretary, Development Elizabeth Smith Health Advisor UNDP Douglas Gardner United Nations Resident Coordinator Anne-Isabelle Degryse-Blateau Program Director and Deputy Resident Representative Hong Sokheang UNDP Poverty Reduction Cluster Team Leader Lay Khim Assistant Resident Representative and Environment and Energy Cluster Team Leader Wisal Hin Trade and Private Sector Analyst, Poverty Reduction Cluster Ann Lund United Nations Coordination Specialist AFD Yves Terracol Director AusAid Peter Lindenmayer Representative Roger Bednall Program Manager FAO Kimiko Uno Country Representative IMF Jeremy Carter Resident Representative Tom Rumbaugh IMF 112 Appe n d i x C : I n d i v i d u a l s a n d O r g a n i z at i o n s I n t e r v i e w e d Robert Hagemann IMF, Asia and Pacific Department Michael Khun IMF John G. Nelmes Resident Representative JICA (Phnom Penh) Momoko Hotta Assistant Resident Representative (Education, Judicial Reform) Eiichiro Hayashi Aid Coordination Advisor (PFM, overall coordination) AkiraYamashita Project Coordination Advisor (Infrastructure & Environment, Social Consideration) Tomohiro Ono Assistant Resident Representative (Infrastructure, Urban Living Conditions) JICA (Tokyo) Chisa Hara Team Director, Human Department Yukihiro Koizumi Chief, Mekong Region, Southeast Asia Team IV, Regional Department I (Southeast Asia) SIDA Erik Illes First Secretary, Embassy of Sweden Sok Narom Program Officer USAID Erin Soto Representative Reed J. Aeschliman Director, Office of General Development UNFPA Alice Levisay Deputy Representative WHO Maryam Bigdeli Health Economist GTZ Dr. Chhom Rada Deputy Program Coordinator, Health Sector Reform Dr. Yath Yathy Health Systems Advisor Suzanne Mueller Acting Resident Representative Julian Hanson Poverty Mapping and Land Management Dr. Angelika Fleddermann Team Leader, Rural Development Program C. Private Sector Federation of Cambodian Rice Millers Associations Oknha Phou Puy President Kent Helmers Resident expatriate specialist Garment Manufactures Association in Cambodia Dr. Ken Loo Secretary General 113 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Cambodia Hotel Managers Association Lina Chancel General Manager James K. Sok Office Manager Other Bretton G. Sciaroni Sciaroni and Associates D. NGOs and Civil Society Water Supply and Sanitation Program Jan Willem Rosenboom Country Team Leader NE Village Development Project Kim Vuthana Former Project Director The NGO Forum Chhith Sam Ath Executive Director Ek Siden Development Issues Programme Coordinator Cambodian Center for Human Rights Kem Sokha President Medicam Dr. Sin Somuny Save the Children, Norway Kong Sakem Education Program Officer Cambodia Development Resource Institute Larry Strange Executive Director Brett Ballard Research Director Chan Sophal Senior Research Manager Netra Eng Research Manager Ingrid Fitzgerald Gender Specialist Dr. David Craig Researcher Kim Sean Somatra Research Associate Toshiyasu Kato Former Consultant World Education Kurt Bredenberg Party Chief Liesbeth Roolvink Technical Advisor Royal University of Phnom Penh Dr. Luise Ahrens Social Fund Projects Sophornn Khaim Former Officer, Social Fund of the Kingdom of Cambodia; currently Community Development Specialist, The Louis Berger Group, Inc. 114 Appe n d i x C : I n d i v i d u a l s a n d O r g a n i z at i o n s I n t e r v i e w e d PACT Cambodia Kurt A. MacLeod Asia Regional Director, Country Representative for Cambodia SME Cambodia Rini Seiha Star Kampuchea Tieng Sophorn Program Coordinator Economic Institute of Cambodia Kim Natacha E. World Bank / IFC Ian Porter Country Director Nisha Agrawal Country Manager Ngozi Okonjo-Iweala Former Country Director Lynne D. Sherbourne-Benz Country Program Coordinator William B. Magrath Lead Natural Resource Economist Tom C. Tsui Former Country Anchor Steven Schonberger Lead Operations Officer Timothy Conway Poverty Specialist Emmanuel Y. Jimenez Sector Director Indermit Gil Sector Manager Magdi Amin Senior Private Development Specialist Barbara Nunberg Sector Manager Ahsan Ali Senior Procurement Specialist Denis Robitaille Manager (Procurement) Rebecca Sekse Senior Financial Specialist Jason Steele Information Specialist Margarita Nunez Senior Highway Engineer Dzung Minh Nguyen Senior Auditor, IAD Philip Adoteye Manager IAD Bernard Donge IAD Terry Matthews Senior Institutional Integrity Officer, INT Michael Richards Lead Institutional Integrity Officer, INT Juan G. Ronderos Senior Institutional Integrity Officer, INT Chorching Goh Senior Economist Bonaventure Mbida-Essama Former Country Manager Alain Labeau Lead Specialist Glenn S. Morgan Lead Environmental Specialist Wael Zakout Lead Operations Officer Maryam Salim Senior Human Development Specialist Jennifer Thomson Senior Financial Management Specialist Luiz Tavares Senior Water and Sanitation Specialist Jitendra Bajpai Sector Director, Transport Enrique Crousillat Lead Energy Specialist Homi Kharas Chief Economist and Sector Director, PREM Kazi Matin Lead Economist 115 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 Martha Ainsworth Lead Economist Albert Zeufack Senior Economist Fadia Saadah Sector Manager Christopher J. Thomas Sector Manager Peter Jipp Senior Natural Resources Management Specialist Omporn Regel Senior Operations Officer Makiko Harrison Senior Economist Rama Lakshminarayanan Former Manager of Health Project Zhi Liu Lead Infrastructure Specialist Jitu Shah Country Sector Coordinator, Environment Gillian Brown Senior Gender Specialist Thang-Long Ton Economist Luis Bienveniste Country Sector Coordinator Toomas Palu Senior Health Specialist Robert Taliercio Senior Country Economist Chea Huot Economist Jan Willem Rosenboom Team Leader, Water Supply and Sanitation Program Mia Hyun Poverty Specialist Simeth Beng Operations Officer Charis Wuerffel Consultant, Scholarship Program Vanna Nil Social Development Specialist Sok Sokunthea Procurement Specialist Chamroeun Mudita Rural Development Officer Seilava Ros Adviser to Executive Director for Cambodia Clay Wescott Consultant Louise F. Scura Lead Natural Resource Economist Guy Darlan Lead Specialist Yasuo Konishi Consultant James Knowles Consultant Agnes Albert Loth Senior Financial Officer Zafar Ahmed Consultant Christopher Chamberlain Former TTL for Social Fund, Health projects Lorraine Hawkins Former TTL for HSSP James Brew IFC Regional Representative Karla Quizon Program Manager, IFC Hor Soneath Business Development Officer, IFC 116 Appendix D: Guide to IEG-World Bank’s Country Assistance Evaluation Methodology This methodological note describes the key Assessments of assistance program elements of IEG-WB’s country assistance evalua- outcome and Bank performance are not tion (CAE) methodology.1 the same By the same token, an unsatisfactory Bank CAEs rate the outcomes of Bank assistance program outcome does not always assistance programs, not the clients’ mean that Bank performance was also unsatisfac- overall development progress tory, and vice versa. This becomes clearer once A Bank assistance program needs to be assessed we consider that the Bank’s contribution to the on how well it met its particular objectives, which outcome of its assistance program is only part of are typically a subset of the client’s development the story. The assistance program’s outcome is objectives. If a Bank assistance program is large determined by the joint impact of four agents: in relation to the client’s total development (a) the client; (b) the Bank; (c) partners and effort, the program outcome will be similar to the other stakeholders; and (d) exogenous forces client’s overall development progress. However, (for example, natural disasters, international most Bank assistance programs provide only economic shocks, etc.). Under the right circum- a fraction of the total resources devoted to a stances, a negative contribution from any one client’s development by donors, stakehold- agent could overwhelm the positive contribu- ers, and the government itself. In CAEs, IEGWB tions from the other three and lead to an unsatis- rates only the outcome of the Bank’s program, factory outcome. not the client’s overall development outcome, although the latter is clearly relevant for judging IEGWB measures Bank performance primarily the program’s outcome. on the basis of contributory actions the Bank directly controlled. Judgments regarding Bank The experience gained in CAEs confirms that performance typically consider the relevance and Bank program outcomes sometimes diverge implementation of the strategy, the design and significantly from the client’s overall develop- supervision of the Bank’s lending interventions, ment progress. CAEs have identified Bank the scope, quality, and follow-up of diagnostic assistance programs which had: work and other AAA activities, the consistency of the Bank’s lending with its nonlending work • satisfactory outcomes matched by good client and with its safeguard policies, and the Bank’s development; partnership activities. • unsatisfactory outcomes in clients that achieved good overall development results, Rating Assistance Program Outcome notwithstanding the weak Bank program; and, In rating the outcome (expected development • satisfactory outcomes in clients that did not impact) of an assistance program, IEGWB consid- achieve satisfactory overall results during the ers the extent to which major strategic objectives period of program implementation. were relevant and were achieved, without any shortcomings. In other words, did the Bank do 117 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 the right thing, and did it do it right. Programs tor to focus on whether the trade-offs adopted typically express their goals in terms of higher- were appropriate. However, in other instances, order objectives, such as poverty reduction. the strategy may be found to have glossed over The country assistance strategy (CAS) may also certain conflicts, or avoided addressing key establish intermediate goals—such as improved client development constraints. In either case, targeting of social services or promotion of the consequences could include a diminution integrated rural development—and specify how of program relevance, a loss of client ownership, they are expected to contribute toward achiev- and/or unwelcome side-effects, such as safeguard ing the higher-order objective. IEGWB’s task violations, all of which must be taken into account is then to validate whether the intermediate in judging program outcome. objectives were the right ones and whether they produced satisfactory net benefits, and whether Ratings Scale the results chain specified in the CAS was valid. IEGWB utilizes six rating categories for outcome, Where causal linkages were not fully specified in ranging from highly satisfactory to highly the CAS, it is the evaluator’s task to reconstruct unsatisfactory. this causal chain from the available evidence, and assess relevance, efficacy, and outcome with Highly satisfactory: The assistance program reference to the intermediate and higher-order achieved at least acceptable progress toward all objectives. major relevant objectives, and had best-practice development impact on one or more of them. No For each of the main objectives, the CAE major shortcomings were identified. evaluates the relevance of the objective, the relevance of the Bank’s strategy toward meeting Satisfactory: The assistance program achieved the objective, including the balance between acceptable progress toward all major relevant lending and nonlending instruments, the efficacy objectives. No best-practice achievements or with which the strategy was implemented and major shortcomings were identified. the results achieved. This is done in two steps. The first is a top-down review of whether the Moderately satisfactory: The assistance program Bank’s program achieved a particular Bank achieved acceptable progress toward most of its objective or planned outcome and had a substan- major relevant objectives. No major shortcom- tive impact on the country’s development. The ings were identified. second step is a bottom-up review of the Bank’s products and services (lending, analytical and Moderately unsatisfactory: The assistance advisory services, and aid coordination) used program did not make acceptable progress to achieve the objective. Together, these two toward most of its major relevant objectives, or steps test the consistency of findings from the made acceptable progress on all of them, but products and services and the development either (a) did not take into adequate account a impact dimensions. Subsequently, an assessment key development constraint or (b) produced a is made of the relative contribution to the results major shortcoming, such as a safeguard violation. achieved by the Bank, other donors, the govern- ment, and exogenous factors. Unsatisfactory: The assistance program did not make acceptable progress toward most of its Evaluators also assess the degree of client major relevant objectives, and either (a) did not ownership of international development priori- take into adequate account a key development ties, such as the Millennium Development constraint or (b) produced a major shortcoming, Goals, and Bank corporate advocacy priorities, such as a safeguard violation. such as safeguards. Ideally, any differences on dealing with these issues would be identified Highly unsatisfactory: The assistance program and resolved by the CAS, enabling the evalua- did not make acceptable progress toward any of 118 Appe n d i x D : G u i d e t o I E G - W o r l d B a n k ’ s C o u n t r y A s s i s ta n ce E va l u at i o n Me t h o d o l o g y its major relevant objectives and did not take into • the extent of building NGO capacity; and, adequate account a key development constraint, • the level of social and environmental capital. while also producing at least one major shortcom- ing, such as a safeguard violation. Sustainability can be rated as highly likely, likely, unlikely, highly unlikely, or, if available The institutional development impact can be information is insufficient, nonevaluable . rated as: high, substantial, modest, or negligi- Sustainability measures the resilience to risk ble. Institutional development impact measures of the development benefits of the country the extent to which the program bolstered the assistance program over time, taking into client’s ability to make more efficient, equitable, account eight factors: and sustainable use of its human, financial, and natural resources. Examples of areas included in • technical resilience; judging the institutional development impact of • financial resilience (including policies on cost the program are: recovery); • economic resilience; • the soundness of economic management; • social support (including conditions subject • the structure of the public sector, and, in par- to safeguard policies); ticular, the civil service; • environmental resilience; • the institutional soundness of the financial • ownership by governments and other key sector; stakeholders; • the soundness of legal, regulatory, and judicial • institutional support (including a supportive systems; legal/regulatory framework, and organizational • the extent of monitoring and evaluation sys- and management effectiveness); and, tems; • resilience to exogenous effects, such as inter- • the effectiveness of aid coordination; national economic shocks or changes in the • the degree of financial accountability; political and security environments. 119 120 Appendix E: Comments from the Cambodian Government 121 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 122 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 123 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 124 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 125 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 126 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 127 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 128 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 129 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 130 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 131 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 132 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 133 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 134 Appe n d i x E : C o m m e n t s f r o m t h e C a m b o d i a n G o v e r n m e n t 135 136 Endnotes Chapter 1 Chapter 3 1. World Bank, Operations Evaluation Department, 1. The Bank has not been engaged in support- Cambodia: Country Assistance Evaluation, Report No. ing the development of the financial sector, except 21354, November 16, 2000. for IFC’s involvement with commercial banking, 2. The 1991–93 United Nations Transitional Author- leaving leadership to the IMF and ADB. The latter ity in Cambodia. produced Cambodia’s Vision and Plan for Financial Sector Development for 2001–2010. The government Chapter 2 indicated that it would welcome greater Bank involve- 1. These included the ADB-supported Socio- ment in the sector. Economic Development Plans (I: 1996–2000, and II: 2. See IMF Independent Evaluation Office, “Evalua- 2001–05), the 1998 Platform for the Second Term, tion of Technical Assistance Provided by the IMF the United Nations Millennium Development Goals , – Volume 2, Technical Assistance in Cambodia FY1998– the World Bank and IMF-supported 2003–05 National 2003,” January 31, 2005. See also UNDP, Evalua- Poverty Reduction Strategy, and the 2004 Rectangular tion Report of the Technical Cooperation Assistance Strategy. Program on Strengthening Economic and Financial 2. The portfolio also included 24 government- Management Project, 2004. executed trust funds for US$29.7 million and 9 3. ADB, Australia, EU, France, Germany, IMF, Japan, Bank-executed trust funds totaling US$4 million. Sweden, UK, UNDP , and World Bank. 3. There were no further IDA commitments in the 4. See External Advisory Panel on PFMRP, Final first half of FY07. Report 2007, Phnom Penh, April 20, 2007. 4. A series of adjustment operations following this 5. Progress was made in the introduction of SAC was contemplated at the time, and work on a program budgeting, incorporation of some donor planned series of PRS operations began in 2004, but funding for public investment in the budget, shifting the first of these operations was only approved in July from cash payments to use of the banking system, 2007. payment of civil service salaries by electronic transfer, 5. The FY99 PER received an award from the reducing payment arrears, establishing an internal Quality Assurance Group for “Excellence in ESW .” audit function in 19 ministries, conducting expendi- 6. Aid flows over the entire period 1994–2005 ture-tracking surveys in health and education (with totaled US$5.1 billion. Bank support), and introducing a merit-based pay 7. The then Chief Economist of the World Bank, initiative in the Ministry of Economy and Finance, to be who visited Cambodia before efforts were made to extended to the Ministries of Commerce and Health. improve coordination, referred to the situation as “the 6. The IMF reported that between 1994 and 2003 most dysfunctional case of donor coordination he had total revenues increased by only half of the targeted ever seen.” increase under IMF programs, despite the introduction 8. See CED, Cambodia Aid Effectiveness Report, of the value-added tax in 1999. See IMF, Cambodia: 2007, and Government-Donor Coordination Commit- Ex-Post Assessment of Longer-Term Engagement, Report tee, “Overview of TWGs Progress March 2006–January No. 04/324, October 2004. A survey of 1,200 businesses 2007” February 2007. by the Economic Institute of Cambodia estimated that 137 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 the government may be losing up to US$400 million in completely unrealistic, requiring an annual GDP tax revenue per year due to corruption. growth rate of 10 percent. The average real GDP 7. Annual visitor arrivals increased from 177,000 in growth during the SAC period was a highly respect- 1994 to 1.4 million in 2005. able 7 percent. 8. Foreign direct investment averaged almost 6 18. See 2005 CASCR, p. 63. percent of GDP in 1994–98. During the CAE period 19. See World Bank, The Poverty Reduction the ratio declined steadily from 6.6 percent in 1999 to Strategy Initiative: Findings from Ten Country Case 1.8 percent in 2003, before recovering to 6–6.5 percent Studies of World Bank and IMF Support, 2005. in 2005–06. 20. Fiscal 2005 CAS, p. 82. 9. The government has stated, “Of particular 21. The comparators cited here include the importance is reduction in high transaction costs, nontransition countries with recent CAEs and with which make serious long-term investors shy away from poverty data analyzed in the 2006 Annual Review of making commitments in Cambodia.” NSDP , p. 12. Development Effectiveness. Some other countries 10. Cambodia was the first developing country to had more rapid rates of poverty reduction. See World reach full accession to the WTO. Bank, Annual Review of Development Effectiveness 11. The NGO Economic Institute of Cambodia, 2006, appendix D. in its Cambodia Competitiveness Report 2005–2006, 22. World Bank, Cambodia: Sharing Growth, June which surveyed 100 business leaders, found that 2007. corruption was listed as the most serious constraint to 23. The IDA/IMF Joint Staff Assessment found doing business in Cambodia, with inefficient govern- the NSDP to be “a significant step forward in terms ment bureaucracy listed second. of government ownership, diagnostics and results 12. The SAC supported the reintroduction of a framework.” Joint Staff Assessment Note, June 21, preshipment inspection scheme for imports, and 2006, p. 3. The government has expressed the view that included conditionality on revisions to the Law on much analytical work in this area has been done by the Investment, to reduce excessive tax concessions for Bank without adequate coordination with the govern- new investment. ment and other donors, and that a more coordinated 13. In the Bank’s view “The decision to reject approach could have avoided duplication and helped the Bank’s recommendation for the Single Window build analytic capacity. While IEG agrees that more implies a significant change in project design and collaboration in poverty analysis would be desirable to timing, increases the already high level of risk associ- build capacity in the future, and that coordination in ated with the project, and a lower likelihood of achiev- this area remains an important challenge, it finds that ing its development objectives.” the Bank did what was realistically possible given time 14. Forum working groups on trade facilitation and constraints, which were recognized and discussed the investment climate are led by the Bank. with the government in May 2005 during the review of 15. These include the Law on Audit, Law on Patents, the Concept Note for the Poverty Assessment. Inventions and Industrial Design, Law on Trademarks, 24. DFID’s independent midterm assessment the amended Law on Investment, Law on Copyright, of this trust fund rated it as having achieved most the amended Law on Taxation, Law on Commercial of its important outputs. See Urashima and Kong, Enterprises, Law on Commercial Arbitration, and Law Cambodia: Poverty Reduction Support Programme on Financial Management. – Mid Term Review, DFID, May 2006. 16. Undoubtedly this strong growth has had a highly 25. See appendix table A.4 for a complete listing of positive impact on employment, but comprehensive these reports. unemployment data are not available. Cambodia’s Socioeconomic Surveys show an unemployment rate of Chapter 4 4 percent or less, but this is undoubtedly understated, 1. The current plan covers 2006–10. Lack of and does not reflect substantial underemployment. in-country presence before 2003 limited Bank involve- See NSDP , p. 21. ment in the early formulation of the ESP. 17. While not meeting a target for income per 2. School construction accounted for 59 percent, capita might seem significant, the SAC target appears 49 percent, and 27 percent, respectively, of project 138 endnotes expenditures in the Social Fund I, Social Fund II, and possibly causing a slow start include standard supervi- the Flood Emergency Rehabilitation projects. sion budgets for a complex, sectorwide program and 3. See Marshall, EQIP School Grants Program initial capacity constraints combined with a year-long Evaluation, Final Report, April 2004. Two additional hiatus in forming a government after the 2003 elections. Bank-executed pilots that fed into the design of the 14. Generally the government and donors have CESSP were funded by two Japan Social Develop- agreed on the program of analytical work and review ment Fund grants with Save the Children, Norway, outputs jointly. as implementing agency. Evaluation found that these 15. Health Public Expenditure Tracking Survey, pilots, operating in very remote, low-income areas, draft, January 2007. This report is being managed by increased access for the poor and disadvantaged the Bank with financial support from a Netherlands students, improved teaching, reduced drop-outs, Partnership Trust Fund and with technical and financial and led to better school management and greater support from WHO. See also appendix 4 for references community involvement. See Implementation Comple- for other reports mentioned. tion Memoranda and associated evaluations for JSDF 16. Health Public Expenditure Tracking Survey, TFs 026779-KH (October 2002) and 052059 (May 2006). p. 4. Budget disbursement mechanisms have been 4. The CESSP was appraised jointly, and shares a modified to increase the timeliness and reliability of PMU, with an ADB education project. budget releases, but results have been limited because 5. See appendix table A4 for full reference to the funds go to provincial offices, not to the facility level. reports listed in this paragraph. 6. See appendix table A2b and Education: Subject Chapter 5 Matter Report for the CSES 2004, June 2005, NIS in 1. Only about 15 percent of cultivated land cooperation with Statistics Sweden, Table 2004.1.5. had dependable supplemental water supply at the 7. Student Achievement and Education Policy: beginning of the CAE period. Results from the Grade Three Assessment, Final 2. Average rice yields increased from around 1.5 Report, CESSP , Phnom Penh, October 2006. tons/ha. in the mid-1990s to 2 tons/ha. Because rice 8. Cambodia Education Sector Performance accounts for an estimated 85 percent of crop produc- Analysis 2006, EC Technical Advisory Team, November tion, in 2000–05 this change alone was a major factor 2006, p. 57. in sector growth. During the CAE period there were 9. Cambodia Disease Control and Health three years of negative growth and two years with Development Project, PPAR, IEG, April 2004, p. 10. growth exceeding 10 percent. 10. PPAR, p. 26, 30, and 48, and DHS 2005. 3. Seila means “foundation stone” in the Khmer 11. The HSSP includes an IDA credit for US$17.2 language. The Seila program (1996–2006) evolved out million, an IDA grant of US$9.8 million, and cofinancing of a UNDP-supported program for reintegration of from DFID—a US$1.84 million grant. Parallel financing refugees—Cambodia Area Rehabilitation and Integra- includes US$20 million from ADB, a Japanese grant of tion. It started in five provinces but became a nation- US$2.2 million, and two DFID grants totaling US$20.16 wide program. It became both the framework for donor million. In addition, since 2004 UNFPA has provided all support to rural development and the pilot program of its financing to the Ministry of Health through the for testing local capacity for planning and overseeing HSSP partnership. small-scale projects. The Seila program began working 12. For evidence on contracting see WDR 2004, at the village level but, following the adoption of the pp. 109–110, and Loevinsohn and Harding, “Buying Commune Law in 2001 and elections for Commune Results: Contracting for Primary Health Care Delivery” Councils in 2002, the government shifted the locus of in Spending Wisely: Buying Health Services for the local administration to the communes, comprised of Poor, World Bank and WHO, 2005, pp. 139–173. clusters of villages. 13. This turnover reflected a temporary uncertainty 4. See IEG, Project Performance Assessment in the Bank about whether to remain engaged in the Report for the Forest Concession Management and health sector. In the 2005 CAS the Bank decided to Control Project, June 27, 2007, p. 31. retain a significant role in health and was assigned the 5. The Bank has since introduced “framework” lead role among the four CAS partners. Other factors impact assessments as part of project processing in 139 C a m b o d i a — A n I E G C o u n t r y A s s i s ta n ce E va l u at i o n , 1 9 9 9 – 2 0 0 6 cases such as the Forestry Project where a full assess- Bank study. See also Cambodia Competitiveness ment depended on the outcome of subsequent work. Report 2005–2006, op.cit. 6. The value chain study of agricultural products 2. A U.S. government report concluded that was useful in beginning the process of understanding “Endemic corruption, lack of judicial independence the structure of markets and costs. However, a desk from the executive branch, and lack of legal training review of the report points to the need for better in the judiciary significantly weaken the enforcement quality control and verification of field survey data on of Cambodian law.” United States General Accounting cost, prices, and production parameters before the Office, Cambodia: Governance Reform Progressing, results can be used beyond the level of broad indica- but Key Efforts Are Lagging, June 2002, p. 8. tions. 3. The 2004 Investment Climate Assessment 7. However, the government itself has acknowl- included a survey of 800 private firms, which revealed edged that “A comprehensive strategy for the agricul- that corruption was among the greatest obstacles to tural sector as a whole is still to be developed.” NSDP , investment in Cambodia. Some 82 percent of firms p. 44. reported paying bribes and the average payment exceeded 5 percent of gross revenues. Chapter 6 4. See Kaufmann, D., A. Kraay, and M. Mastruzzi, 1. The Provincial Water and Provincial and Rural Governance Matters VI: Governance Indicators for Infrastructure projects were among those investigated 1996–2006, World Bank Institute, 2007 by INT. Misprocurement was found in both projects 5. The governance indicators are rule-based and both were suspended until February 2007. The governance, quality of public administration, and water project is being restructured but the govern- transparency and accountability in the public sector. ment has decided to cancel the Bank’s further involve- 6. Cambodia ranks in the bottom tenth of countries ment in the innovative small town water component in the CPI percentile, and the country’s CPI score has (output-based with private participation) which will be declined (on a scale of 0–10, from 2.3 in 2005 to 2.0 funded instead through Chinese aid. in 2007). 2. The Rural Investment and Local Governance Project was also rated satisfactory on quality-at-entry Chapter 8 by the Quality Assurance Group. 1. The apparent reasons for the significant 3. During the implementation period of the progress in institutional and human capacity project, 1998–2003, water connections increased from development in these sectors are strong leadership, 50,000 to 105,000 and lost water was reduced from 56 continuity of professional staff, clearly defined and percent to 17 percent. The Phnom Penh Water Author- monitorable functions, and autonomy—both the ity continues to improve its performance, and by 2006 EDC and PPWSA are independent entities whereas had increased connections to 150,000, and reduced the Sihanoukville water authority, which was less water losses to 8 percent. successful under the urban water project, is a depart- 4. For example, in waste management in Phnom ment of the government. Penh and development and operation of the Phnom 2. Collapse of the local garment industry follow- Penh and Siem Reap airports. ing the end of the Multifiber Agreement in 2005 was also predicted, but growth has remained strong. The Chapter 7 Garment Manufacturers’ Association of Cambodia is 1. See World Bank, Cambodia Governance and optimistic about the future of the industry. Corruption Diagnostic: Evidence from Citizen, 3. A proposed Poverty Reduction and Growth Enterprise and Public Official Surveys, May 10, 2000. Facility arrangement remains stalled because of See also Cambodia Center for Social Development, outstanding bilateral debt obligations to the United National Integrity Systems Country Study Report, States and Russia. Arrears on these debts, dating 2006. Another Center for Social Development Report, from the 1970s and 1980s, total US$800 million. An “Corruption and Cambodian Households,” states agreement, in principal, has been reached on resched- that citizen perceptions of corruption in 2005 have uling with the United States but the agreement has not worsened relative to the findings of the 2000 World been finalized. Agreement is still needed on reschedul- 140 endnotes ing the Russian debt. In January 2006 the IMF granted Appendix B Cambodia full debt relief of all outstanding IMF obliga- 1. Cambodia, Financial sector diagnostic, tions, equivalent to about US$82 million, under the IFC-MPDF 2006. multilateral debt relief initiative, “reflecting good 2. Cambodia NPRS and Rectangular strategy. policy implementation and a commitment to reduce 3. NBC Economic Watch 2006. Many rural credit poverty.” operators continued on an informal basis, as the 4. Prior to 1999 the Bank did not maintain a number of unregistered operators numbered about separate office in Cambodia but employed a retired 60 as of December 2005. United Nations official as a liaison officer. The Bank assigned a country manager in 1999 (initially hired as Appendix D a consultant) but maintained a one-person office until 1. In this note, “assistance program” refers to 2001. The country director did not move to the field products and services generated in support of the (to Bangkok) until 2001. The Bank began to expand economic development of a client country over a the staff of the Resident Mission in 2003, to about 35 specified period of time, and “client” refers to the persons at present. country that receives the benefits of that program. 141 142 REFeRENCES Asian Development Bank. 1996. “Report and Cambodia, National Institute of Public Health Recommendation of the President to the and National Institute of Statistics. 2006. Board of Directors on a Proposed Loan to the Cambodia Demographic and Health Survey Kingdom of Cambodia for the Basic Health 2005. Phnom Penh. Services Project.” Report No. RRP:CAM 27410. 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