Preface

Summary

Cambodia has achieved remarkable economic development, with an average annual GDP growth rate of 7 per cent in the past two decades. A series of reforms have been implemented to support this sustained and robust growth. Among them, public financial management (PFM) reform has played a crucial role and acted as the backbone of all reform efforts. Before the start of PFM reform in the mid-2000s, cash shortages were chronic and arrears in salary payments to civil servants and armed forces were rampant in the country. Inefficiency in budget allocation, which negatively affected the quality of public service delivery, was at a critical level.

Recognizing the need to strengthen the PFM system to improve accountability, efficiency and effectiveness, the government initiated a comprehensive reform program covering all PFM components in 2004. These included macroeconomic policy and the revenue-expenditure framework, public investment management, public debt management, state asset management, public procurement management, the public accounting system, the financial management information system and the fiduciary control system.

Since its inception, the PFM reform program has yielded many positive results. The significant increase in tax revenue, coupled with a transparent and effective revenue management system, enabled the government to allocate more resources to priority sectors, such as health and education, and increase support for other critical public sector reforms. It also spurred a significant increase in civil servants’ salaries, which are now paid in a timely manner through banking systems.

In this context, the new spirit of PFM reform is indispensable. The PFM system cannot be robust on its own or without all parties’ participation, especially the civil servants who implement it directly. However, general understanding and knowledge of PFM are limited, both among government officials and the general public, posing a challenge on the path to a robust, responsive, transparent and accountable PFM system. This situation has prompted the General Secretariat of the PFM Reform Steering Committee to make greater efforts to raise awareness and promote understanding of PFM.

The Public Financial Management: Cambodian Experiences book is one of the new initiatives to address the challenges mentioned earlier. The book starts with an overview of PFM in Cambodia, with a brief introduction to the discipline of public financial management. It goes on to discuss Cambodia’s experience implementing PFM reform in detail, including how PFM has reformed government budgeting and how reform impacts the many components of PFM.