Cambodia - Economic and Public Sector Capacity Building Project (LIL)

Report No. PID10684 Project Name Cambodia-Economic and Public (@) ... Sector Capacity Building Project (LIL) Region East Asia & Pacific Sector Civil Service Reform, Public Financial Management Institutional Development Project ID KHPE71247 Borrower Kingdom of Cambodia Implementing Agency Council for Administrative Reform The Office of the Council of Ministers 41, Russian Federation Boulevard Phnom Penh, Kingdom of Cambodia Tel: (85) 5-23723903 Fax: (85) 5-23362151 E-mail: tinamus@camnet.com.kh Date PID Prepared April 30, 2002 Appraisal Date April 12, 2002 Projected Approval Date June 6, 2002 Background Following the Paris Peace Accord in 1991 and general elections in 1993, a coalition Government was formed. Since then the Government's public sector reforms have focused primarily on the first generation of reform, i.e., achieving macroeconomic stability and improving fiscal management. Those reform efforts achieved significant success in containing inflation and restoring fiscal discipline. Since 1996, however, the reform efforts weakened significantly due partly to conflicts between the two coalition parties. A new coalition Government, formed in November 1998, along with the collapse of the Khmer Rouge, brought the highest levels of political stability, security and peace in Cambodia ever achieved in the last three decades. This new Government demonstrated commitment to developing and implementing economic and social policies with a focus on poverty reduction. To help reduce poverty, improving public service delivery is essential. The major challenge facing the Cambodian government now is to formulate and implement the second generation of reform, e.g., improving pubic financial management and public administration, moving toward good governance, and strengthening government capacity for poverty-focused policy formulation. Project Objectives The project's development objective is to enhance the capability of the Cambodian public sector to perform critical tasks more effectively. Helping Cambodia on this agenda will involve a coordinated effort to shift civil service incentives to a sustainable basis and to create systems of accountable and transparent governance.  This project begins this process. It will provide a jump-start to capacity building through immediate bridge support for skill enhancement in key reform areas. The project will build capacity among a targeted cadre of government officials to carry out urgent and essential development tasks, while the basis for longer-term institutional development is being established. A hallmark of the project is to introduce innovative approaches to extend the reach of capacity building by leveraging new technologies, such as a Global Development Learning Network (GDLN) facility. The project will have four main components: (i) strengthening project management; (ii) training program development and implementation; (iii) institutional development; and (iv) the GDLN center. The project aims to build capacity of three target groups: executives, managers, and professionals, in both the executive, and, to a lesser extent, legislative branches. For each target group and program, an appropriate degree of participation of female civil servants will be ensured. Six categories of training include: (i) leadership and management practices; (ii) policy development and implementation; (iii) public financial management; (iv) human resource management; (v) governance and public administration; and (vi) poverty reduction. Project Benefits The proposed project will support the Government in delivering public services more effectively and efficiently. The ultimate beneficiaries will be the Cambodian people, particularly the poor, who will have access to improved public services. Project Risks One risk is that, in the absence of more significant civil service pay reform, the Government may have difficulty retaining trainees in government. The World Bank proposed a set of actions that would signify a robust program of analytic work that could prepare the ground for civil service pay and employment reform. These were agreed upon with the Government in the form of a work plan to be achieved by August 2003. The Government needs to consider more substantial pay and employment reform in the context of a forthcoming Public Expenditure Review, the Poverty Reduction Strategy Paper, and a potential Poverty Reduction Support Credit (PRSC). Another risk is the financial viability of the GDLN center. The concern is that there would not be sufficient demand from both the public and private sectors for the Center to achieve a sustainable utilization rate. General mitigation measures include: the effective marketing and promotion of the center's services for donor community and private sector usage, government commitment to utilize the center for civil service training, and donor support for recurrent expenses. The projected revenues presented in a feasibility study conducted for the Cambodia GDLN center indicated that the center could reach operational sustainability at the end of the fourth year of operation. Project Financing The proposed credit amount is US$5.4 million. The Government's contribution is US$0.26 million. -2-  Project Implementation The Council of Administrative Reform is the executing agency. The Advisory Board is to provide advice on the implementation of the project. The Royal School of Administration and the Economics and Finance Institute will host training service delivery, supported by external training institutions. The GDLN center will be established as a separate operational center within the project. Environmental Aspects In accordance with Bank guidelines, the proposed operation has been placed in Category C and will not require an environmental assessment as the GDLN center will be built at the existing building. Poverty Category This project is not poverty-targeted intervention. However, its development objective is to reduce poverty by enhancing the capability of the Cambodian public sector to perform critical tasks more effectively. Project Objective Category The project is a capacity building operation. Contact Point: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Su-Yong Song Task Team Leader (202) 458-0498 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. This PID was processed by the InfoShop during the week ending May 3, 2002. -3-