Document of The World Bank FOR OFFICIAL USE ONLY Report No. 23664 IMPLEMENTATION COMPLETION REPORT KINGDOM OF CAMBODIA TECHNICAL ASSISTANCE CREDIT (Credit No. 2664-KH) June 27, 2002 Southeast Asia and Mongolia Country Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its content may not otherwise be disclosed without World Bank authorization. - ii - CURRENCY EOUIVALENTS (as of June 2002) Currency Unit = Riel I Riel = US$ 0.0002737 US$1.00 = 3658.50 riels WEIGHTS AND MEASURES: Metric System FISCAL YEAR: January 1- December 31 ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank CDC - Cambodian Development Council CIB - Cambodian Investment Board CJ - Council of Jurists CMEA - Council of Mutual Economic Assistance CRDB - Cambodian Rehabilitation and Development Board EAT - Economic Advisory Team EMT - Economic Management Team ESAF - Enhanced Structural Adjustment Facility FCBD - Financial Cooperation and Public Debt ICB - International Competitive Bidding ICORC - International Committee for the Reconstruction of Cambodia ICSID - International Centre for Settlement of Investment Disputes IDA - International Development Association IDF - Institutional Development Fund IMF - International Monetary Fund ITC - Interministerial Technical Committee on Administrative Reform LCB - Local Competitive Bidding MEF - Ministry of Economy and Finance MIGA - Multilateral Investment Guaranteed Agency MOP - Ministry of Planning NBC - National Bank of Cambodia PHRD - Policy and Human Resources Development Fund (Japan) PIB - Public Investment Budget PIP - Public Investment Program PMU - Project Management Unit SDR - Special Drawing Right SSCS - Secretariat of State for Civil Service STF - Systematic Transformation Facility UNCTAD - United Nations Conference on Trade and Development UNDP - United Nations Development Programme USAID - United States Agency for International Development Vice President : Jemal-ud-din Kassum, EAPVP Country Director : Ian C. Porter, EACTF Sector Director and Chief Economist : Homi Kharas, EASPR ICR Task Member : Thang-Long Ton, EASPR - iii- FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT KINGDOM OF CAMBODIA TECHNICAL ASSISTANCE CREDIT (Credit No. 2664-KH) CONTENTS 1. Project Data ........................................1 2. Principal Performance Ratings .......................................2 3. Assessment of Development Objectives and Design, and Quality at Entry .......................................2 4. Achievement of Objectives .........................................7 5. Major Factors Affecting Implementation and Outcome ......................... 22 6. Sustainability ........................................ 23 7. Bank and Borrower Performance ....................................... 24 8. Lessons Learned ....................................... 25 9. Partner Comments ....................................... 27 Annex 1. Key Performance Indicators .32 Annex 2. Project Costs and Financing .32 Annex 3. Economic Costs and Benefits .33 Annex 4. Bank Inputs .33 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 35 Annex 6. Ratings of Bank and Borrower Performance .36 Annex 7. Output and Achievements .37 IMPLEMENTATION COMPLETION REPORT KINGDOM OF CAMBODIA TECHNICAL ASSISTANCE CREDIT (CREDIT No. 2664-KH) Project ID: P034755 Project Name: Technical Assistance Team Leaders: Guy Darlan (TM: 1994-1998) TL Unit: EACNQ and Natasha Beschorner (TM: 1999-2001) ICR Type: Core ICR j Report Date: June 26, 2002 1. Project Data Name: Technical Assistance _ Country! Cambodia/EACSM Region: East Asia and Department: Pacific Region Sector/subsector: KY - Other Economic I Policy Key Dates Original Revised/Actual Project Concept Document 03/24/1994 Effectiveness 03/23/95 03/23/95 Appraisal 06/10/1994 I Approval 12/06/1994 Closing l 06/30/2001 12/31/2001 Borrower/Implementing Government of Cambodia/Ministry of Finance and Economy Agency: Other Partners: Staff At ICR preparation At Appraisal Vice President: Jemal-ud-din Kassum, EAPVP Gautam Kaji, EAPVP Country Director: Ian C. Porter, EACSM Calisto Madavo, EAPCO Chief Economist and Sector Homi Kharas, EASPR Vinod Thomas, EAPVP Director: Team Leader: Natasha Beschorner, EACNQ Guy Darlan, EAPCO ICR Author Thang-Long Ton, EASPR Not applicable Country Team Reviewers for Su-Yong Song, EASPR and Not applicable the ICR: Omowunmi Ladipo, LOAG3 -2 - 2. Princiial Performance Ratings Rating for Outcome: HS = Highly Satisfactory, S = Satisfactory; U = Unsatisfactory; HU = Highly Unsatisfactory; Rating for Sustainability: HL = Highly Likely; L = Likely; UN = Unlikely, HUN = Highly Unlikely, Other ratings: H = High, SU = Substantial, M = Modest, N = Negligible 2.1. The principal performance ratings are as follows: Outcome: U Sustainability: UN Institutional Development Impact: M Bank Performance: U Borrower Performance: U ICR QAG (if available) Quality at entry not available Project at Risk at any time yes not available 3. Assessment of Development Obiectives, Design and Oualitv at Entrv 3.1 Original Objective 3.1.1. Background Since 1989, after more than two decades of atrocious warfare and intense internal conflict, the government of Cambodia began the daunting task of rebuilding the country from ground zero. To bring the country from a self-subsistent and command economy to a market-based system, the authorities had to recreate a macroeconomic framework within which the economy could function and undertook a long series of reforms to restore economic recovery and growth. Initial results of these reforms were positive. However, the country's extremely tenuous institutional setting, political instability and uncertainty, weak human resource base, and lack of overall implementation capacity were serious impediments for these reform measures to take hold. In late 1992, the government called on the World Bank and the IMF to help develop a program of economic reforms and correct the flaws of the initial reforms. The persistent institutional weaknesses necessitated urgent and lasting remedies if the country was to deepen the adjustment process since second-generation reform measures would require even stronger administrative and institutional capacity. In 1993, the newly elected coalition government intended to address these critical institutional deficiencies through appropriate measures with external assistance for capacity building to help accelerate Cambodia's economic recovery and its transition to a market economy. 3.1.2. Objectives. To assist the government in developing the basic institutional capacity to formulate and implement its economic reform program, the Technical Assistance Project was - 3 - designed with two main overall objectives: (a) improving the management of public sector finance by strengthening the economic management team (EMT), and (b) establishing an enabling foundation for a legal environment conducive to private sector development. In addition, the project would finance studies in priority sectors as deemed appropriate. 3.1.3. Strengthening the EMT would require: (a) reinforcing the EMT units that have already been set up under the initial phase of the reform; (b) assisting those units which have been established only very recently; (c) setting up those units which have yet to be established (i.e., Debt Unit in the Ministry of Economy and Finance -- MEF); and (d) reorganizing and strengthening those units which were not considered a priority so far but would play a critical role in the implementation of the economic recovery program (i.e., budget and project monitoring units in key line ministries). This would also include establishing and providing training through a School of Finance, later formally named the Economic Finance Institute (EFI) at MEF. 3.1.4. The assistance in building the foundation for private sector development involves: (a) establishing a legal reform unit and providing legal advisory services for key government institutions; (b) supporting regular publications of laws and regulations; and (c) establishing a system for publishing judicial decisions. 3.2 Revised Objectives 3.2.1. The umbrella character of the project led to a plethora of activities to be implemented and a challenge to proper supervision, monitoring and implementation. In addition, the 1997 coup d'etat led to a period of instability and uncertainly and adversely affected the implementation of the project during 1997-1998. In mid-1999, following an extensive assessment of the project by Bank staff, the government and the Bank agreed to refocus the activities of the project on priority areas in the public sector reform program (public expenditure management and public administration), which was being supported by an IMF's Poverty Reduction and Growth Facility (PRGF), approved in October 1999, and a subsequent IDA's Structural Adjustment Credit. Essentially, the components of the project were adjusted and regrouped under four main topics (a) Civil service capacity building through continued support for the EFI in MEF; (b) Support for macroeconomic management and capacity building of MEF departments (budgetary management and economic policy formulation); (c) Public administration reform (civil service - census and registration, design of a military demobilization program - supported under a subsequent IDA operation, and continuing support for publication of legislation and court decisions); and (d) Legal reform (support to the Ministry of Commerce in the development of a commercial code and other related regulatory activities). 3.3 Original Components 3.3.1. To achieve the initial objectives, the project supported activities in the following areas: (a) public sector management; (b) legal technical assistance for private sector development; and (c) training, studies and institutional strengthening. - 4 - 3.3.2. Public Sector Management. The project aimed to support the strengthening of the government institutional capacity in (a) public expenditure control; (b) public investment management; (c) foreign debt management; (d) civil service management reform; (e) building and equipping a training center and related facilities attached to MEF; and (f) logistics and support services to these activities. 3.3.3. Public expenditure control. The project supported the implementation of new systems of budget management and Treasury management initiated under an IDF operation. This consisted of (a) strengthening budget preparation capacity in MEF, technical ministries, and provinces; (b) strengthening budget monitoring and control mechanisms; (c) strengthening Treasury cash management functions; and (d) training administrators of technical ministries and provinces to understand and apply the new procedures, and training treasurers to understand the new expenditure and accounting system. 3.3.4. Public investment program. Within the public investment area, the project supported (a) the development and delivery of a computerized public investment management system in MEF, the Cambodian Development Council (CDC), and selected line ministries; (b) establishment of the Public Investment Budget Unit in MEF; (c) strengthening of project monitoring units in selected line ministries; (d) development of strategic planning and aid coordination capacity in CDC; and (e) strengthening of macroeconomic analysis capacity in MEF. 3.3.5. Foreign debt management. In order to improve the capacity to manage foreign debt, two activities were supported by the project: (a) development of the institutional and legal framework for the management of Cambodia's public external debt; and (b) establishment of a new debt office in MEF to oversee the management of external debt, including building capacity for debt reporting to the World Bank. 3.3.6. Public sector personnel management/Civil service management reform. The project provided support to define a series of options for the reduction of public sector employments via departure schemes, covering the military, civil service and the SOE sector. 3.3.7. The School of Finance - later known officially as the Economics and Finance Institute (EFI). The project envisaged the EFI as a center of activities for the macroeconomic management component of the project. Funding for the construction of this training facility was also earmarked in the project. It was anticipated that the World Bank Institute (then the Economic Development Institute) would provide substantial course material and support. 3.3.8. Legal Technical Assistance for Private Sector Development. To re-establish and strengthen certain key legal institutional capacities and procedures required for developing the economic and financial legal framework for private sector development, the project would provide to the Council of Jurists (CJ) and the Interministerial Technical Committee on Administrative Reform (ITC) qualified legal advisors, training and related equipment to implement the following activities: (a) preparation of a legal diagnostic study to determine the process and status of development to date of Cambodia's economic and financial laws and the degree of compatibility of these laws and regulations currently in force; (b) comprehensive - 5 - assessment of legal training needs; (c) formulation of a time-bound road map on specific economic and financial legal priority drafting and training measures to be implemented under the project; and (d) establishing an automated system for publishing on a regular basis Cambodia's Official Journal in Khmer, French and English and the decisions of the country's higher courts and the development of a system of jurisprudence and doctrinal writings; and a trade mark gazette by the Ministry of Commerce. 3.3.9. Training, Studies and Institutional Strengthening. The project would finance studies of primary importance to the government's rehabilitation program and to improve policy design in sectors others than those falling within the scope of the project, including studies in agriculture, education, energy, environment, forestry, health, transport, statistics, and the feasibility of electronic cash transfers to provinces. 3.4 Revised Components 3.4.1. There had been a series of revisions in the components and activities during the life of the project to meet the current and emerging needs of the authorities as they responded to the demands of a changing situation in the country. The coup d'etat in 1997 affected the project implementation and its progress due to changes in the government and officials who were responsible for the project. From the Bank's side, there were changes in project management and task manager. The project was subsequently refocused with major regrouping of activities in mid-1 999, following an extensive review by the Bank. 3.4.2. The authorities initially planned to use funding from the credit for the installment of the National Public Investment Management System (NPIMS). However, given the high cost, this activity was in the end financed by a grant from Japan. During the first annual review, assistance to the government for forest management was added in May 1996. This component supported (a) forest concession management; (b) forest policy reform; (c) logging control and log verification; and (d) legal counsel services. Limited logistic support to the Executive Secretariat of the National Committee on Forest Policy was also provided. 3.4.3. Following an extensive review by the Bank in mid-1999 as mentioned earlier, the project was refocused, with the government's agreement, to cover four main categories of activities: (i) Civil service capacity building: support EFI in MEF: Activities include classroom training for civil servants in economic management, financial management, basic legal skills, and practical training in professional English, computer skills and office management; (ii) Support for macroeconomic management and capacity building for MEF: budget management, economic policy formulation, economic analysis and forecasting, VAT implementation, and debt management; (iii) Public administration reform: advisory assistance on demobilization, support for preparation of a civil service census and functional analysis of ministries and agencies; - 6 - (iv) Legal reform: development of the commercial code (support to the Ministry of Commerce -- MOC); legal diagnostic study; publication of laws and court decisions (support to the Legal Reform Unit - LRU -- in the Council of Ministers). 3.5 Quality at Entry 3.5.1 Quality of the design. This project predated many of the quality control mechanisms that have been introduced for IDA-financed operations since 1994. The project was designed with detailed components and activities to take into account the special situation facing the government of Cambodia. Potential risks were identified at the design stage: (a) limited absorptive capacity; (b) scarce counterpart staff with minimum skills; (c) unfamiliarity with World Bank disbursement and procurement procedures; and lastly (d) uncertain political situation as the country emerged from years of conflict with a fragile coalition government. Several measures were designed to mitigate them: (a) activities were to be implemented gradually and in a sequential manner and to finance incremental actions conditional upon implementation of key preceding activities; (b) special efforts to recruit suitable expatriate Khmers as consultant/experts; and (c) implementation was supported by intensive and regular supervision by both the Bank and the Borrower and the leading role of the Project Management Unit (PMU). 3.5.2 When the project was identified and launched, the United Nations Transitional Authority in Cambodia (UNTAC) was running Cambodia.' The UN was directly in charge of all key administrations, including Budget and Customs. There was no national budget, no tax department, no public investment department. In this context, and because both the newly established government and the donor community wanted to press ahead with minimal reforms that could get the support of the donors, substitution TA was chosen as the best means of assistance. The project never claimed, and IDA Board Members endorsed that stance, that the Bank (or anyone else) knew in advance how most of the project components would evolve, given the situation in Cambodia at the time the project was prepared. It was therefore deliberately prepared as a substitution TA project under an umbrella project with a large studies fund allocation. 3.5.3 The flexibility of the project design was also deliberate. Initially, IDA envisaged several TA projects to support the different priority sectors, and this project would have focused on public expenditure control and management. But IDA realized that there was no capacity in the government to manage more than one project. As a result, all the priority sector components were folded into one TA project, with the understanding that the studies would lead to preparation of more focused and sectoral operations. 3.5.4 As the situation in the country evolved, several changes and revisions to the project were necessary to meet the emerging needs of the Borrower during the first several years of implementation. A major restructuring in 1999 was undertaken to address the issues of management and improved implementation of the project to ensure the realization of the I The new government was established in September 1994, but it did not really assume its functions until early 1995. project's objectives on training and knowledge transfer. The components were grouped into four main categories with improved focus. The new arrangements was designed to help the project implementation with more result-oriented and better capacity building activities. 3.5.5 The project objectives were consistent with government priorities for the economic reform program aiming at opening the country to external investment and liberalizing the economy. At the time of project preparation, IDA ascertained that commitment to the reform program appeared strong among all the members of the Coalition Government, despite continuing tensions and complications among the factions. 3.5.6 However, the intentionally broad nature of the project appeared, in hindsight, to jeopardize its development objectives as it became difficult to supervise during the implementation stage. Close supervision, which was required and understood as a prerequisite during the design of the project, was not always possible to carry out, and there was some long absence due to the change in the task team. 3.5.7 Consistency of the project with the CAS and government priorities. The critical need for capacity building in public administration for economic management was identified in the country economic report (Cambodia: From Rehabilitation to Reconstruction, February 10, 1994) and in the Country Assistance Strategy (May 10, 1995) as the necessary keystones in the consolidation and acceleration of reforms, and in the transition to a market-based economy. The Bank focused its support in four areas: (a) the institutions of macroeconomic management; (b) legal reform; (c) sectoral management; and (d) aid coordination. The Bank's work would address issues of resource mobilization, expenditure control, public investment management, and aid coordination. The Technical Assistance project, which was approved and made effective as the CAS was prepared, was seen as the key instrument to carry out this support in the areas of expenditure management, debt management, and civil service reform. 3.5.8 Compliance with safeguards policies: not applicable for this project. 4. Achievement of Obiectives 4.1 Outcome/lchievement of Objectives. 4.1.1. The objectives of the TA project covered two broad categories: (a) building capacity and (b) preparation of the foundations for an environment conducive to private sector development. A broad range of activities were implemented to build, develop, strengthen, and improve capacity through a series of components supporting several ministries and agencies and at the same time to assist in developing an environment favorable for the private sector. The very umbrella nature of the TA project proscribes an umbrella assessment of the project. The outcome and achievements of the project will have to be reviewed carefully in details (see Section 4.2 for outputs by components and Annex 7 for the matrix of activities in details). 4.1.2. Multi-component and flexibility characteristics. As usually the case for a multi- component technical assistance project, the overall outcome and achievements of the objectives - 8 - are mixed. On the one hand, progress was achieved on several components; on the other, there were problems and difficulties that hindered the implementation of others. Further, due to the stress on flexibility in this project - an understandable rationale at the time of the project preparation due to the fledgling conditions of the country - there were many changes and adjustments during project implementation, including addition and cancellation of some components and activities, that may have either contributed further to or diluted the overall effectiveness of the whole package of assistance. At the same time, these added to the complexity in the assessment of the project. 4.1.3. The umbrella nature of the activities and subsequent changes (additions and cancellations) also made it extremely difficult to coordinate, manage, monitor and supervise the project and required enormous amount of attention both by the Bank and the government. It was understandable to have the project address bottlenecks in capacity building for the client country at the onset of its effort at rebuilding, but in retrospect, the project was spread too thin and its achievements, although far-reaching in some instances, were therefore much diluted. 4.1.4. The project objectives also contained inherently a dual feature that added to the complexity of the assessment of achievements: It was designed first to meet the short-term needs in training and then at the same time sought to build and transfer knowledge and expertise for the long term. This dual feature appeared to underscore all activities supported by the project while the short-term horizon of the project made it difficult for the assessment of the long-term objectives envisaged in the project. 4.1.5. Political instability and uncertainty. The TA project was prepared and implemented during the time when there was political instability and uncertainty in Cambodia as the country emerged from a deeply divisive conflict characterized by hostilities and opposing factors that were trying to consolidate and strengthen their power. The political system put in place by the UN was utterly fragile. While the project objectives were agreed with senior officials and the Bank's staff appraisal asserted a strong commitment from them, the necessary channels to translate these objectives into concrete results were still in a fledgling stage, making the project's implementation subject to different ideas and interpretations and requiring close supervision and consultations. 4.1.6. The 1997 coup d'etat had a major impact on the project; it adversely affected the very basis on which the project was being implemented, namely the coalition government consensus to carry out the reforms. Sub-components that were deemed "politically sensitive but necessary" by the coalition government prior to 1997 could no longer be carried out and had to be closed or drastically modified. There were subsequent changes in the project management team, both in the PMU and the Bank's team.2 With these changes in the government, the PMU and the Bank's team, close supervision was not possible for some period of time, creating serious difficulties in effectively managing this project, which required extensive supervision, as discussed above. 2 The Project Director, with rank of Junior Minister, fled to Thailand. The Project Administrator and Accountant also left after their contract was terminated following the assessment of the new task team. The Bank Task Manager moved to another assignment in 1998. - 9 - 4.1.7. In early 1999, following the appointment of a new task team, an extensive review of the project was undertaken and the project was declared a problem project and an internal audit was recommended. I The supervision mission found many shortcomings in the implementation of the project. These included unsatisfactory progress in the legal reform component, inadequate project management, notwithstanding the substantial resources allocated to the administration under the project, inadequate financial management, and lack of transparency. While the mission found that there was reasonable progress in capacity building for macroeconomic and public sector management, there was continued extensive reliance on substitution-type advisory and insufficient emphasis on training of counterparts and knowledge transfer. Training, where provided, was not systematically evaluated, resulting in difficulty to determine its effectiveness. The CPPR mission in May 2000 concurred with the assessment of the mid-1999 supervision mission, stating that the "World Bank is exposed to considerable reputational risk because of inadequate project supervision, primarily before May 1999." 4.1.8. The findings of the May 1999 supervision mission led to the Bank's recommendation of a far-reaching overhaul of the project, beginning with the reorganization of the PMU to perform the task of strategic planning and monitoring/evaluation function, tighter administrative procedures for consultant selections and procurements, stricter standards for consultant employment and their outputs, intensified monitoring of consultant service arrangements and their performance. All these measures were to ensure that funds were responsibly disbursed and capacity-building objectives achieved. 4.1.9. The Bank and the authorities subsequently agreed to realign the project's activities with the government's public sector reform program, focusing on capacity building, knowledge transfer and training, rather than substitution TA. The PMU was reorganized and strengthened with better defined responsibilities and accountability. In addition, there were efforts for better and close supervision of the activities from the Bank's task team and tightening of the procedures and safeguards. These efforts helped to strengthen the support for capacity building activities. From mid-1999 to the end of 2001, the project was intensively supervised and implementation proceeded satisfactorily with close supervision and monitoring through a strengthened PMU and frequent supervision missions, in addition to monthly reporting by the PMU and weekly electronic communications. 4.1.10. However, the sustainability of all activities supported by the project remained a question mark in the background during the implementation stage and emerged as the most important issue toward the end of the project. The TA project provided valuable support for the authorities to develop and build its capacity -- probably from ground zero -- for the administration of a modem state, despite many problems and difficulties in its implementation. But given the short horizon of the project, it was only a short-term tool for a long-term requirement and could only modestly provide a beginning to address the larger needs of Cambodia. 3 This did not take place, however. The Region requested but did not get qualified staff to carry out the audit. A FMS staff from LOA participated in regular supervision missions during Stage 2 - which was unprecedented. - 10- 4.1.1 1. Use offoreign consultants and its impact. This project relied initially on the services of foreign consultants to meet the immediate technical needs of the country. While this was an appropriate decision, given the lack of capacity in the government, the quality of the consultants funded by the project appeared to be uneven and the performance of some did not meet satisfactory standards, nor were the service commensurate with the fees paid. In some instances, there was no assurance that knowledge was indeed transferred after the departure of the consultants. Supervision missions reported that the government has had a negative experience with the use of foreign consultants and lacked the means to enforce specific performance. This impact has created an extreme reluctance on the part of the government in the use of foreign consultants for technical assistance. 4.1.12. Another issue that might affect the sustainability of the project concerns the practice of allowance payments as an incentive to be trained under various components. During the Stage I of the project, these allowances were allowed. The payment of allowances was a traditional practice by donors in Cambodia that became an "entitlement" among Cambodian civil servants. Civil servants would work with allowance toward the achievement of a project's development objectives during the life of the project. As allowances ended with the project, the sustainability of the project became jeopardized. This sustainability question was raised in the reports of many components of the TA project submitted to the task manager. 4.1.13. The project also had problems with disbursements and procurement. Among the former, there were irregularities, such as the allowances as mentioned above, tax payments for consultants from Bank funds, and significant advances that were made from the Special Accounts. The tax payments were refunded upon discovery. Procurement issues included irregularities in retroactive contract renewals. 4.1.14. Based on the overall initial criteria of the project (a) strengthening the country's economic management team with sustainability in the training and successful transfer of skills and knowledge and (b) creating an environment conducive to private sector development, the project outcome is judged as unsatisfactory, with the exception of specific components as discussed in Section 4.2. While extensive training was accomplished and some transfer of knowledge took place, the project did not appear to create a reasonably firm basis on which all capacity building activities supported by the project could be assured to continue or firmly institutionalized. The sustainability of important activities remains a concern when funding was no longer available as the project closed in December 2001. 4.2 Outputs by Components 4.2.1. With the broad range of objectives and activities supported by the TA project, some objectives were achieved and activities were satisfactorily implemented while other objectives remained to be realized and several activities experienced problems and issues that caused delays and considerable difficulties. In order to assess the outcome and achievement of the objectives of this project, it is useful to distinguish the two stages (hereby referred to as Stage 1 and Stage 2) during its implementation as there was a realignment of its activities in mid-1999, as discussed earlier. Stage 1 - 1995-1999 Components Support for Public Sector Management 4.2.2. Public expenditure control (Budget and Treasury). A national budget -- non-existent before the project -- was put in place, with guidelines and procedures. Overall this component has contributed to MEF's capacity for the budget preparation process and the Treasury cash management activity. The budget activities covered the preparation of annual budget documents (institutional framework for expenditure control, establishment of the monthly revenue and expenditures projections, annual budget review conferences, rules and procedures for revenue collection and expenditure operations), the development of macroeconomic tools and framework for budget analysis, the monthly reports for the Cabinet, line ministries and provinces. Staff in the budget unit are now managing the budget database system and equipment and computers funded by the project have facilitated the work in the Budget Department. Treasury accounts were reorganized in line with new budget nomenclatures while new rules were established for their management. 4.2.3. In mid-1999, the contract for the senior consultant who worked in this component ended and he was requested to prepare the handover and training of his counterparts. While it was noted that the public finance system was functional, subsequent supervision missions and the task team leader remained concerned about inadequate training of counterpart officials in this component. The project also provided for allowances for the technical staff working in the Department. This funding now came to an end as the project closed and this raised the question of sustainability in the work of this component. 4.2.4. Tax administration. In January 1998, the government decided to introduce a value-added tax system. The project accommodated this request for assistance and provided direct support on tax management to MEF's Tax Department, complementing the resources of other donors such as IMF, UNDP, and USAID. Tax experts funded by the project assisted MEF in the implementation process of the VAT, including the drafting of the implementing regulations for the Law on Taxation, administrative procedures and other requirements for VAT implementation, evaluation of the VAT work, training and seminars on VAT. 4.2.5. Public investment management. The public investment management sub-component was not supported by the project since the government preferred using grant to fund it. A grant was obtained from Japan to finance this activity. 4.2.6. Support for the Economic Unit. Under this component, the TA project supported an Economic Unit to assist MEF to develop the capacity for macroeconomic analysis. The unit, under a macroeconomic consultant advisor, established an economic database, prepared the country's macroeconomic framework that was used in the Policy Framework Paper (PFP) with the IMF and the World Bank and the economic outlook for 1996-2000 through the use of the RMSM macroeconomic model. The unit also organized training program in forecasting, - 12- economic analysis and produced the Monthly Bulletin of Statistics, the Quarterly Economic Review, and the Weekly Report. 4.2.7. Support for the Economic Advisory Team (EAT). This sub-component supported the MEF initiatives in the preparation of economic and financial policies for the government to be presented at the Consultative Group meetings and the International Conference on the Reconstruction of Cambodia. The consultants financed by the project contributed to the policy decision making process of the government and the MEF in the areas of economic, financial and fiscal management, assisted in building MEF capacity in economic decision-making process. 4.2.8. Debt Management. Through the Debt Management Unit (DMU), created in MEF by the government to manage external debt, the TA project supported the strengthening of the national capacity for debt management and the development of the institutional framework for debt management. A master plan was prepared for the unit. DMU drafted an action plan for the external debt reporting exercise, completed the inventory and reconstitution of files on Cambodia's debt to OECD countries and to countries of the former Soviet Union. DMU developed a system for debt reporting to the World Bank to fulfill its obligations as a borrower. It also took part in the preparation of bilateral debt negotiations following the Paris Club rescheduling and later on with the Russian Federation. 4.2.9. Support for the Ministry of Commerce. Activities funded by the project covered basic advice on trade policies and equipping the ministry with a computer training center. Consultants provided advice on regulatory aspects of Cambodian trade relations with its trading partners and regional and international trade agreements and international organizations, including the WTO. Assistance was also provided for draft legislation on bankruptcy, product liability and business organization and related legal training. 4.2.10. ASEAN. The project funded a legal advisor to assist MEF in the preparation for Cambodia's membership in ASEAN. This included background and technical preparation of legal, economic and procedural requirements and training associated with the membership application and ASEAN-related activities. The advisor also acted as a coordinator for other donors' assistance to MEF in this activity. 4.2.1 1. Customs Management. This sub-component began in September 1995 to cover the work of consultants working on strengthening customs administration, continuing the work financed by a UNDP Project. The consultants assisted in establishing revised regulatory framework and procedures for custom revenue collections and recommendations for its implementation, preparation and delivery of a computerized customs database, suggestions to update the Customs Code. In addition, they provided advice on strengthening anti-smuggling activities and prepared a report on strategy to increase public revenue through customs. Training was also provided to customs officials for border control and smuggling detection. 4.2.12. Civil Service Management Reform. The TA project funded consultant services to study options to reduce the size of the civil service on the basis of a voluntary departure program in May 1996. This study analyzed data on the composition and profile of the public sector to design - 13 - and cost a phased departure program. There was no feedback from the government on this study and this sub-component was closed in May 1997. The second phase, consisting of helping the government to implement the voluntary departure program, was not carried out due to the political sensitivity in advancing the civil service reform agenda at the time despite a lot of sound technical work provided by various donors including the TA on options for civil service reduction and renewal. The May 1997 supervision report stated simply that "no further activities are scheduled under this sub-component which is therefore now closed." 4.2.13. The TA project also supported the initial design of a program for the reintegration of war veterans (not initially included in the appraisal documents). The Cambodian Veterans Assistance Program (CVAP) was prepared with cofinancing from AusAid (Australia) and presented to the donors by the authorities. The TA project subsequently supported the design of the program in close coordination with other donors, including the diagnostic work, the preparation of registration of soldiers and strengthening the institutional capacity of the government agencies that would carry out the CVAP and the software and hardware computer program for registration. However, after the 1997 coup d'etat, one of the donors withdrew its assistance for the registration of soldiers. The government and the Bank subsequently decided to suspend activities under this sub-component. 4.2.14. Personnel Management Public Enterprise Reform. The project provided funding for consultants in public sector reform to assess the prospect for restructuring of state-owned enterprises (SOEs) under the supervision of the Ministry of Commerce, including design of strategy for the privatization and liquidation of SOEs which are private and commercial in character. 4.2.15. The School of Finance [officially named Economics and Finance Institute (EFI) in 1997]. The project funded the construction of the school whose facility was completed in the last quarter of 1997, one year after it was envisaged in the appraisal report. There was some issues with the contractor whose payment was withheld pending the completion of work and the resolution of a legal dispute. The May 1999 supervision mission expressed its concern with potential additional structural problem and on-going building maintenance. 4.2.16. EFI coordinated its training program with the Bank's World Development Institute (WBI) which organized workshops to help with curriculum design, training of trainers, and on public finance issues. Classes were offered in the 1997-98 school year and included topics in tax administration, budget and treasury management, legal training, English, and computer skills. Besides the multi-year partnership with the Bank's EDI, the Institute has continued its training mandates and made arrangements for collaboration with other international organizations, including the IMF, the ADB and the other bilateral institutions as well as local institutions, i.e., the National Bank of Cambodia, the Royal School of Administration, the National Institute of Management, the Faculty of Law and the Faculty of Economics. The EFI library was completed in December 1998 and continued its work on updating its electronic database. (See further discussions of the EFI in Stage 2.) - 14 - Legal Technical Assistance for Private Sector Development 4.2.17. Legal Reform Unit. Due principally to weak government commitment to the establishment of the Legal Reform Unit (LRU) and the Bank's reluctance to launch any legal component activities in the absence of the LRU as overall coordinator and supervisor, the legal component did not become operational and the activities did not start until well after the project's mid-term review. The LRU was finally created in August 1997 and its Director chosen via Prime Ministerial Decrees. The Bank concurred with the LRU's terms of reference and the 1998 work program was approved by the government. There was however considerable confusion in this component since no less than five agencies shared responsibility for the execution of legal assistance activities. After one year, there was no attempt to coordinate the activities under this component and the work of consultants hired by the various agencies. There were continuing delays in the completion of the commercial code and the implementing regulations and in the launching of the legal diagnostic study. In mid-1999, the TOR for the diagnostic study was finally complete and the May 1999 supervision mission recommended the immediate launching of this study. 4.2.18. The LRU activities included the support to the government to publish the Official Gazette on a regular and timely basis. The publication began in late 1997. Other activities included legal training for civil servants, assistance in the dissemination of laws, publication of legal opinion, and training and training material development. 4.2.19. Support for the Cambodian Development Council (CDC). Limited assistance was provided to the Cambodia Investment Board (CIB) of the CDC in an ad-hoc manner with the service of consultants on private sector investment and private sector development. This also included assistance to the CIB in developing a set of criteria to ensure consistency between private investment and the government policies in natural resource development. The supervision report stated that further Bank support to the CIB would be based on the recommendations of the report prepared in early 1997 by FIAS on "Monitoring Foreign Investment in Cambodia." There was, however, no further assistance under this sub-component. Training. Studies and other Sectors 4.2.20. The activities under this component were designed to provide timely financing for priority activities identified in the course of the project implementation according to the needs of the government. 4.2.21. Water Supply. The first activity to be funded under this component was to assist the Ministry of Mines and Energy in strengthening the capacity of local staff in the water sector due to the withdrawal of German technical assistance. This activity helped to strengthen the institutional framework needed for the water supply projects financed by ADB, Japan and the World Bank. 4.2.22. Electricite du Cambodge (EDC). A study was commissioned to review the issues in the power sector's regulation and pricing, public utility finances, operations and maintenance, - 15 - corporatization of public enterprises; and the legal aspects of power regulation and corporatization. 4.2.23. Stock Exchange Study. The project funded the preparatory activities toward the establishment of the Security Commission in Cambodia. These included workshops on the development of a capital market, preparation of a business plan for the Security Commission, draft operating regulations, development of training programs and timetable for the implementation of a Security Exchange in Cambodia. Project Management Unit 4.2.24. To help manage the project, a project management unit (PMU) was organized and funded. The unit was housed in MEF to coordinate, monitor and facilitate the implementation of the activities of the project. A financial unit was also established to monitor the project's financial and accounting situation and provided relevant information and training to line ministries and other implementation agencies. This unit had changed over time during the life of the project. Originally, project units were supposed to be installed in several line ministries to help with project management and monitoring. However, only one - the World Bank Division -- was established in MEF that carried out the financial aspects of the project, separated from the PMU. The recommendation of the May 1999 supervision mission was to shift the financial function of the World Bank Division so that it became an integral part of the PMU (see further discussion in Stage 2). 4.2.25. While there was a lot of resources devoted to build, strengthen, and make the PMU operational, the performance of the PMU, however, was a concern for the Bank as noted by the May 1999 supervision mission, especially after the 1997 coup d'etat (see para. 4.1.6.). The mission noted a number of weaknesses in monitoring and executing project activities, contract management, and compliance with reporting and procurement under the Credit Agreement, not withstanding the size of the unit and the considerable resources which were allocated to it over the duration of the project. The supervision mission noted errors in contract processing and lack of consistency in recruitment and remuneration of consultants. There were also concerns from participating ministries and agencies about delays in requests for technical assistance. There were also ill-defined responsibilities and accountabilities between PMU and MEF staff, resulting in lack of transparency in project management and decision-making activities. 4.2.26. Subsequently, the new Task Team recommended that the PMU be reorganized and downsized with better strategic planning, monitoring, and evaluation functions. The reorganization was effected along with the realignment of the project components. (See the discussion of the PMU in Stage 2.) Support for Forest Management 4.2.27. This component which consisted of providing assistance to the government in forest management was added in May 1996 during the first annual review. The objective was to provide assistance to the Secretariat of the National Committee for Forest Policy in the - 16- formulation of a long-term forest policy with the preparation of studies on: (a) forest concession management; (b) forest policy reform; .(c) legal counsel services; and (d) logging control and log verification. The above reports were the only activities in this additional component. Stage 2 - 1999-2001 Components 4.2.28. In mid-1999, following an extensive supervision mission from the Bank as discussed earlier, the project was realigned and the components were grouped into four main components: (a) civil service capacity building; (b) support for macroeconomic management and capacity building for MEF; (c) public administration reform; and (d) legal reform. Civil service capacity building component 4.2.29. Economics and Finance Institute (EFI). The activities to support this component were focused exclusively on the development of the EFI at the MEF as a government institution that provides training in economic management, financial management, basic legal skills, and practical training in basic office management for civil servants. EFI has become a specialized institution attached to MEF. During the period 1999-2001, EFI began to fulfill its mandate of training civil servants while improving its facilities - including the EFI library -- and related educational services. Training was provided in economic management, public finance, financial accounting, computer skills, tax administration, professional English. EFI offers a MBA program in association with a university in Australia and also after-hour fee-based training. 4.2.30. Efforts by the Bank during the second phase of the project were focused on making the EFI a sustainable institution so that it could continue after the project ended, especially in generating revenues and identifying alternative financial resources while ensuring a consistent delivery of services and training. The Institute also actively pursued efforts to develop revenue- generating activities. The status report on EFI noted that the morale of the Institute "remains strong and unshaken" by the closing of the project and that EFI has been well prepared to continue its training operations and to serve its training mission for the civil servants. EFI has formalized a Memorandum of Understanding (MOU) with MEF that specified minimum financing over a three-year period and EFI's institutional arrangements and governance structure over the next several years. Thus, EFI has developed a good foundation on which to build its future without the funding from the TA project. But, it will also require the strong commitment from MEF and the government to ensure EFI sustainability. 4.2.31. MEF-Economic Unit. The unit continued with the activities focusing on macroeconomic analysis, producing its periodic reports, Monthly Bulletin of Statistics, Quarterly Economic Review, and MEF Weekly Flash Report. The Unit also collected and managed the macroeconomic database. While the consultants provided expertise to MEF in these areas, it was a concern whether the knowledge transfer and training for national staff would be sustained at the project closure. Nevertheless, the unit has its clear terms of reference and would continue its activities in this area and its continuing mandate to provide macroeconomic analysis for MEF. - 17 - Support for Macroeconomic Management and Capacity Building for MEF 4.2.32. In the second stage, the TA project continued the support activities in macroeconomic management and capacity building for MEF, including budget management, economic policy formulation, economic analysis and forecasting, VAT implementation and debt management. 4.2.33. Budget Department. The TA financed a senior consultant on public finance in this department, providing assistance to prepare the Annual Budget Books, develop macroeconomic tools and the framework for budget analysis. The Department produced monthly reports for the Cabinet, line ministries, and provinces and managed the budget system database. The project has provided the basis for this department to develop its activities in support of MEF and the government in the budget area. However, the transfer of knowledge from the senior consultant to officials in the Department was not adequate, despite the Bank's repeated request for him to train at least four identified counterparts to take over his responsibilities. 4.2.34. Debt Management Unit. The unit contributed to the management and reporting of external debt with the support of the project in office equipment and training. It took part in the negotiations for debt rescheduling with the US and the Russian Federation. The DMU also worked to clarify and update official records of debt obligations to Cambodia's creditor countries, thus fulfilling an important responsibility for MEF and the government in general. The unit managed the debt database and provide estimates of debt service payments and schedule for existing debt. The TA project has provided timely support for the establishment of this unit, whose activities are much needed by the government during the debt rescheduling exercises with its creditors and especially in reconstituting the data on external debt and the debt reporting exercise to the World Bank. However, the transfer of knowledge on debt reporting and the sustainability of the unit remains a concern: the report from the DMU stated that the cut of allowances to the staff at the closure of the TA project would affect negatively the performance of this unit (see the discussion of allowances). 4.2.35. Tax Department. The TA project supported the work on implementation of VAT regulations. However, there were modest results following the cancellation of the contract with the VAT advisor, due to some irregularities in the contract. The department now collaborated on the VAT work with the IMF. 4.2.36. MEF- Economic Advisory Team. Activities to help MEF in policy analysis and recommendations related to public expenditures issues in the structural reform program of the government were being implemented. Services were also provided to assist MEF on implementation of the Structural Adjustment Credit and in the timely preparation of the government's Interim-Poverty Reduction Strategy Paper. 4.2.37. Bilateral Cooperation Unit. Modest support was provided to help this unit in the management of bilateral cooperation, including activities to prepare and review official documents related to bilateral loan and grant agreements, proposals for projects and project implementation. - 18- 4.2.38. ASEAN Department. Modest support was allocated to this unit to assist on tariff policy and other issues in economic integration with the ASEAN countries and also with the preparation of tariff proposal as part of the application process to WTO. 4.2.39. Legal Department of MEF. A small amount of official equipment support was provided to this unit. Staff have also attended training courses at EFI. Public Administration Reform 4.2.40. The public administration reform supported activities on civil service reform and also the design of a comprehensive program for the demobilization of the armed forces (the redesign of the earlier CVAP). 4.2.41. Civil Service Reform. The project supported the strengthening of the institutional capacity for civil service management reform. It financed the first ever complete work on civil service census which included the official registration and fingerprinting of civil servants. However, this activity experienced long delays because of the need to complete registration of civil servants in every province. It was finally completed near the end of 2001. The report identified "ghost" workers who were removed from the government payroll. A report on civil service reform was presented at the Consultative Meeting in 2001 and was well received. This has served as a basic and useful tool for the government to better manage its civil service and will contribute to further reform needed in this area. 4.2.42. Demobilization advisory services. The Pilot Demobilization Program, supported by the project, was completed. Activities included also an evaluation of the program and support for the preparation of the full-scale demobilization program, including workshops. The project provided funding for an advisor who assisted in the evaluation of the pilot demobilization program. The full scale demobilization program was expected to be supported by further IDA funding as well as by other donors. Legal Reform 4.2.43. Legal Reform Unit. The Legal Reform Unit was housed in the Council of Ministers. After much delay during the first part of the TA project, the legal diagnostic study was completed and its findings and recommendations were discussed in a workshop in April 2000. A steering committee was set up by the government and arrangements were made for the preparation of a government-owned strategy for the development of the legal and judicial sector in Cambodia. LRU was also overseeing a legal training program for public officials. However, as the supervision mission in mid 2000 noted, the LRU was less active in the legislative reform process than was originally anticipated under the support of the project. This was still a concern as the project closed. 4.2.44. There was difficulty in the preparation of the legal and judicial reform strategy. The consultant report which was late in delivery was judged unsatisfactory by IDA and did not reflect the terms of reference agreed earlier. The supervision mission in February 2001 urged the - 19- government to have the draft strategy finalized as soon as possible for presentation to the government. The strategy paper, once completed, would serve as one of the building blocks for the proposed legal and judicial reform project under preparation. 4.2.45. Progress was achieved in the publications and dissemination of laws and regulations adopted in 1999 and 2000. The publication of the monthly bulletin, which reproduces laws and regulations of Cambodia in three languages (English, French, and Khmer), has been continuous since September 1999. Progress was made in the issue of laws and regulations on a thematic basis. There has been considerable demand for the monthly bulletin, especially from foreign investors. 4.2.46. The government is committed to the timely publication of laws and regulations, but funding for this activity and the search for alternative funding sources after the project remained a challenge. The project's task team had proposed various options for the government to insure sustainability of this activity. The discussions on these options were still on-going as the project closed in December 2001. The sustainability of the LRU itself remained also a challenge for the government as the project funding came to a close. 4.2.47. Ministry of Commerce (MOC). The project funded consultants who provided advice on and reviewed the Law on Commercial Enterprises which was submitted to the Council of Ministers and the Law on Commercial Contracts with preparation of explanatory notes and coordination with the Civil Code drafting team to ensure compatibility. However the first group of consultants did not complete the work. Subsequently, MOC appointed a Cambodian international team of lawyers to complete the preparation of priority elements of the commercial code. The review process involved extensive training for staff of the ministry and consultation with stakeholders. Activities also included advice on the draft Trademark legislation, drafting of the implementing regulations on related commercial issues, the organization of a conference on globalization and study tours to international trade organizations. A study was completed on the legal implication of the proposed Cambodia's accession to WTO. 4.2.48. National Assembly. The project supported the National Assembly's Secretariat General to strengthen staff capacity in reviewing draft legislation through a training program and advisory assistance, and ease some of the bottlenecks involved in the legislative process. The training program was provided by international experts on issues in constitutional laws. Advisory assistance was provided to NA commissions and members of the Parliament for a series of draft laws on land and fixed assets, proposal on human rights, AIDS prevention, mineral ore management, financial agreements between Cambodia and OPEC. Technical advice was also provided to the National Assembly's President and the Secretary-General. 4.2.49. National Bank of Cambodia. The project received a request in 1999 for funding from the National Bank of Cambodia to complete the task of restructuring and modernizing its accounting system. The TA project provided continuing support to this process which had been implemented for three years by the central bank of Belgium. This support also included training and knowledge transfer for the computerized accounting system management and reporting and related activities. - 20 - Project Management Unit 4.2.50. Following the recommendation of the May 1999 supervision mission, the PMU was reorganized in August 1999 to effectively provide general oversight and overall management of the project, daily administration and coordination for the implementation of the project, monitoring progress of the project components, and acting as the interlocutor with government agencies and especially MEF. The PMU was streamlined with about 50 percent reduction in administrative costs. The terms of reference of the PMU was revised and clearly delineated, with specific responsibilities to review, evaluate proposals and contracts, monitor and follow up all project components. 4.2.51. A system of reporting and monitoring was established and operational, aiding the task manager in supervising the project. The PMU prepared monthly activity reports detailing actions taken and key issues requiring clarification to be discussed monthly with MEF and with the, Bank's task manager. In the last part of the project, the PMU provided timely assistance to the Bank task team and succeeded in playing an effective supporting role in the monitoring and implementation of the project. 4.2.52. Originally, the project envisaged the establishment of project units in several line ministries to monitor activities that involved the later. However, only one such unit was established in MEF in 1996 (the World Bank Grant and Loan Management Unit, later renamed World Bank Division). This unit oversaw the implementation of all IDA-financed projects. There was some confusion between the functional responsibilities of the financial unit in the PMU itself and the World Bank Division in MEF. Subsequently, the mid-1999 supervision mission recommended that the function of this unit be shifted to the PMU to address the problem of splitting the overall accountability that also contributed to the lack of effectiveness of the PMU. 4.2.53. The matrix in Annex 7 presents in details the project-supported activities and their outcome. 4.3 Net Present Value/Economic Rate of Return 4.3.1. Not applicable. 4.4 Financial Rate of Return 4.4.1. Not applicable. 4.5 Institutional Development Impact 4.5.1. The TA project supported several departments in MEF, and in various other ministries and agencies of the government in a broad range of institutional development activities. Consultant services and training were provided at varying degrees of intensity and diversity. - 21 - With such a broad spectrum of activities and a diverse group of recipients, the institutional development impact has been uneven and at times difficult to assess. The ICR could only highlight selected impacts among these diverse activities. 4.5.2. The most important impact made by the project is the establishment of the EFI at MEF. Ironically, this activity was only an one-liner in the project implementation plan of the appraisal report ("training facility"). The EFI is a functioning institution serving as a training center for civil servants in macroeconomic and financial management. The school also has made arrangements with institutions such as the World Bank Institute and academic establishments to further its training agenda. It has contributed during the life of the project to train and transfer knowledge to a large group officials. 4.5.3. The project also supported capacity building in MEF, with the Economic Unit and the Economic Advisory Team. The Economic Unit contributed effectively to the development of the macroeconomic analysis capacity among officials of the ministry and continued to produce monthly statistical documents. The unit faced funding difficulties, however, for the publication of these documents as the project closed, thus raising the question of sustainability of the work of this unit. 4.5.4. At MEF, the project supported the development and strengthening of many departments and units with varying degrees of impact. The Economic Advisory Team provided advice on policy issues to the senior official of the MEF. Experts were also providing training to national staff of the Ministry. However, the transfer of knowledge was modest as the experts left. 4.5.5. The Budget Department benefited much from the project support and contributed effectively to the budgetary process of the government in performing its fumctions with the preparation of the Annual Budget Books and related documents and activities in the budgetary preparation process. The project helped to institute budget processing activities and transfer knowledge on the management of the budgetary database and budgetary analysis, literally from ground zero when the govermment was established. 4.5.6. The Debt Management Unit was created and supported by the project. It met the needs of MEF in the urgent activities on debt management, including debt rescheduling negotiations with the US and the former Soviet Union. Training and knowledge transfer were also provided to the unit, but as the PMU's own report pointed out, the work on debt reporting remained a challenge for the staff in the future and the need for continuing assistance would go beyond the life of the TA project. 4.5.7. The project supported the LRU to flesh out key legal elements to enable private sector development while strengthening the government capacity for the drafting of legislative documents and providing training for government officials. LRU published laws and regulations as part of an essential public service. These activities would be continued in the proposed project on legal and judicial reform. LRU also has been responsible for the production of volumes of law and jurisprudence, but this activity would need to be sustained once the project was closed. Various options were being considered and discussed to carry this activity forward. - 22 - 5. Maior Factors Affecting Implementation and Outcome 5.1 Factors Outside the Control of Government or Implementing Agency 5.1.1. The project was implemented during a period of political uncertainty and instability in Cambodia as the country was being put back together. The government was a coalition government with different ideas and approaches to the problems facing the country. The activities funded by the project were subject to the mood of the political interest groups and influenced by senior officials in the government. The 1997 coup d'etat adversely affected the implementation as some senior officials involved in the project were no longer in place. 5.1.2. Weak technical and institutional capacity base was outside of the government's and MEF's control. Although the project anticipated this bottleneck, it was underestimated with the resulting ineffectiveness of many activities and a less than desirable transfer of knowledge and skills from consultants to Cambodian officials. Weak management capacity also led to difficulties in managing consultants effectively and to ensure the quality of their services, requiring substantial intervention from the Bank. 5.2 Factors Generally Subject to Government Control 5.2.1. During the implementation of the project, MEF was responsible for the coordination and cooperation between many ministries and agencies involved in this project. However, as the implementation of the project was underway, there were delayed in some components, especially the legal component, leading to the question of commitment to and interest in the project by the authorities. The Bank had to undertake much of the coordination work, especially liaison between MEF and the Council of Ministers. 5.3 Factors Generally Subject to Implementing Agency Control 5.3.1. MEF was generally responsible for the coordination between its departments and with other relevant ministries and agencies to carry out the activities on capacity building and provision of advisory services. The unfamiliarity with the Bank's procedures and the diverse components of the project among many ministries and agencies affected and delayed some components. 5.4 Costs and Financing 5.4.1. The original credit amount was SDR 11.6 million (US$17 million equivalent). At the end of the project on December 31, 2001, SDR 11,504 million (or US$ 15.971 million equivalent) has been disbursed. - 23 - 6. Sustainabilitv 6.1 Rationale for Sustainability Rating 6.1.1. The sustainability of the gains made under the project is rated as unlikely. Many training and capacity-building activities supported by the project were unsustainable as the project closed. The Bank's supervision reports toward the end of the project were concerned with the sustainability of all these activities and discussions were on alternative funding sources to carry on the most promising activities. 6.1.2. The multi-faceted features of the project contributed to the concern for sustainability due to the broad range of activities both in several ministries and agencies and also within each ministry, each with their own agenda and competing needs. Ownership of the project was much diluted at the implementation level, making the interests in sustaining the activities supported by this project more difficult. 6.1.3. Capacity-building, the principal feature of this project, was pursued in general on a piecemeal basis and suffered from lack of coordination between consultant advisory services, training, and transfer of knowledge to the national counterparts. Several consultants reports and studies were completed with no follow-ups. There are problems with relying on individual consultants and inadequate management of these consultants. Some activities envisaged in the appraisal report were not completely implemented while other new activities were added. While the additions and cancellations of some activities were in some instances done at the request of the government, they contributed to weaken the effectiveness intended for the whole package of assistance supported by the project, accentuating the unsustainability of these activities. 6.2 Transition Arrangement to Regular Operations 6.2.1. The government and the Bank recognize the importance of capacity building in helping the country move to a market-oriented economy. This project has built some basic steps for the next generation of TA lending activities while providing valuable lessons and examples for the new activities. The Bank recently approved a credit on capacity building in the form of a LIL. This credit built on the lessons of this TA project. 6.2.2. Several proposed projects that will continue to provide technical assistance to Cambodia: A proposed legal/Judicial Technical Assistance project is expected to assist the legal and judicial reform to support the implementation of the legal and judicial strategy of the government. A Proposed Forestry Technical Assistance operation would support the government in managing forestry. A proposed Structural Adjustment Credit would provide further assistance to the government's reform program. In addition, several activities aim to support the government in governance and demobilization. - 24 - 7. Bank and Borrower Performance Bank 7.1 Lending 7.1.1. The Bank's performance in project identification is rated as unsatisfactory because the Bank's project appraisal did not appear - in hindsight -- to assess appropriately the commitment of the government and the capacity to implement a project which was made infinitely more complicated due to its umbrella nature and its broad and flexible coverage. The very reason for the broad coverage of the project undermines its sustainability, especially within a political environment of instability and uncertainty. Its ambitious coverage - again, in hindsight - did not serve well its development objectives, despite the broad agreement for this approach at the design stage. The project also suffered from the coup d'etat in 1997 which upset the delicate political balance within which it was implemented. Further, some activities were cancelled while others were added with no systematic reason other than they were required by the government. While the project anticipated the severe lack of institutional capacity, it was overly optimistic in overcoming the weakness and underestimated the complexity of a project that encompassed several ministries and agencies. 7.2 Supervision 7.2.1. The Bank's performance in the overall supervision of the project is rated as satisfactory, especially after the mid 1999 refocus of the project, as the task team made substantial efforts to restructure the project and monitor its activities. The rating of satisfactory should be qualified, however. In the first few years, however, problems with the project implementation were not addressed in a timely manner, especially after the 1997 coup d'etat. The PMU did not contribute effectively to alleviating the problem of coordination among ministries and within MEF. The gap between task team leaders was long, despite the emphasis on the need for close supervision and monitoring of the project of this nature. Supervision was pursued more intensively and effectively after the project was realigned in mid-1999. The PMU was reorganized and played a better role in monitoring the activities of the project. However, even with the intensified supervision effort, the multi-faceted characteristics of the project required exhaustive monitoring effort to keep the activities relatively on track. 7.3 Overall Bank Performance 7.3.1 The Bank's overall performance was rated as unsatisfactory, despite the enormous efforts of the task team to supervise and monitor the implementation of the project, especially in the second stage. The umbrella nature of the project with numerous activities required a lot of efforts from the Bank in order to keep the project relatively on track. New activities requested by the government added to the burden of supervision and monitoring while the weak institutional capacity of the implementing agency was taxed enormously. - 25 - Borrower 7.4 Preparation 7.4.1. The government's role in project preparation was affected by the political situation as Cambodia just emerged from the worst conflict. It took office only effectively after the project was prepared. While the senior officials agreed and committed themselves to the objectives of the project, the country's institutional capacity was absent to translate these objectives into concrete reality. Further, the commitment of the government to the whole package supported by the project was - in hindsight - less transparent than during the project preparation stage, resulting in the delay of some components due to the political sensitivity of some of these activities. 7.5 Government Implementation Performance 7.5.1. The government performance was not satisfactory because there were long delays in implementing some major components of the project and problems with coordination between the various ministries involved in the project. While there appeared to be strong commitment from senior officials in the MEF, ownership of the project was not transparent among the other ministries and agencies, with little effort at coordinating the activities called for in the project. 7.6 Implementing Agency 7.6.1. The performance of MEF, the main agency responsible for the implementation of the project, was mixed, and marginally satisfactory, given the efforts of MEF to undertake and coordinate perhaps for the first time a project with multi-faceted activities. MEF was leaming by doing in the implementation of this project with weak capacity while having to coordinate with other agencies and ministries (Ministry of Commerce, Council of Ministers, etc.). The PMU could not provide efficient assistance as it was unable to coordinate, supervise and monitor effectively all the activities of the project at the same time. 7.7 Overall Borrower Performance 7.7.1. Overall borrower performance was rated as unsatisfactory as the question of sustainability overshadowed most of the components of the project, even for those that had made progress under the project. The quality of training and the transfer of knowledge to national staff remains to be assessed. 8. Lessons Learned 8.1. Lessons leamed from the project include the following: * Broad coverage. The coverage on technical assistance is too broad, making the project unwieldy for the Bank in performing effective supervision and implementation and for the government to manage and monitor; given its weak institutional capacity. Technical - 26 - assistance provided to many ministries and agencies seems to be diluted in its usefulness as the project was being implemented. * Careful assessment of the capacity of new borrowers in the preparation and implementation of projects, especially in low-income countries ravaged by war, political chaos, and emigration, is much needed. While the project had anticipated the lack of capacity, it had in retrospect underestimated the degree of this capacity deficiency and was too optimistic in anticipating the ability to develop human skills to meet the requirements. Basic institutional capacity is essential in the preparation and implementation of a TA project. The capacity was non-existent in Cambodia, resulting in over-reliance on outside experts and ambiguous transfer of knowledge once they left. * Ownership of the project resided with the senior officials but was not transparent among the officials who were to implement the project. * Appropriate emphasis in short term and medium and long term for a technical assistance project. The TA project to Cambodia tried to cover the short-term needs as well as meeting the long-term requirements for capacity building. In hindsight, the overall objective of capacity building requires better definition, emphasis, and an appropriate horizon. The TA project tried to do both and was less effective. * Unfamiliarity of the Borrower with the Bank's processes and procedures. As this was one of the very first credits to Cambodia, the unfamiliarity of the country with the Bank's processes and procedures aggravated the already complicate management of the project. This unfamiliarity, while anticipated, was much underestimated, especially in Cambodia, a country which just emerged from over two decades of isolation and warfare. * Lengthy period of implementation brings about the question of sustainability of the activities supported by the project. The sustainability of the activities supported by the project was uncertain, rendering the benefits and experiences gained through implementing this project questionable. * Effective communication, dialogue and consensus building with the Borrower, especially in the case of a new client who was unfamiliar with the Bank's operations. Comprehensive mechanism is needed for effective communication between the Bank and the client. A common understanding on what needs to be done has to be undertaken with all levels of governments and agencies concerned to help move the project forward. This was effected after the project was refocused. * Allowance payments. The Bank needs to implement strictly its policy of non-payments of allowances so as to avoid endangering the sustainability of its projects. * The policy on salaries for consultants needs to be uniform and consistent with the skills and knowledge. * Consultant performance. Given the negative experience of the government with the use of foreign consultants, the Bank will need to tighten its supervision and monitoring of the foreign consultants funded by Bank projects, especially in Cambodia. - 27 - 9. Partner Comments 9.1 Borrower/implementing agency w.o~ ~~~n Ie mrel; t#48f I Y*Nr?I>OM OF CAM.ROfDIA \ ~ ~ ~ AD R411ghan King Phrnom Pai, June A S . i2 Mr TumE.Ls,c Ton Ta3k Man3gr g ef F rH4rc^S Povr,y Aeduwtion and Eonnomic Maniigemc kfriz E4st Mw and Pmfic Th- Wc'd £ie Wwthidcon D.C 20C;3 Fax: (2SC) 477 63'I SUbbJed. hLnchrM xis.tx Pre (LWA C( Z64 - KH) [Cmpn,rnlan Lvrricbmnll Rept.i OCR) DeMr NMI. Tb3tq-LUvn, Tcom This, iss wL'f;vr d yOufr lmro of[irnc ilk 2U)1z wit1- dne 4drzft Implrem tionr ConIplerk-e Rv¢t ((CwR) only res4is it o Jn le 24, Y)n2 thht tiauX ea in restwed 10. ynt h R*S-dist tht ICR, I hxT no pil.mI-tr r mments on ith drsi zs it pre.ff1S a fair riviomt f project implenr*ha;otj &M tA41.cnent tte project ahjcctives.. In costvrfutiln, I Atrin pised to vdritt ! yoL ir- otrer io mlfcio h ^u tzh or se cwmcafse cn th. EDra IC¶ ChMJi Kilt LeeSg Utd%e Sereiai G#vn1 NMinistf cEenaormy tnd FfntrKc CC Nr Eitow3xure MbaEszrnr Cho haf W cd.d 3nck Cartn:at6 Curnitry Offict - 28 - CONTRIBUTION TO THE ICR nl. n rtiM. it II;, the R(C lnlt &:hb mlectlin wili tifd tnEensc tTi. (EcS! ic&d Mw iltre rchtibcryjtq blr3 in vLMi-i doaiiinI ofid Se;wrs. airming ro firmly s;cw Carab-odin we&d the arg ,Qtth (if hiiIs-ii vid susiicatke devcelpct.t Trhi- mai in rdinfr nccO af tambadia, u bt~s ¢r,:sro2a:, were tih m3pimentts ce ir JetienLing t. rerics uarnis tt etTect v z, ijt"ioi '4 a tarket ;nr idiopraVi tho prtpf mwoXra min o ,r ecarcanic re'aolry'AMd $Mwthk as well u & e de-dopt l.vY of privee sm-r 3atwitir rT* T0 tnical Us5istmncc PNwjeci (I A Pr4ije) w-as spe flc-ly :iLnrd to 1poft est rquirvrits in or&.r to h0p ihInpk1 f iw the Crri-rirnl cwnNmic. ref'r7m piofrwnt Itt .:rtnIrig d imnie£nnting5 wthtiuwl rtts--ns ffr. -:prminj IhI, trrMaw; e o:f it: 1ttt1C tewr l Cieig and evabiisi1iia _ babiing dvitdivient for privmfle ietiw de"eopmncrwi l he rraii Dorxribuiwr. of TA pYLect w rbe rdbrrn phrfeis i. &sI il mrnde t vathIsbto r qabi!iN CxIuI 'anrt services, prpre and Lnpeirr em r-izizing pronw ai p,w4idc Cquipme(ii L wri f stipport g: irkplergticm attm s d IMain, wc&6 WAIre kiW714 w l 4in;E to carry cV suc Public Fpcrditurs Ckt:rloi - ublik Jrnvrstrnen Ma>asctmzn - Public Scctor Pers3rwrl lnaimvncnta - Pri4a Se~- ManagAenerI AJ t b Mh the T,A rSje M w r, ew i 3n 1 afl a cri tki-. me 6;ir C u Ihu&, diI to its caw ni rnd Foltia s-t-zlthen Ga l;v=rrzer 'tt'C=hadI- has ben crafnnsr.ted La rtb wAliorin vf TA's reeUtCCS rE d'-s op C irxituthinal *a.:y ;w irmpfment tl-e reSoil3ns rhiro b detailed irxog-n f cap ci:y bui)d14, xwhich h4s led Lo it* semriis:nmerrt of thex p Ijw *;ectirvs. From Nwb 19. 10to D.MbCr D1, the TA PNiwiecl fibrrcd compneet io HitAf I rnplemernin; awensi.i in l ie hlner n urees rov hirh havc ha devvioptnent iunpwls rit hwve outwe-ghed the (crtdirrei. The numnedo4 okjecii*ve achtitcil fy cor*prz=ts anr l 8ii vAce af tih hiuh pg tc;nl impart ao TA jo,rJK Fi x Ot.yr impleraentzioi. wa bj .'ef pwrecz 't7c I&rBly L: tpiiX lo Weltr4tth- dh e r iilmnt inseituitif RiW * 6 wUrc. hit.o had i serwrril -ote to ry in tfbi rT&xln ofTfoA, thrio.h pit6ir4 a broWd runLm aeqwi ±eft and the nPilt;uti& cLpDz.- > xn"iy Vo dcgn arnw ieIle me,r rn.C:5urRl rcfbiimntd to manage. a ;uvir, O;Id Ornvue Itlc Th1 TA?!oJ.j sI titExuhfs.! iwsl.b ticsw,t M. pcMbinnsftnd dxItaIr'h in sne ik4lads D)urng the impikmenixien of i! praje;: ther vki itWw /rlsiYn whkh Arkw e the orc4j1 TA i wa s the fist cedit to CaWVdia. 2xperience with Ath4 W9orld ERik's -oSCs, end pIoceJurvV%d;dcl!nes Ls raiher limited (r.iid in e:anplicating nun"ciaverl). - 29 - - ^WI etl -I7l,L II al e hW'rAn Of tilef rjcr . 1lf'hn weO p;r of mufR5 w1 a p.r cr7llue.tterauth lb.~ trnk,'l DA Lrnd aM= h v nents reKspsrziMle A>r prajeL mle¢t a i,;lx ir. marakiflg Oflectivell *J4* 10 WMP atap ent sap!dty -L1nFlcar deffition ofdviih¢)I rconbki rd a tcirblLities c PI'.W md w'uwrierpan ME'P staff rtsijhlW in Lak oF trsnipfrc in pxoj ntApn:n atru: demson* mLic:8. MltmftdmsrJiLg and lat;V; og mpzfibll rtsilied in e*iys in hnidlir4 rquw$ from paniipting rnitistits and arcics eia tc hnic g3it,tr- Di.LAilty in rec=uIng Llw ilernninnbl exrrts v;ith 15he required pioilic - Thrc~ wEre some worctO ifl OfL sii anr t kiiok 0S cC'ite31siv ir. r6:ruiTlme1 and * I ti lck of nMrie=liiMi PManlr hc variews ag=6ts nwt Tdiqwd In ae repezis rc,k.s of ilc. consy.iltas ruzailic urntdr t1e pj=oJ The Ia'4 of a uni^rxm app-idi io the- reeritLment ofiecmicui wist-anct r.JlI;:d ir, d-upl ;olin dfw^ark snd djspzrir aPnnf vicrs . - thc "iiiors recruited d itt 81 bs ofthe wutitffgm were likely to tdrt&ene opo,aiionzt w kr and litlie- x TO "aWiry building. og ir;d Any in'umv(smarA otht voluts5wrpsns in ase .afix :ntim is , neu:szuy ?;ifct:jCra1'i pret ioplX¢ntb ,9A *LI btinysl lrasrser, r tA ifrojtL% suppitfz orirwntg. in muny .mpWw;ilng apeniel The(C wuere di I'i5t'cJ[, in iurrmt,inS and nQIr.jlterinE wrkac r l mpoz^r> szrd ;ls Pre ect. * Mny chain s and zdru!w=cnt duriri, ft projea iil^Itipn tffl t-e prrjecut i:Lnienl}=il>n ccrgrs& It ilw4iA bc void q.wf %sble. 'r-K im r f4A Projt: dcs. rj neoesrv Id to ciwty buildid. Capcity I1u-didg Prhjes:ot sv u e Sn rced Lfr TA Grant ntot TA f.edj (tlmnl EHiiuJ cost oi wrvies. Li rIlatib I6 C &1itfiq pt odt4e 1d I11 coiKi4sion. Ilthukl' sevmet o*-h1vsu Wcrt noW. ii,v tnd o= activities VTC ufnul1iSfitd iinplmentid, the TA .r4reci fws, made, a siandil, cwntributhio w chci pioms of ufnstbrmation to o WufS1ni ceinir;f. trs iiyip'Tzant out carmig sewlt owsiftwesI inwit-utiami suJi%' to strWS1CZr the. bNc1 vgwr.=nent ma1nd Dth-l aet14s orthe pcrJjeci mnn tmeat. hot b1ICealt*d foa CLnboi& wkith reprdw ( 4) upltdc the insilu;lhnIl cstpbci bidi0.ngof i-. c6%. se,r'nt-s (ii) srefig6en the :ma=w.*wni,Vs marage r-l afj ether -rIaWd swtc of the ctufflr>, NiO vtorni" ihe cvil wvan and demWo ed s 5alikern r, be IdequaLe nrwrt;w, anmd (ii) imriprtv he ir plernertrulm of'ihe areity -xilic w ithi ihihet i.cVel of mtac*wi;unr ,D r-onitor COvObKdiLa .'. i. r UJr4ex the TA roJect. espcialy, he Eq ics ar,d IFnance Institute (Wh* School of FrMiriz- w.as e=:liesht4W oti Decenlh 3C, I 97,, which called for ilc crrai5m o f ait official trai,nn« cetee to buili U th e tuman ruovrR Gpacilty and aalwrie Ltc quaii,y of prdk 6rt.iC= gf ihi doiicials of .he Mnisiry cdEconaziy aud Finane and 1.ts* 4tLe-e Unimigtrid otEhe Rtxi Oewrninend that deal witi appIied .d8n)ntM V eciAiwv ier of finan;: tac -hc dio,4> S . ... *.. - 30 - 9.2 Cofinanciers. There were no cofinanciers. 9.3 Other partners (NG0/private sector): There were no other partners. - 31 - IMPLEMENTATION COMPLETION REPORT THE KINGDOM OF CAMBODIA TECHNICAL ASSISTANCE CREDIT (CREDIT No. 2664-KH) Annex Tables Annex 1: Key Performance Indicators ................................................ 32 Annex 2: Project Costs and Financing ................................................ 32 Annex 3: Economic Costs and Benefits ................................................ 33 Annex 4: Bank Inputs ................................................ 33 Annex 5: Ratings for Achievement of Objectives/Outputs of Components ................................................ 35 Annex 6: Ratings of Bank and Borrower Performance ................................... 36 Annex 7: Output and Achievements ..................... ........................... 37 - 32 - ANNEX 1: KEY PERFORMANCE INDICATORS PLEASE SEE THE POLICY MATRIX IN ANNEX 7 ANNEX 2: PROJECT COSTS AND FINANCING (US$ million) Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Project Cost by Component Estimate Estimate Appraisal (%) Public Sector Management 10.261 10.353 120.3 Legal Assistance for PSD 1.500 1.842 122.8 Training 2.697 0.646 0.3 Study Fund 1.200 0.213 0.2 Project Management and 1.334 1.384 103.8 Implementation Salaries and operating costs 1.700 2.275 133.8 Forestry Policy Reform 1.987 Total Project Costs 18.700 18.700 100.0 Total Financing Required 18,700 18.700 100.0 Note: Including counterpart funding. Forestry policy reform consisted of studies. Project Finan ing by Component (in US$ million equivalent) Component Appraisal Estimate Actual/Latest Estimate Percentage of Ap raisal Bank Govt. Total Bank Govt. Total. Bank Govt. Total Public 3.3 0.3 3.6 6.8 0.4 7.2 206.1 133.3 200.0 Expenditure Control Public 4.2 0.4 4.6 - - - - - Investment Management Foreign Debt 0.7 0.2 0.9 0.1 0.2 0.3 14.3 100.0 33.3 Management Personnel 1.3 0.3 1.6 2.3 0.3 2.6 176.9 100.0 162.5 Management Legal 1.3 0.3 1.6 1.8 0.3 2.1 138.5 100.0 131.2 Assistance for PSD Training 1.9 1.5 3.4 0.6 1.5 2.1 31.6 100.0 60.0 Study Fund 1.2 0.0 1.2 0.2 0.0 0.2 16.7 - 16.7 Project 1.3 0.5 1.8 1.4 0.8 2.2 107.7 160.0 122.2 Management and Implementation Forestry Reform - - - 2.0 0.0 2.0 - - Total Cost 15.2 3.5 18.7 15.2 3.5 18.7 100.0 100.0 100.0 Note: Forestry Refom consisted of studies. - 33 - ANNEX 3: EcONOMIC COSTS AND BENEFITS I Costs | Benefits | NPV I ERR (%) Not Applicable N/A ANNEX 4: BANK INPUTS a) Missions Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g., 2 Economists, 1 FMS, etc.) Implementation Development Progress Objective Month/Year Count Specialty Identification/Preparation 7 2 economists, 2 public S S January 1994 sector specialists, 2 legal experts, I debt specialist AppraisalVNegotiation 10 4 economists, I public S S June-July 1994/October 1994 sector specialist, 2 legal experts, I debt specialist, 2 others Supervisions April 1995 2 1 economist, I TA expert HS HS July 1995 3 2 economists, I public HS HS sector specialist, I legal, I TA expert November 1995 1 1 economist HS HS May 1996 4 2 economists, I TA expert, HS HS 1 public sector specialist, I civil service specialist January 1997 3 2 economists, I TA expert, S S I legal expert May 1997 . October 1997 2 1 economist, I TA expert S S December 1997 2 1 economist, I TA expert S S June 1998 2 1 economist I TA expert S S November 1998 1 1 legal expert January 1999 ??? I I legal expert May 1999 4 1 economist, 2 legal U S experts, I FMS August 1999 3 1 economist, I legal expert, I FMS February 2000 5 2 economists, I legal expert, I FMS, I public sector expert July 2000 2 1 economist, I legal expert S S February 2001 3 1 economist, I legal S S expert, I FMS May 2001 2 1 economist, I FMS September 2001 1 1 economist S S ICR: No mission 1 1 economist U - 34 - ANNEX 4: BANK INPUTS (continued) b) Staff Actual Stage of Project Cycle No. Staff Weeks $ ('000) Identification/Preparation 15.8 57.3 Appraisal/Negotiation 35.6 141.2 Supervision 141.2 623.2 Sub Total 192.6 821.7 ICR (est.) 7.8 22.5 TOTAL 200.4 844.2 Note: 1. Figures do not include Trust Funds. - 35 - ANNEX 5: RATINGS FOR ACHIEVEMENT OF OBJECTIVES/OUTPUTS OF COMPONENTS (H - High; SU = Substantial, M = Modest, N = Negligible, NA = Not Applicable) Policy High Substantial Modest Negligible Not Applicable Macro policies X Sector Policies X Physical X Financial X Institutional Development X Environment X Social X - Poverty Reduction - Gender - Other (Please specify) Private sector development X Public sector management X Other (Please specify) - 36 - ANNEX 6. RATINGS OF BANK AND BORROWER PERFORMANCE (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory 6.1 Bank Hijhlv satisfactory Satisfactory Unsatisfactory Hwghly performance Unsatisfactory Lending ______ Supervision | Xi|il Overall 1111 mIz 6 2 Borrower HighIv satisfactory Satisfactorv Unsatisfactorv Highly performance Unsatisfactory Preparation 1/ L 1 [i] Government implementation performance Implementation [ | agency perfonnance Overall Note: 1. Not rated as the elected government of Cambodia only took office effectively in 1995. - 37 - ANNEX 7. OUTPUT AND ACHIEVEMENTS Component Activity Outcome/Achievements A. Macroeconomic Management Public Expenditure Control (Budget Contributed to the strengthening of MEF capacity for budget and Treasury Management) preparation process and the Treasury cash management activity There was progress in training and transferring of skills to national staff But with the end of the project that also ends the allowance support for staff, sustainability of this activity may be affected Strengthen: Recruit - Budget preparation capacity - Public Finance Advisor (SPF) Institutional framework for expenditure control - finalized - Expenditure control - Budget and Treasury Advisor Prepare annual budget review conferences - done - Treasury cash management (SBT) Finalize system for projecting monthly revenues and - 5 Budget Technicians (BTs) expenditures - completed - Treasury & Public Accountant Finalize rules and procedures for revenue collection and Expert (TPA) expenditure operation - completed Provide: Reorganize Treasury accounts in line new budget - Office equipment nomenclature - completed Establish new rules for managing Treasury accounts - completed Prepare annual training programs for counterpart staff- not done Prepare annual T&V programs for counterpart staff in line ministries and provinces - not done Tax Administration Support on VAT tax Consultant assistance for the authorities' need on VAT implementation and management implementation process, including drafting of implementing regulations, training and seminars. IN the second stage of the project, due to the cancellation of the contract with the VAT advisor, there were limited results. The Tax Department now collaborate with the IMF on the VAT work Public Investment Management PIP Unit and PIP System This component was not supported by the project as the Development govemment obtained another source of funding for this activity Some elements of this components were covered under related activities within the project - Strengthen PIP management - Develop public investment budgeting - Strengthen project units in line ministries - Strengthen aid coordination - Strengthen strategic planning - Develop macro-analysis capacity Project Units in Line This sub-component was subsequently not supported under Ministries the TA project. Recruit The following activities were not covered by the project as - Project Mgmt Specialist altemative source of funding was used. - Programming Specialist - Develop procedures for project monitoring - Project Accountant - Prepare manuals and textbooks - General Accountant / Auditor - Conduct workshops to train staff in project monitoring 2 Organization Specialists - Deliver computer system in interface with PIB system in MEF - Train staff to use computer system Strateaic Planning and Aid The activity was not covered by the project during the first Coordination phase. However, dunng the second stage of the project, modest support was allocated to help the Bilateral Cooperation Unit in the management of bilateral cooperation Recruit - Aid Coordination Adviser - Consultant for vision for future - 38 - - Expatriate Cambodians Provide Office equipment Macroeconomic Analysis/Economic Unit Recruit. Training program in forecasting, economic analysis, etc - - Adviser to MEF's Economic Prepared Unit Provide Establish a database - Completed Office equipment Develop macroeconomic model Deliver office equipment The Economic Unit prepared macroeconomic framework in the context of the PFP with discussion with the IMF and World Bank; prepared economic outlook for Cambodia for 1996-2000 The Economic Advisory Team (EAT) assisted MEF in preparing economic and financial policies and program for the government These were presented at the CG meeting and the ICORC meeting for Cambodia. The EAT assisted MEF in preparing for the resumption of collaborative relationship between the government and the IMF. The unLt assisted in policy analysis and recommendations on economic, financial and fiscal management, as well as structural reform program The activities include (i) preparation and execution of the budget, (ii) assistance in managing the Budget Strategy and Enforcement Center, (ui) MEF's focal point for implementation of the Bank's SAC, (iv) preparation of the l-PRSP, (v) monitoring fiscal performance in preparation for regular meetings of the donor group on fiscal reform, (vi) providing training at the EFI and the Royal School of Administration. The unit produced the Monthly Bulleting of Statistics and the Quarterly Economic Review. The above activities were continued during the second stage of the project. However, the future of these publications depended on the decision of the government as the project closed Support for the Economic Advisory Consultant services were provided to help MEF in the Team preparation of economic and financial policies for the government's presentation at the CG and OCORC meetings They also contributed to the capacity building process at MEF. For the second part of the project, consultant services were funded to assist the MEF on the implementation of the SAC and the preparation of the I-PRSP The issue of sustainability overshadowed this activity once the project closed. Debt Management - Develop institutional framework for Recruit/Select. extemal debt management - Institutional Expert in debt The Debt Management Office was constituted following the - Strengthen capacity for debt reporting management preparation of its Master Plan. It prepared an action plan for to World Bank - Organization Expert (Master external debt reporting, completed inventory and Plan) reconstitution of files on Cambodia's debt to OECD - Computer System Engineer countries and to the former Soviet Union, developed a (CSE) system for debt reporting to the World Bank and assisted in - System Suppliers bilateral debt negotiation following the Paris Club Provide: rescheduling, in particular the negotiations with the US and - Office equipment Russia. provided training program for debt management The project envisaged the However, with the project's closure, the sustainability of I followng activities. m ost of the activities above was a challenge for the unit The - 39 - Develop institutional framework debt reporting exercise to the Bank still met with difficulties, for debt management despite training and provision of equipment and computers, Action plan for extemal debt according to the completion report of the DMU reporting Prepare the master plan for new debt unit Prepare training program (other than computer) for debt management Fully implement new organization and staffing plan of Debt unit Deliver computer system and train staff to use and maintain it CSE to monitor delivery of computer system and training Deliver office equipment Support for the Ministry of The project funded consultant activities on trade policies and Commerce office equipment for the Ministry Advice was provided on regulatory issues in Cambodian trade relations with its trading partners and in Cambodia's membership in intemational trade agreements and organization, and on draft legislation on bankruptcy, product liability, and business organization as well as legal training for the ministry's staff During the second phase of the project, activities included advice and review of the Law on Commercial Enterprise and the Law on Commercial Contracts with coordination with the Civil Code drafting team to ensure compatibility. Advice was also provided on the draft Trade Mark legislation, drafting of the implementing regulations on related commercial trade organizations. A study was also completed on the legal implication of the proposed Cambodia's accession to WTO Support for ASEAN unit A legal advisor was funded to assist MEF in the process for Cambodia's membership to ASEAN Later on, modest support was allocated to this unit to assist on tariff policy and other issues in economic integration with ASEAN and also with the application process to WTO. But due to the inability to conclude the contract with the consultant, the intended work was not carried out. Custom Management Strengthening of the customs administration - continuing the work previously financed by UNDP. Consultants assisted in establishing a revised regulatory framework and procedures for customs revenues collections and recommendations for its implementation. Advice on strengthening anti-smuggling activities and a report on strategy to increase revenue through customs were also provided. Civil Service Management Reform - Assist in administration reform Recruit: This component funded consultant services to study options - Develop strategy for reducing the size - Consulting firm to reduce the size of the civil service on the basis of a of the civil service and PE sector - PE Adviser voluntary departure program in May 1996 There was no feedback from the govemment on this report and this sub- Conduct PE audits to determine component was closed in May 1997. redundant employees Collect data on household The second phase, consisting of helping the govemment to income and expenditures implement the voluntary departure program, was not Propose a new civil service implemented due to the political sensitivity in advancing the remuneration policy civil service reform agenda at the time. Submit departure scheme proposals to the govemment Instead, the project supported the work on civil servant Study the cost of departure census, which was completed in 2001 after delay. The report schemes on civil servant census and on functional analysis of Study new pension plan and activities was presented to the CG meeting of donors in social security systems 2001. -40 - Assessment of the restructuring Consultants were provided to assess the prospect for prospect for SOEs under the restructuring SOEs under the Ministry of Commerce, supervision of the Ministry of including design of strategy for privatization and liquidation Commerce. of SOEs which are private and commercial in character Assistance in the design of the strategy to privatise or liquidate those enterprises with no public rationale. Provided recommendation regarding the reorganization of the ministry. Designed and conducted training programs for the ministry's officials Support for the reintegration of war Support was provided for the implementation of the veterans Cambodian Veterans Assistance Program However, the activities were suspended after the withdrawal of one donor Demobilization advisory services The pilot demobilization program, funded by the project during its second stage, was completed Activities also included an evaluation of the program and support for the full-scale demobilization of the program. B. Legal Assistance for PSD - Develop certain key elements of Recruit The LRU was established in August 1997 as a technical unit enabling legal environment for PSD - Legal Adviser to CJ to the Council of Ministers, finalization of its organizational - Strengthen capacity for legal drafting - Legal Adviser to ITC structure and formulation of the TOR and training - Legal experts for diagnostic Developed work program study and training needs Legal diagnostic study - TOR completed in May 1999 and assessment (CJIMOJ/MOC) study completed in 2000 after much delay A steering - Legal experts for legal committee was set up and by the govemment and drafting and training master arrangements were made for the preparation of the plan (CJIMOJ) govemment strategy for the development of the legal and - Legal specialists for Official judicial sector in Cambodia Joumal and jurisprudence Legal training for civil servants - on going (COMIMOJ) Publication of legal opinions - on going - Institutional Specialist (CJ) Development of training materials - on going Provide Review of laws developed by foreign experts -- incomplete Office and printing equipment Development of core legal text -incomplete Established a legal reform unit The legal component of the project did not become (LRU) operational until the mid-term review There was also Adopt official statement on considerable confusion in this component as no less than five priority economic and financial agencies shared responsibility for the execution of these laws activities Carry out legal training needs assessment The LRU was less active in the legislative reform process Prepare/carry out time-based that was originally anticipated and was a concern for masterplan for legal drafting and supervision mission. This component was rated as training unsatisfactory in the last PSR. Prepare and carry out action plan to re-establish Official Journal Prepare and carry out action plan to establish system for codifying judicial decisions. Formulate action plan for developing a body of jurisprudence Deliver office computer and printing equipment and train staff to use and maintain it Support for the Ministry of See above. Commerce Support for the Legal Department of A small amount of official equipment support was provided MEF to this unit. C. Training for Public Finance - 41 - Management - Provide a suitable venue and Recruit The Economic and Finance Institute (EFI) building was environmnent for training - Training Coordinator completed in May 1997. Build EFI began its operation in 1998. - Training facility EFI provided major training activities and resource development Finalize study and plan for EFI cooperated with national and intemational institutions training facility building EFI is a functioning training facility serving the MEF staff. Complete construction of training facility During the second phase of the project, EFI became the Prepare courses for staff to be central focus for the capacity building activity at the MEF. trained at the facility EFI began to fulfil its mandate of training civil servants Monitor training activities of while tmproving its facilities Efforts toward the end ofthe project consultants project focused on EFI's sustainability in the future Support for the Cambodian Limited assistance was provided to the Cambodian Development Council Investment Board of the CDC Support for Forest Management This component to assist the government in forest management was added in May 1996 during the first annual review. The objective was to provide assistance to the Secretariat of the National Committee for Forest Policy in the formulation of a long-term forest policy with the preparation of studies on: (i) forest concession management; (ii) forest policy reform; .(iii) legal counsel services; and (iv) logging control and log verification. These reports were the only activities in this additional component. Support for the National Bank of In 1990, the project received a request for funding Cambodia from the National Bank of Cambodia to complete the task of restructuring and modernizing its accounting system. The TA project provided continuing support to this process which was initiated and implemented in the past three years by the central bank of Belgium. This also included training and knowledge transfer for the computerized accounting system management and reporting and related activities. Support for the National Assembly The project supported the National Assembly's Secretariat General to strengthen staff capacity in reviewing draft legislation through a training program and advisory assistance. The training program was provided by international experts on issues in constitutional laws. Advisory assistance was provided to NA commissions and members of the Parliament for a senes of draft laws on land and fixed assets, proposal on human rights, AIDS prevention, mineral ore management, financial agreements between Cambodia and OPEC. Technical advice was also provided to the National Assembly's President and the Secretary-General. D. Study Fund - Finance priority studies/activities not Recruit For the first phase of the project, there were only three clearly identified at appraisal or in - Aid Coordinator Adviser in studies commissioned strengthening the institutional areas not covered under Project CDC framework for the water supply project to be financed by Aid coordinator to prepare rules multilateral and bilateral donors; study on the issue of power for study fund management sector regulation and pricing for Electricite du Cambodge; Prepare TORs for and the stock exchange study on the preparation toward the studies/activities to be finance by establishment of a security commission in Cambodia. Fund Ensure best possible use of I studies - 42 - Project Management Unit - Project Management Unit (PMU) Appointed/recruited: - Financial Unit (FU) - Project Coordinator - Project Administrator - Project Accountant - Project Adviser - Support Staff Provide - Office equipment and fumiture - Vehicles The PMU was set up with The PMU served as the principal body that oversaw the responsibilities for overall implementation of the project During this period, it suffered management, administration and from an unclear mandate as it was unfamiliar with individual coordination of the responsibilities and its relations with MEF counterpart staff. implementation of the project There were delays in handling requests from participating - established the special ministries and agencies There were errors in processing account for the project at the contracts and lack of consistency in recruitment standards National Bank of Cambodia; and remuneration for consultants. - coordinated the day-to-day PMU staff were at time overwhelmed with requests from line activities of PMU; ministries due to the multifaceted complexity of the project. - monitored work progress of the project's components and acted as interlocutor with other components at line ministries; - organized meetings of project implementation team, - provided accounting, disbursements, and procurement of goods and services according to the Bank procurement guidelines, - provided project status reports and other related services. The Financial Unit - Monitored financial and accounting situation, including physical inventory - Provided relevant information and training to line ministries and other implementation agencies. Source World Bank staff IMAGING Report No.: 23664 Type: ICR