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Describes the preliminary findings of IMF staff at the conclusion of certain missions (official staff visits, in most cases to member countries). Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF's Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, and as part of other staff reviews of economic developments.

Cambodia--Aide-Mémoire

Joint World Bank/International Monetary Fund Mission for PRSP Workshop

April 26, 2001

A World Bank/IMF mission visited Cambodia to co-sponsor the Poverty Reduction Strategy Paper (PRSP) workshop on April 25-26, jointly with the Royal Government of Cambodia (RGC). The mission is pleased that the workshop was well attended with some 150 participants from various Government ministries and agencies, Parliament, donors, NGOs, the civil society, and the private sector in attendance. The mission believes that the workshop was fruitful in enhancing awareness on poverty reduction, clarifying questions on the PRSP, taking stock of the progress made so far, identifying gaps toward PRSP preparation, and setting out the next steps. The mission would like to thank the RGC, and the Ministry of Planning in particular, for their efforts to make this workshop a success. This Aide-Mémoire reiterates key messages for the RGC in terms of the content and process in moving towards the full PRSP, and proposes next steps to build on the momentum created at the workshop toward developing a nationally owned and fully participatory PRSP.

Flexibility on Content and Timing

The mission would like to reiterate that the World Bank and the IMF are flexible on the content and timing of the PRSP so that it can be a useful and effective tool. It is up to the RGC to decide what goals, what policies, and what measures are to be included in the PRSP, based on inputs from various stakeholders. As long as the strategy is focused on reducing poverty and promoting growth, sets out priorities consistent with macroeconomic and fiscal constraints as well as implementation capacity, and is put together in an open and participatory process, a PRSP could take a variety of forms in terms of structure and substance. The guidelines for Joint Staff Assessments of full PRSPs, which were distributed in Khmer and in English and presented at the workshop, emphasize this flexibility at the country level.

Since this is inevitably a complex and evolving process, the mission recommends that the RGC take the time needed to prepare the first full PRSP. The December 2001 date set in the Interim PRSP can be postponed, as long as there is reasonable and continued progress, and there are clear milestones against which progress can be assessed, through regular progress reports.

Participatory Process

The process of the PRSP preparation should be as open and participatory as possible. First, the whole Government needs to be fully involved. In particular, it is critical for core agencies, such as the Ministry of Economy and Finance, to be fully involved for the sake of fiscal consistency. It is crucial for line ministries, in particular the social sector, agriculture, rural development, and commerce ministries, to be also fully involved so that the PRSP can build on sectoral diagnosis, strategies, and action plans already developed or under preparation. It is also essential for the National Assembly and the Senate to be involved in the review process.

The mission recommends that the RGC establish an effective, extensive, two-way participatory process with NGOs, civil society, the private sector, donors, and the poor themselves to ensure that the PRSP reflects the consensus of the Cambodian society as a whole. This participatory process would need to go beyond circulating draft documents for comments. A participatory process would need to be extended to eliciting views and priorities of key stakeholders outside and within the RGC at an early stage. One useful tool for making participation effective, yet timely, could be the setting up of a public website, in Khmer and in English, where relevant current documents would be readily available and to where comments and suggestions could be directed.

Socio Economic Development Plan, 2001-2005 (SEDP II) and PRSP

The mission would like to re-emphasize that the PRSP is not an isolated document. Rather, the PRSP preparation should take advantage of relevant information, strategies, and other materials already available to address poverty. The mission welcomes the indication by the Ministry of Planning that the PRSP will be consistent with the Socio Economic Development Plan, 2001-05 (SEDP II) and build on the information and analysis contained in the SEDP II.

The mission endorses the RGC's intention to build on the work done for the SEDP II to prepare the full PRSP by doing the following additional work: (i) prioritizing economy-wide and sectoral policies and choosing measures to be implemented in the first, second, and third years; (ii) fully costing the public expenditure interventions and programs envisaged under the strategy to ensure that they can be financed; (iii) establishing systems for monitoring outcomes; and (iv) undertaking an extensive participatory process, including consultations with the poor.

The mission understands that the RGC has two options. One is to submit the current draft SEDP II to the Council of Ministers in early May, and to the National Assembly and the Senate in early June for approval. If that is the case, the full PRSP will be a separate document from the SEDP II, but part of the same process. The other option is for the RGC to take more time (i.e. delay submission of the SEDP II to the Council of Ministers) and make the SEDP II more comprehensive (by completing actions (i)-(iv) above), thereby submitting a more comprehensive SEDP II to the World Bank and the IMF (in lieu of a separate PRSP document). The mission confirms to the RGC that either option is acceptable to the World Bank and the IMF, and it is up to the RGC to choose one of them.

Technical Assistance Needs

The process and content associated with a full PRSP entail a lot of human resource capacity and know-how. A list of technical assistance needs could be updated and presented to donors for their consideration. Donors are keenly interested in the preparation and implementation of a PRSP that reflects the key principles of ownership, poverty focus, and participation. The RGC should not hesitate to avail itself of this good will.

Institutional Arrangements

While the Ministry of Planning has been designated as the coordinator for the PRSP's preparation, institutional arrangements need to be further clarified and strengthened to ensure full participation from the whole Government, especially line ministries, Parliament, NGOs, civil society, the private sector, donors, and the poor themselves. In this regard, the newly established Council for Social Development under the Supreme Council for State Reform, chaired by the Minister of Planning and comprising representatives from eleven ministries, could play a catalytic role.

Next Steps

The Consultative Group meeting in Tokyo, scheduled for June 11-13, 2001, provides the next important occasion for the Government to interact with donors on the PRSP process. It would be advisable to take opportunity of this gathering between the RGC and the donor community at the highest level to make good progress toward the PRSP. In this context, the mission recommends that the RGC prepare a document presenting the progress made in preparing the SEDP II and the PRSP, dealing with internal coordination, the organization of the participatory process, a timetable of actions to be undertaken, milestones to assess progress, and technical assistance needs.

The mission will prepare a summary of the sectoral sessions at the workshop in order to capture the results of the discussions. The mission also undertakes to provide detailed comments on the draft SEDP II by May 20, 2001, with a view to identifying further work that needs to be done in each sector toward the completion of the PRSP. The World Bank and IMF staff will seek to coordinate fully and constructively with other external partners, including the Asian Development Bank.