Cambodia - Public expenditure tracking survey (PETS) in primary education

Weaknesses in Cambodia's public expenditure management system-including the difficulty in channeling funds down to service providers-have resulted in costly inefficiencies in the effectiveness of expenditures in improving social welfare outcomes (World Bank, 1999 PER and 2003 IFAPER). In response to these problems, the Royal Government of Cambodia (RGC) initiated implementation in 2000 of the Priority Action Program (PAP), intended to delivery resources to front line service delivery units in the priority sectors in a timely manner. The introduction of the PAP in education also represented a major change in terms of resource allocation and education sector strategy. The PAP education was launched in 10 provinces in 2000, and expanded to cover all provinces in 2001, and, it shifted the focus of education policy toward basic education, in general, and demand-side constraints in particular. The assessment of the primary education PAP 2.01, which provides for schools' operational budgets, and accounts for over one quarter of the entire PAP budget in education, is the subject of this report, which is based on a survey of two hundred schools in seven provinces carried out in 2004. The survey found that reported leakage in PAP 2.1 is low, but also found that the PAP system is characterized by low quality record keeping, thereby limiting the robustness of the empirical findings on leakage. In terms of total PAP, there is no reported leakage of funds between Provincial Treasuries (PTs) and Provincial Offices of Education (PEOs). There is also evidence of low leakage of PAP 2.1 funds in terms of what District Offices of Education (DEOs) receive from PEOs, and what schools receive, over the 2000-2002 period, but this finding is not very robust since the survey found that the quality of official, required PAP records is low, especially at the school and district levels. The poor quality of record keeping, including low reliability of receipting records and spending books, and weak monitoring and inspection of PAP implementation, must be taken into account when interpreting all the reported results. The introduction of the Priority Action Program represented a major change in terms of sector strategy, budget formulation, and resource flow. As such, a comprehensive assessment was needed to analyze the impact in terms of providing resources to schools in a timely, and predictable manner, making sure those resources are used as intended, and improving education outcomes. The challenge for Ministry of Economy and Finance (MEF) is to mainstream PAP, building on the lessons learned thus far, into the cornerstone of a medium term financial de-concentration program. However, at the same time, MEF recognizes, and this report shows, that improvements in the design of PAP are necessary before it is mainstreamed. The report concludes with a summary of the key issues and recommended actions.