Ministry of Economy and Finance

Cambodia

December 2019

Revenue Mobilization: The Case of Cambodia

1

Content

1. Cambodia's public financial system

• Revenue Mobilization Strategy 2019-2023

• Budget System Reform Strategy for Sub-National Administration 2019-2025

2. Revenue Mobilization for Municipal Finance

2

Cambodia's public financial system

3

Public Financial Management Reform Program (2004-2025)

Budget credibility(2004-2008)

FinancialAccountability

(2009-2015)

Budget-policy linkages

(2016-2020)

Accountability(2021-2025)

PFMRP Stage 3: “Budget-policy linkages”

4

Budget System Reform Strategy 2016-2025

Revenue Mobilization Strategy 2019-2023

Public Procurement System Reform

Strategy 2019-2025

Budget System Reform Strategy for Sub-

National Administration 2019-2025

Revenue Mobilization Strategy 2019-2023 (Vision, Objective, Targets and Approaches)

5

6

effective and efficient revenue

collection

effective and efficient revenue

collection

improve investment climate and re-

orient investment direction

improve investment climate and re-

orient investment direction

strengthen competitiveness

strengthen competitiveness

promote economic diversification

promote economic diversification

Modernizing tax and non-tax revenue administration and policy

Vision: Transforming the national revenue system to be modern that can respondto the development needs and the changes of social-economic structure.

Vision & Objective

Targets & Approaches

Maintain revenue

sustainability at optimal

level

Ensure sustainable economic

growth

Ensure fairness

Ensure social equity

7

• at least 0.3 percentage points of GDP• Improve service quality and productivity

Approaches

Budget System Reform Strategy for Sub-National

Administration 2019-2025

8

Cambodia: Sub-National Administration (SNA)

9Source: PEFA of Phnom Penh Capital Administration (2019)

National Programme on Sub-National Democratic Development (NP-SNDD) 2010-2019 :“delivery of core services” 1. central government (ministries and provinces)

2. sub-national authorities (mainly districts and municipalities)

10

Ministry of Economy and Finance six fiscal transfers instruments:• District/Municipality Fund (DM Fund),• formula-based provincial transfer

mechanism• Commune/Sangkat Fund (CS Fund),• Sub-National Investment Fund (SNIF),• Conditional grants• Own-source revenue

Fiscal Decentralization Framework (1/2)

Source: PEFA of Phnom Penh Capital Administration (2019)

Transfer Functions& responsibility0101

Own source revenue0202

Fund Transfer0303

Fiscal Decentralization Framework (2/2)

• No Borrowing and bond issue• Capital and provincial

administration follow zero-budget balance approach

• Recent tax revenue decentralization (Property tax) though collecting procedure is prepared by tax administration (GDT)

11Source: PEFA of Phnom Penh Capital Administration (2019)

Fiscal and Budgetary of SNA

Revenue ofSub-national level

Expenditure of Sub-national level

Current Ex

Capital Ex.

1. Current revenue (Tax & Non-tax)

2. Subsidy from National level

12

Budget Balance

SNA Revenue Collection

• Patent tax • Stamp registration tax• Tax on means of

transportation• Public Lighting tax• Accommodation tax• Tax on unused land• Tax on property rental • Property tax

13

Public service-related fee &

charge

Royalty

Tax Revenue Non-Tax Revenue

Sub-National Budget System Reform Strategy 2019-2025 (1/2)

14

Regulations Law on Public Finance System (2008) & Law on Finance and Property Management of Sub-National administration (2011)

Target Aligned with Budge System Reform Strategy 2016-2025:(Program budgeting, budget-policy linkage, etc)

Development Plan 5 year-development plan & 3-year rolling investment programs

Modernization Budget strategy plan, program budgeting and Financial Management Integrated System (FMIS)

Service coverage One-stop services cover 14 sectors (education, health, industry, etc)

Revenue Mobilization for Municipal Finance

(Phnom Penh Capital Administration)

15

Overview of Phnom Penh Capital

• Area: 679 Km2

• Population: 2.12 millions • Men: 1.03 millions • Women: 1.09 millions

• No of Household: 399, 203 • Density: 3,136 persons/Km2• Khan: 14• Sangkat: 105• Village: 953 

16

17

Budgetary FrameworkPhnom Penh Capital Administration revenue source:• Non-tax revenue and tax revenues• Conditional grant • subsidy from central government.

Source: PEFA of Phnom Penh Capital Administration (2019)

18

Decentralization

Source: PEFA of Phnom Penh Capital Administration (2019)

• Environmental education (2018)• Orphanage Center (2019).

Functional transfer

• “one window service” offices capital/provincial and municipal/district/khan administrations

Administrative transfer

• Tax on property rental (2017)Revenue transfer

• 5 year-development plan & 3-year rolling investment programs: “Preparation and Developing the PIP”: (7 classifications)

• No interference form central on communes/Sangkat budget preparation.

Budget preparation