Unlocking Capacity and Revisiting Political Will: Cambodia’s Public Financial Management Reforms

Abstract

Over the past several years the Royal Government of Cambodia has successfully and consistently been implementing its Public Financial Management Reform Program (PFMRP), which has focused on improving the credibility of the budget while reducing fiduciary risk. This outcome is surprising not only because of the well known difficulties of implementing ambitious PFM reforms in low income, post-conflict countries, but also because most other reform programs in Cambodia have either failed or stalled, including an earlier effort at PFM reform (2001-2004). The paper develops a case study of the PFMRP (using the methodology in Barzelay et al., 2003) and argues that the success of the PFMRP is due to the way in which it was developed. The central hypothesis probed is that the public management processes and techniques that led to the development of the PFMRP are the same ones that explain its successful implementation. These include: a joint government-donor analytical process to define the problem and build consensus, an agreed reform vision and action plan, a pilot civil service reform in the Ministry of Finance to address capacity constraints, and formal coordination mechanisms for government and donors. The paper disputes the dominant hypothesis that the change was related to 'political will,' instead focusing on how public management solved the problem. The conclusion offers lessons on designing reform programs (in terms of public management processes and strategies) that may be applicable to other countries.