Cambodia’s Governance Risk Assessment Reveals Need for Improved Financial Management and Procurement

A recent report by the Asian Development Bank (ADB) highlights the need for Cambodia to enhance its public financial management and procurement systems to reduce corruption and increase development effectiveness.

Key Findings

• The country-level governance risk assessment, conducted under the Second Governance and Anticorruption Plan (GACAP II), identified significant risks in public financial management and procurement.
• Weaknesses were found in budgetary planning, monitoring and evaluation, transparency, and accountability in public financial management.
• Procurement processes were criticized for corruption and lack of competition, with many government contracts awarded without proper tendering processes.

Challenges

• Lack of political will to combat corruption
• Inadequate institutional capacity to address governance risks
• Weak judiciary system
• Limited public trust in government institutions

Recommendations

• Develop a comprehensive risk management plan (RMP) for public financial management and procurement
• Improve budgetary planning, transparency, and accountability
• Promote competition in procurement processes

ADB’s Governance Assessment Approach

• The GACAP II approach provides a framework for country-level governance assessments to identify risks and develop plans to mitigate them.
• Cambodia’s first GACAP II assessment is a country-level document addressing the first phase of this cascading approach, with preliminary sector-specific risks assessed for priority sectors.

Next Steps

• The Cambodian government has welcomed the report’s recommendations and is committed to implementing reforms to improve its governance systems.
• The ADB will continue to work with Cambodia to develop a comprehensive RMP and provide technical assistance to support implementation of reforms.

Background

The assessment was based on extensive dialogue and discussions held during two field missions, as well as analysis of recent diagnostic studies undertaken in public financial management, procurement, and corruption in Cambodia. The report’s findings were presented during a recent retreat involving ADB staff and advisers involved in preparing Cambodia’s Country Partnership Strategy (CPS) 2011-2013.

Conclusion

The report highlights the need for Cambodia to address governance risks in public financial management and procurement to reduce corruption and increase development effectiveness. The Cambodian government is committed to implementing reforms, and the ADB will continue to provide support and technical assistance to help achieve this goal.