Cambodia
Technical Assistance Report-Government Finance Statistics

As part of Cambodia’s participation in the Japan-funded Government Finance Statistics (GFS) and Public Sector Debt Statistics (PSDS) project for selected Asian countries (JSA3),1 this mission conducted an in-country workshop (December 2–4, 2019) and provided follow-up technical assistance (TA) on GFS and PSDS (December 5–13, 2019).2 Both activities were aimed at strengthening compilation and dissemination of fiscal data in line the GFS Manual 2014 (GFSM 2014) and the PSDS: Guide (PSDSG) to support surveillance and decision making. At the request of the authorities, the TA mission participated in the inter-agency workshop on data consistency in macroeconomic statistics conducted by the Ministry of Economy and Finance (MEF) during December 5–6, 2019.

Abstract

As part of Cambodia’s participation in the Japan-funded Government Finance Statistics (GFS) and Public Sector Debt Statistics (PSDS) project for selected Asian countries (JSA3),1 this mission conducted an in-country workshop (December 2–4, 2019) and provided follow-up technical assistance (TA) on GFS and PSDS (December 5–13, 2019).2 Both activities were aimed at strengthening compilation and dissemination of fiscal data in line the GFS Manual 2014 (GFSM 2014) and the PSDS: Guide (PSDSG) to support surveillance and decision making. At the request of the authorities, the TA mission participated in the inter-agency workshop on data consistency in macroeconomic statistics conducted by the Ministry of Economy and Finance (MEF) during December 5–6, 2019.

Summary of Mission Outcomes and Priority Recommendations

1. As part of Cambodia’s participation in the Japan-funded Government Finance Statistics (GFS) and Public Sector Debt Statistics (PSDS) project for selected Asian countries (JSA3),1 this mission conducted an in-country workshop (December 2–4, 2019) and provided follow-up technical assistance (TA) on GFS and PSDS (December 5–13, 2019).2 Both activities were aimed at strengthening compilation and dissemination of fiscal data in line the GFS Manual 2014 (GFSM 2014) and the PSDS: Guide (PSDSG) to support surveillance and decision making. At the request of the authorities, the TA mission participated in the inter-agency workshop on data consistency in macroeconomic statistics conducted by the Ministry of Economy and Finance (MEF) during December 5–6, 2019.

2. The GFS-PSDS in-country workshop (attended by 41 participants) discussed in detail the GFSM 2014 and PSDSG frameworks as applied in Cambodia’s statistics. It provided the participants the opportunity to discuss practical issues of fiscal data compilation and use of GFS and PSDS in fiscal analysis, cross-country comparisons, and the International Monetary Fund (IMF) surveillance work, including monitoring economic developments and balance sheet analysis. Mr. Suhas Joshi, Regional Treasury Advisor in the IMF Capacity Development Office in Thailand (CDOT), made a presentation on the close correlation between GFS and Public Financial Management (PFM) reforms and the importance of high-quality fiscal data for an overall PFM performance.

3. At the inter-agency workshop organized by the MEF the mission provided practical guidance and recommendations on reconciling data for general government (GG) with other macroeconomic datasets. In addition, the mission reviewed the progress with compiling and disseminating more accurate GFS and PSDS; advised on improvements to the annual GFS time series; discussed the expansion of institutional coverage to include extrabudgetary units; and drew-up a work program for further GFS and PSDS development, including the compilation and dissemination of GFS balance sheets for GG.

4. The MEF is making steady progress in developing reliable, consistent, and internationally comparable fiscal statistics to support surveillance work. Its GFS team in the General Department of Policy (GDP) has compiled the 2015–2018 annual time series for consolidated budgetary central government (BCG) and local governments (LGs), and reconciled these data with fiscal data published in the Article IV Staff Report. The GDP staff compiles GFS financial balance sheets, on a pilot basis, based on the accounting data sources. The bridge table between GFS and national Table of Government Financial Operations (TOFE) (Dec 5–6, 2019) held in Kep Province; and the following week through December 13, she was joined by Ms. Mei Ling Tjung, GFS expert, for the TA mission.

5. Enhanced coordination of GFS and PSDS developments and PFM reforms is critical to ensure sustained progress. The MEF Consolidated Action Plan in Stage 3 (CAP3–2020) under government’s PFM Reform Program contains two GFS-related Key Performance Indicators: compiling GFS tables (Activity 21.3) and determining the budget deficit in accordance with GFS system (Activity 33.3). The mission suggested coordinating the Action Plan with further GFS/PSDS developments within the activities of CAP3–2020 and beyond (CAP4). During the discussion of the ongoing revisions to the 2008 Public Finance System Law, the mission advised on inclusion of specific provisions relating to GFS as part of the overall Fiscal Reporting (Pillar I of the IMF Fiscal Transparency Code).

6. Closer cooperation between statistics-producing agencies is essential to improve the quality of macroeconomic statistics. At inter-agency workshop on data consistency in macroeconomic statistics, representatives from the MEF, the National Institute of Statistics (NIS), the Council for the Development of Cambodia (CDC), and the National Bank of Cambodia (NBC) agreed on the need on enhanced cooperation. As possible first steps, the mission recommended that agencies coordinate to agree on a common institutional table listing all general government and public sector units; reconcile GFS with data on general government with other macroeconomic datasets; and formalize the inter-agency cooperation by establishing a working group with a formal Memorandum of Understanding (MOU).

7. Quarterly PSDS for the Joint World Bank (WB)-IMF database can be produced on a semi-annual basis. Official PSDS and metadata are disseminated by the MEF on a semi-annual basis in the Cambodia Public Debt Statistical Bulletin. The MEF’s GDP submitted PSDS for 2018Q1–2018Q4 and metadata questionnaires to the Joint WB-IMF Quarterly PSDS database on April 1, 2019. The data relates to gross BCG debt position covering loans and debt securities. The mission suggested that the GDP follow up on debt data publication with the WB and establish regular reporting procedures for quarterly PSDS dissemination.

8. The mission worked with officials from the GDP and the General Department of Budget (GDB) of the MEF and liaised with the IMF’s Resident Representative for Cambodia. The mission thanks the authorities for their cooperation and support. The following priority recommendations carry particular weight to improving GFS and PSDS in Cambodia:

Table 1.

Priority Recommendations

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Detailed Technical Assessment and Recommendations

A. Expanding Institutional and Data Coverage

9. The mission found that coverage of fiscal statistics remains limited and excludes extrabudgetary units and balance sheets data. Monthly and annual GFS include Statement of Government Operations and detailed tables on Revenue, Expense, and Transactions in Assets and Liabilities for BCG. GFS consolidating all three levels of LGs are compiled on an annual and a semester basis due to the complexity of consolidation between three levels of LGs. Annual GFS for general government are published on an unconsolidated basis due to the absence of reliable source data on extrabudgetary units represented by PAEs. The GDP staff compile financial balance sheets on a pilot basis but does not report it to STA and APD yet because of their work to improve the data quality is in progress.

10. The GFS team receives two types of source data for extrabudgetary units: attachment to the annual budget and the financial reports of PAEs. The attachment to the annual budget contains the main aggregates on PAEs’ transactions. Another type of reporting established by the PAE Reform Committee includes (i) execution reports on revenue and expenditure in line with the Chart of Accounts (COA), (ii) annual trial balance, (iii) trial balance adjusted after actual results calculations, (iv) end of period trial balance, (v) balance of flash estimates of advance information, and (vi) revenue estimates. By the end of 2019, 15 institutions reported expenditure reports to General Department of National Treasury (GDNT). Some of PAEs also presented trial balances. However, there are several consistency issues in these reports. Some PAEs postponed the implementation of the MEF’s accounting and reporting standards for the next year or beyond.

11. The mission reviewed the main aggregates on PAEs’ transactions and noted that the overall balance for 29 PAEs amounted to 0.66 percent of gross domestic product in 2018. To expand the institutional coverage of GFS by including PAEs the mission proposed, as a first step, using the source data available in the attachment to the annual budget (see Appendix VI). The mission also recommended that the MEF progressively improve the reliability and consistency of source data for PAEs.

Recommended actions:

  • Bridge the 2018 budget execution reports of PAEs with the GFSM 2014-based formats and compile consolidated GFS for general government.

  • Bridge the 2018 financial reports of 11 PAEs with GFSM 2014-based formats and compare the results with GFS based on budget execution data to improve the accuracy of the GFS compilation bridge tables.

B. Enhancing Source Data for GFS and PSDS

12. Based on previous missions’ recommendations, the GDP staff started using final trial balances for BCG and all three levels of LG as source data in compiling annual GFS. However, the trial balance for BCG is not available on a monthly basis; Therefore, the GDP staff compile high-frequency GFS for BCG based on Revenue and Expenditure Reports as well as some additional data, including the information about externally financed operations and on-lending. At the same time, the GFS team also continue compiling GFS for BCG based on the trial balance to better understand the differences and discrepancies between datasets. The main discrepancies relate to debt, on-lending loans, and acquisitions of nonfinancial assets, mainly arising from different exchange rate valuations applied by the different source data providers (GDNT and General Department of International Cooperation and Debt Management (GDICDM)).

13. Another issue for monthly GFS covering BCG is a difference between reports of data collection questionnaires/queries for revenue and expenditure and the posted monthly trial balance. The trial balance’s posted date means the date of including all approved monthly data in the general ledger (monthly trial balance). The questionnaire/query reports are based on the data collected before approval. All transactions are recorded in the Financial Management Information System (FMIS), but revenue and expenditure reports are based on a query and not the posted trial balance. Therefore, some data are not included in the revenue and expenditure reports based on query collections. As a result, there are discrepancies between the query revenue and expenditure data reports distributed and the trial balance. A possible solution could be to agree on a single cut-off date for the monthly data reporting after data posting to the general ledger.

Recommended action:

  • Perform internal reconciliation on an annual basis to ensure data consistency between query-based and posted data; and adjust for valuation differences among source data on loans and on-lending loans, acquisition of nonfinancial assets financed form abroad, and debt liabilities.

14. The mission addressed additional issues encountered in the annual GFS time series and provided recommendation to improve classification and data consistency. It is important for the GDP staff to map the new COA codes with GFS classifications based on the economic substance rather than national definitions. Once established, the mapping should be applied in a consistent way. The reclassification of accounts in the national COA, for example from Tax revenue to Non-tax revenue, would affect the mapping to GFS only in case the economic substance of the account changes. Any changes in coverage, source data, time of recording, valuation, and classification should be explained in the metadata. On a best effort basis, the changes should be extended back to the earliest data available to maintain data consistency (see Appendix VII for detailed recommendations).

C. Reconciling GFS with Other Macroeconomic Datasets

15. Government activity is reflected not only in GFS but also in other macroeconomic datasets. For instance, national accounts contain data on government gross saving, government final consumption expenditure, and government gross capital formation. Monetary and financial statistics (MFS) include net claims on government, government deposits, and debt securities. Broadly, the same principles and concepts are applied in GFS, national accounts, MFSs and external sector statistics (ESS). Detailed explanation on the relationships between GFS, System of National Accounts (SNA), balance of payments (BOP) and international investment position (IIP), and MFS is explained in GFSM 2014, Appendix 7.

16. Concerted efforts are needed to regularly review inconsistencies and reconcile GFS with statistics compiled by the NBC and the NIS. Discrepancies between macroeconomic datasets usually occur because of differences in coverage and sectorization, classification, valuation, and time of recording. As possible first steps, the coverage of general government and public sector units should be coordinated between all statistics producing agencies. In addition, the mission proposed basic reconciliation tables that could be populated with general government data provided through the national accounts, BOP, IIP, and MFS to support further discussion on data consistency (see Appendix V).

Recommended actions:

  • Coordinate and agree on the institutional coverage of the general government and public sector with NIS and NBC.

  • Reconcile GFS on general government financial balance sheets with the NBC-compiled statistics (MFS, BOP/IIP) on an annual basis by comparing data, identifying differences, reconciling and explaining the reasons for differences in a note of reconciliation.

  • Reconcile GFS on general government with the NIS (totals for Saving, Net investment in NFAs, and Net Lending/Borrowing), annually by comparing sources, identifying differences, reconciling and explaining the reasons in the note of reconciliation.

17. Institutional arrangements regarding responsibilities, methodology, data sharing and reconciliation by statistics producing agencies should be formalized. A MOU represents an important instrument that that strengthens the need to integrate and coordinate efforts. It is useful if the MOU makes a distinction between the Steering Committee (senior member Working Group) responsible for strategic decision making, and operations Working Groups (expert level Working Group) responsible for executing the ongoing compilation and reconciliation. Topics to consider in drafting a MOU are listed in Appendix IX to this report.

Recommended action:

  • Form a Working Group for reconciling GFS with data on general government in other datasets of macroeconomic statistics (NBC and NIS).

D. Action Plan

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Cambodia: Technical Assistance Report-Government Finance Statistics
Author: International Monetary Fund. Statistics Dept.