Comments on Agriculture/Rural Development in the IFAPER

National Workshop

20 October 2003

Issues

Framework for public expenditure

Quantity of public expenditure

Quality of public expenditure – composition

Quality of public expenditure – service delivery

Framework

Overall vision - Contribution of rural-based economy to growth and poverty reduction – agriculture is one important part of thisRole of different actors – public vs. private sector, ministries, levels of government in achieving visionPolicy tools – public expenditure, tax, trade, regulations, etc.Role of public expenditure - support a well-functioning, efficient, rural private sector not dependent on income transfers

Quantity

Need to better define basis for “agricultural” or “rural sector” expendituresAgricultural spending is typically about 6 to 7% in LDCs and about 3% in MDCs compared to almost 2% (?) in Cambodia – but only captures RGCNeed to improve budgetary process to capture different sources of expenditures – RGC, ODA – for strategic alignment, transparency and accountability – MTEF linked to NPRSComposition and quality matter more than quantity

Quality - composition

Focus should be on public goods (infrastructure and research) rather than subsidies – applied to donors & RGC expendituresAgricultural pricing subsidies/SOEs – WTO, “unregulated monopolies”Shift agricultural support services of private goods to the private sector – research, extension, seedsAdequate funding for recurrent costs – declines for salaries and O&M worrisome/ODA impactsConcentration of expenditures – subsectors (forestry and fisheries) and crops (rice)

Quality – service delivery

Incentives – public expenditure reform but what can be done now at ministry level?Decentralization – demand responsive services (administrative autonomy, PAP, commune/sangkat funds)Cost recovery – irrigation, services to groupsResponsibility should be accompanied by resources, flexibility and accountability

Conclusions - priorities

Define “rural economy expenditures” based on vision, institutional roles, instruments

Develop MTEF ministry by ministry and then consolidate – don’t lose accountability

Discipline RGC & donor expenditures towards public goods and recurrent costs – budget support

Align incentives of users (cost recovery) and providers (administrative and fiscal decentralization)