Ministry of Economy and Finance

Consultative Meeting on
Draft Sub Decree on
The Establishment and Functioning of
Sub-National Investment Fund

29 April 2015
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Content
1.

Background

2.

What is SNIF?

3.

The Main Points in Draft Sub

Decree

1. Background
The Royal Government of Cambodia is implementing
National Program for Sub-national Democratic
Development
(NPSDD).
And,
the
three-year
Implementation plan phase two (IP3-2) has set
establishment of sub-national investment facility as
reform target. In this regard, Ministry of Economy and
Finance, together with NCDD-S, and other relevant
stakeholders have prepared draft sub-decree on the
new financing mechanism in order to promote more
socio-economic development at the sub-national
level by financing high quality and strategic public
investments by Sub-National Administrations.

2. What is SNIF?
Main Operation in SNIF
Source of Fund

SNIF Management

Beneficiaries

SNIF
Govt

Management
mechanism

DPs

Capacity
Building
Capital/Provinces

Investment
Budget

D/M
C/S
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3. Main Points in Draft Sub Decree

This draft sub decree has 9 chapters, 35 articles as follows:

Chapter 1: General Provisions

The Sub-Decree aims to determine the establishment and

functioning of Sub-National Investment Fund (SNIF) to achieve
two policy objectives (1) To promote socio-economic development at
the sub-national level by financing high quality and strategic public
investments by Sub-National Administrations and (2) To provide SubNational Administrations with incentives to improve their overall
performance and public investment management.

The purpose of the sub-decree is to define the legal framework for

managing Sub-National Investment Fund in a manner consistent with
the National Program for Sub-National Democratic Development.

The scope of the sub-decree is to cover the management of SubNational Investment Fund of Capital, Provincial, Municipality, District,
Khan and Commune and Sangkat Administrations.
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3. Main Points in Draft Sub Decree

(cont)
Chapter 2: Sources of Fund
The sources of Sub-National Investment Fund include:
o Contributions from the recurrent revenue of the
national budget (X%)
o Contributions from development partners and
financial institutions under the framework of
cooperation financing
o Any other resources as permitted by laws or
regulations
The resources shall be divided into two components
as follow:
o Public Investment component
o General administrative operation cost of SNIF
Secretariat component
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3. Main Points in Draft Sub

Decree (cont)
Chapter 3 : The Management of Fund
SNIF governed by Sub-National Investment Fund Board(SNIF
Board) and had a SNIF Secretariat as its secretary.
SNIF Board is composed of:
Minister

of Ministry of Economy and Finance

Chairperson
Secretary of State of Ministry of Economy and Finance Deputy Chairperson
The Representative of Ministry of Interior
Deputy Chairperson
The Representative of NCDD-S
Member
The Representative of the Office of the Council of Ministers
Member
The Representative of Ministry of Planning
Member
The Representative of Ministry of Rural Development
Member
The Representative of Ministry of Public Work and Transport
Member
..
..
..

3. Main Points in Draft

Sub Decree (cont)

SNIF Secretariat:
The SNIF Secretariat is accountable to SNIF Board
with regard to establishment and functioning of the
Secretariat.
The SNIF Secretariat shall consist of three units, as
follows:
The Finance & Administration Unit
The Operations, Outreach and Communications
Unit
The Legal Affairs, Policy and Monitoring Unit
Internal auditor
The role and duties of each unit shall be determined
by decision of SNIF Board.
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3. Main Points in Draft Sub

Decree (cont)
Principle Functions:

To ensure the effective and efficient

management of the Sub National Investment
Fund.

To provide the SNIF Board with administrative

and other services as required.

3. Main Points in Draft Sub

Decree (cont)
Duties:
Vis--vis SNIF Board:
Manage and implement the activities of the SNIF in accordance with
the policies, instructions and decisions of the SINF Board and in line
with approved SNIF procedures and the SNIF Operation Manual
Prepare, organize and keep minutes of the meetings of the SNIF Board
Provide the SNIF Board with regular progress and financial reports for
review and approval
Provide the SNIF Board with other documentation as requested
Submit annual work plans, annual investment financing plans and
annual budgets to the SNIF Board for review and approval
Submit the SNIF Operational Manual and any revisions and/or updates
to the SNIF Board for review and approval
Submit to the SNIF Board for resolution any emerging issues of policy
or strategy regarding the functioning of the SNIF

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3. Main Points in Draft Sub

Decree (cont)
Vis--vis SNIF (internal):
Updating and revising the SNIF Operational
Manual and related procedures.
Liaison and coordination with concerned
line ministries/departments, national
agencies, provincial authorities and
development partners.
Mobilization of external sources of funding.
Maintain accounts for all SNIF operations
and activities.
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3. Main Points in Draft Sub

Decree (cont)
Vis--vis SNAs:
Ensure that Sub-National Administrations are fully informed of the SNIFs operating
procedures, activities and financing decisions.
Provide national and sub-national stakeholders with orientations regarding SNIF
objectives and operational procedures.
Publicly disclose information about the SNIF and its activities, in accordance with the
Sub Decree on the Establishment, Operations and Administration of the SubNational Investment Facility.
Organize and coordinate capacity development activities aimed at improving access
to and use of SNIF resources on the part of Sub-National Administrations.
Assess and verify the compliance of Sub-National Administrations with SNIF access
requirements and select eligible Sub-National Administrations.
Receive and appraise investment proposals submitted by eligible Sub-National
Administrations, and maintain communications with these Sub-National
Administrations regarding these proposals.
Select acceptable Sub National Administration investment proposals which meet
agreed quality criteria.
Manage the release and disbursement of funds to eligible Sub-National
Administrations in accordance with the Royal Governments public finance
regulations.
Monitor and evaluate the implementation of sub-national investment projects
financed by the SNIF.

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3. Main Points in Draft Sub

Decree (cont)
Responsibility:
The SNIF Secretariat is solely accountable to
SNIF Board.
The Head of the SNIF Secretariat shall be
responsible and accountable to the SNIF Board
with regard to functioning of the Secretariat.
In the event that there is any duty related to
policy or overall strategy, the Head of the
Secretariat shall request advice and
instruction from the SNIF Board.

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3. Main Points in Draft Sub

Decree (cont)
Chapter 4: Receive and Allocation of Fund

Public Investment component is divided into two

subcomponents: core subcomponent and noncore subcomponent.
The core subcomponent shall be implemented in
accordance with the principle as defined in this
Sub Decree.
The non-core subcomponent or other conditions
that are not inscribed in this sub-decree shall be
implemented based on SNIF board decision.

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3. Main Points in Draft Sub

Decree (cont)
After Annual Performance Assessment (APA),
eligible Sub-National Administrations (SNAs)
will be informed preliminary drawing right
from the SNIF. Eligible criteria of SNAs shall
be determined by Decision of SNIF Board.
The annual resource allocation of core
subcomponent of Public Investment
component to eligible SNAs shall be based
on a formula to ensure equity and
transparency.

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3. Main Points in Draft Sub

Decree (cont)
The core subcomponent of Public Investment component
shall be allocated to eligible SNAs based on
calculation as follows:
USD 25,000 shall be allocated to each eligible SubNational Administration
Population: X% of the remaining resources shall be
allocated to proportionate to the population of each
SNA based on the official data from the Ministry of
Planning
Poverty Index: X% of the remaining shall be allocated
proportionate to the poverty score of each SNA
(Poverty index times number of population) based on
the official data of the Ministry of Planning
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3. Main Points in Draft

Sub Decree (cont)

After receiving the official notice of the annual drawing

right which allocated from SNIF, eligible SNAs shall
prepare the project investment proposals which are
not more than the allocated drawing right. In case
SNAs may mobilize additional financing to complement
the SNIF Fund, SNAs prepare co-financed project
proposals, and then submit to SNIF secretariat to
evaluate. The criteria to evaluate the SNA project
investment proposals to receive the budget credit from
SNIF shall be determined by Decision of SNIF Board.

After 3 years of implementation, the SNIF Board will

review SNIF operation manual (including criteria and
procedure for selection of SNA investment).

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3. Main Points in Draft Sub

Decree (cont)
Chapter 5: Transfer and Use of Fund
After the investment projects were
approved, the fund allocations to eligible
SNAs form part of the Sub-National
Administrations annual budget plan.
The transfer of fund from SNIF to eligible
SNAs shall be based on the payment
schedule as instructed in SNIF Operation
Manual.
The use of allocated resource to eligible
SNAs projects shall be defined in the SNIF
Operation Manual.

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3. Main Points in Draft Sub

Decree (cont)
Chapter 6: Procurement Procedure and Payment
System
All project investments financed by SNIF shall be
implemented based on the method and
procurement procedure defined in the Law on
Public Procurement unless there is a separate
regulation.
All project investments financed by SNIF shall be
implemented based on system and payment
procedure of Sub-National Administration unless
there is a separate regulation.
The financial years ending balance of the SNIF Fund
Account shall be carried over to the subsequent year.
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3. Main Points in Draft Sub

Decree (cont)
Chapter 7: Audit on SNIF Account and
SNIF Operation
The purpose of auditing is to ensure the
accuracy of financial data, evaluation of
performance and financial procedure, and
the project implementation of SNAs. The
audit report which combined the
comments from SNAs, SNIF secretariat and
relevant agencies shall be disclosed
publicly.
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3. Main Points in Draft Sub

Decree (cont)
Chapter 8: Transitional Provisions
Ministry of Economy and Finance
shall coordinate to arrange SNIF
Board members within 30 days after
this sub decree comes into effect.
Chapter 9: Final Provisions
Any provisions that contradict this
Sub-Decree shall be abrogated.

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Thank You

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