National Policies and Strategies in Preparation for Graduation. Cambodian team: Dr. Runsinarith Phim and Dr. Ribaun Korm

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1 National Policies and Strategies in Preparation for Graduation from the LDC Category Cambodian team: Dr. Runsinarith Phim and Dr. Ribaun Korm November 2017, Thimphu, Kingdom of Bhutan Disclaimer: This reflects the view of the presenters and does necessarily not represent the views of the Royal Government of Cambodia

2 Contents: 1. Institutional framework used for national macroeconomic modelling Purpose Roles 2. GDP by production 3. Other approaches and models Data sources, assumptions, number of indicators & technical specification 4. Application of models results for actual policymaking & implementation, with key challenges facing policymakers. 5. Initiative for the establishment of a macro modelling for achieving 2030 agenda for SDGs at the national level. Integration SDGs into macro modelling progress Summarize framework with a list of indicators and data required for modelling/monitoring the SDGs 6. ESCAP support 2017/11/14 16 Cambodia 2

3 1. Institutional framework Macro modelling Statistics Law 2017 (Article 4) Statistical activities shall be guided by the following objectives: 1. Supporting the statistical data requirements of RGC policymakers in formulating and evaluating economic and social policies & programs. 2. Facilitating the development of an effective and efficient National Statistical System. 3. Enhancing public awareness of the importance of the role and function of statistics in national development programs. 4. Encouraging the development of methodology and technology in statistical activities. 2017/11/14 16 Cambodia 3

4 1. Institutional framework Macro modelling Ministry of Planning (MOP) 2017/11/14 16 Cambodia 4

5 1. Institutional framework Macro modelling Ministry of Economy and Finance (MEF) Forecast medium term macro indicators Key Indicators Real GDP growth rate Agriculture Industry Service GDP per capital (USD) 1,036 1,139 1,237 1,347 1,451 1,579 Inflation (%) Exchange rate per USD Total budget revenues (% GDP) % people below poverty line (Cambodia) % people below poverty line (Phnom Penh) % people below poverty line (Other urban) % people below poverty line (Rural) Source: National Strategic Development Plan (NSDP) (2014) 2017/11/14 16 Cambodia 5

6 2. GDP by Production (Current Approach) 1. Agriculture sector 2. Industry and service sectors Basic equation: V=P*Q V t+1 = V t * (1 + %ΔV) 2017/11/

7 2. GDP by Production (Current Approach) Agriculture sector To forecast change in value at current and constant prices based on data from Agriculture Ministry for: Crops Forestry Fishery Basic equations: %ΔV t1 = (P t1 *Q t1 )/(P t0 *Q t0 ) (Current price) %ΔV t1 = (P t0 *Q t1 )/(P t0 *Q t0 ) (Constant price) 2017/11/14 16 Cambodia 7

8 2. GDP by Production (Current Approach) Industry and Service Sectors (not available data for direct forecast) Production function Q = ƒ(k, L, A) Where Q: real output, K: capital, L: labor, A: technology Exceptional function in Cambodia g = s/k Where g: growth rate of sub sectors s: saving ratio (s = S/Y or s = I/Y) k: ICOR (incremental capital output ratio) that measures the efficiency of investment (k= I/ΔY) inefficient when ICOR become larger Y: income (GDP) I: Investment of each sub sectors (I t+1 = 20% I t % I t % I t ) 2017/11/14 16 Cambodia 8

9 2. GDP by Production (Current Approach) Sector Aggregation Agriculture, Fishery and Forestry Crops Livestock and poultry Fisheries Forestry and Logging Industry Mining Manufacturing Food, Beverage and Tobacco Textile, Wearing Apparel and Footwear Wood, Paper and Publishing Rubber Manufacturing Other Manufacturing Electricity, Gas and Water Supply Construction Services Trade Hotel and Restaurants Transport and Communication Finance Public Administration Real Estate and Business Other Services 2017/11/14 16 Cambodia 9

10 3. Other approaches of macro forecasting Short term forecast techniques by other institutions (WB, ADB, CDRI) 1. Trend 2. Moving Average 2017/11/14 16 Cambodia 10

11 4. Application of model results for actual policymaking Forecasted/projected GDP growth rate & poverty reduction rate are used to guide multi year sectoral policies of line ministries and line agencies. Forecasted/projected GDP growth and inflation are used in designing annual budget law. Inflation rate is used to determine minimum wage negotiation in garment industry and used by some in private sector as a ground for salary increment. 2017/11/14 16 Cambodia 11

12 5. Macro Modeling for 2030 Agenda SDGs at the National Level Some Progresses in SDGs Localisation Coordinated by the Ministry of Planning, the localisation process of SDGs in Cambodia by starting with the review of goals, targets and indicators, assessing the achievement & unfinished goals of the CMDGs & determining the localisation mechanism. SDGs localisation may be completed in by the end of 2017 and CSDGs may include one additional goal & three targets on demining. A lot of coordination with line ministries to review the goals and targets for their respective sectors but the main difficulty is the availability of data to establish the baselines and targets. 2017/11/14 16 Cambodia 12

13 5. Macro Modelling for 2030 Agenda SDGs at the National Level Some Initiatives to Integrate SDGs into Modeling In 2016, UNESCO Bangkok organized a workshop for Cambodian officials on the country s education simulation modeling to help Cambodia accelerate efforts to meet its SDG4 Education 2030 commitments. Eight senior education planners from Cambodia worked with UNESCO to develop a simulation model called Cambodia Analysis and Projection Model and EPSSim (Education Policy and Strategy Simulation) /11/14 16 Cambodia 13

14 5. Macro Modeling for 2030 Agenda SDGs at the National Level Process of modeling 1. Collecting and inputting baseline data Demographic data Macro economic data School, pedagogical data 2. Outlining policy assumptions and targets Enrolments (including intake and flow rates) Educational personnel and materials use (including utilisation rates and student/teacher ratios) Financing (including unit costs) 3. Generating projection results Educational outputs Financial implications 2017/11/14 16 Cambodia 14

15 6. ESCAP support Macroeconomic forecasting model is very useful in providing alternative future projection for assisting policy makers to choose. Forecasting tool provides a powerful empirical evidence to convince policy makers formulate policy. The capacity building on macro modeling for SDGs is needed for Cambodia. 2017/11/14 16 Cambodia 15

16 THANK YOU FOR YOUR ATTENTION! 2017/11/14 16 Cambodia 16