Discrepancies Abound Between Donor Pledges, Deliveries

In the excitement of the final day of last month’s Consultative Group meeting, international don­ors pledged a total of $635 million—a figure that has upset some representatives of donor countries, who now see that number as an inflated and unrealistic estimate of what Cambodia will receive in the coming months.

Considering the amount of donor criticism that was directed at the government in the days leading up to the June 21 an­nouncement of this year’s pledge, the figure was a surprise to many donors. The amount, about $150 million more than asked for by the government, should not be interpreted as a vote of confidence for the government, said Dan­iel Asplund, Sweden’s head of the development cooperation section.

It can take up to one year for a pledge to become a signed agreement, said Sok Hach, senior economist for the Cambodia De­velopment Resource Institute. And up to five years can sometimes pass by before the cash arrives in Cambodia. This is especially true for long-term projects, such as road construction, Sok Hach said.

CDRI research shows that since the international community started backing Cambodia’s reconstruction in 1992, an average of $450 million in grants and loans have been spent in the country every year.

Last year, donors and agencies reported to the Council for the Development of Cambodia that they distributed $472 million in loans and grants after pledging $615 million at the CG meeting in Tokyo. But this $472 million could be inflated—countries sometimes include in the total donor package amounts they give through UN agencies and the European Commission, whose contributions are listed separately in the CDC report.

The discrepancy between pledges and actual distribution can also be explained by the different accounting practices used by donor countries and agencies.

For example, Japan promised on June 21 to distribute $113 million during its current fiscal year 2002, which runs from April 1, 2002, to March 31, 2003. The US pledged $45 million for the coming fiscal year 2002, which begins Oct 1. And Australia pledged $22.32 million for its fiscal year, which began July 1.

Does this mean that the Cam­bodian government can expect about $450 million within the next 18 months or so? Not exactly. A large aspect of aid consists of technical assistance, which accounts for an in­creasing portion of funds, a CDRI report states.

Technical assistance usually takes the form of international ex­perts contracted to help with specific projects in all fields, from health and rural development to customs overhaul and land re­form. Their tasks include training Cambodian staff.

According to the CDRI report on technical assistance in the 1990s, this form of aid has been increasing to more than half of total grant-and-loan funding. For 2002, this would mean that more than $225 million of the pledge would be allocated to salaries and expenses for technical assistance—not direct cash support.

Of the money pledged, NGOs will get a good share. US legislation dictates that USAID, which will manage $39.5 million of this year’s US pledge, must distribute funds solely to NGOs. However, in June 2001, the US announced that it would resume $10 million in direct aid to Cambodia, which would go for AIDS/HIV awareness. Most do­nors fund a certain number of NGOs, often favoring ones based in their own countries.

Experts and NGO sources estimate that a minimum of $80 million should go to NGOs this year.

The type of funding that leaves the most control to the Cambo­dian government is structural adjustment credit, Sok Hach said. At the end of last year, the World Bank had given the government $16 million of the $30 million credit approved in Feb­ruary 2000.

The $75 million loan package announced at the CG meeting in June is strictly for programs, and does not include a credit, said World Bank representative Bona­venture Mbida-Essama.

Most agencies and donor countries have set up accounting and audit safeguards.

“Corruption in many donor-funded projects is likely more difficult than in other government projects because of donors’ scrutiny,” said Russell Peterson, representative for NGO Forum.

 

 

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