Donors Offer Critique of Gov’t in 2nd Quaterly Meeting

Donors praised the government Wednesday for fiscal im­provements, but criticized demobilization efforts and said more needs to be done to fight crime, corruption and illegal logging.  

At the second quarterly meeting since donors pledged $470 million in aid, German Ambas­sador Harald Loeschner, representing the European Union, said the EU is encouraged by the government’s reform progress.

“At the same time, Cambodia will have to tackle the problem of police reform, crime prevention and judicial accountability of perpetrators,” Loeschner said. He also said “demobilization has not yet really started.”

The government report to key donors stressed 1999 as a year of return to economic stability, with the economy projected to grow 4 percent after stagnating the past two years.

Government officials also noted that inflation is expected to decline from 12.6 percent in 1998 to 5 percent, and that tax revenue has increased 58 percent in the first nine months largely because of a value-added tax implemented in January.

Government officials also lauded successes in curbing illegal logging, cutting civil-service jobs and reducing poverty. The quarterly donor review meetings were set in February, when donors linked the $470 million of new aid to the implementation of reforms.

“Given the difficulties the country has been in, significant progress has been made, and we are very pleased with what we see,” the World Bank’s Southeast Asia representative Ngozi Okonjo-Iweala told reporters.

But donors identified demobilization particularly as a troublesome area.

Japanese Ambassador Msaki Saito questioned why ghost soldiers are being included in the 55,000 soldiers who are to be demobilized.

At a donor meeting in Feb­ru­ary, the government and donors agreed that 55,000 soldiers, not including ghost soldiers, would be demobilized, and the final number of remaining soldiers would be 70,000, Saito said.

“I’m wondering whether the whole scheme has changed,” Saito said. “If you have 55,000 ghost soldiers, you have no need to demobilize.”

Prime Minister Hun Sen argued that only 32,000 soldiers need to be demobilized instead of 55,000. The reduction is due to the 15,000 ghost soldiers who have been discovered and another 8,000 families of dead soldiers who receive payments from the government, eliminating 23,000 soldiers from those that need to be demobilized. Hun Sen also complained that Cambodia has not received any funds from donor countries concerning the demobilization of police officers.

Bonaventure Mbida-Essama, acting chief of the World Bank office in Cambodia, granted a request by Sok An, Minister of the Council of Ministers and head of the government’s demobilization efforts, to meet today to discuss the design of a pilot demobilization program and how to establish a safety net for soldiers who return to civil society.

Donors were given briefings by government officials Wednesday on eight topics: security and public order, economy and finance reforms, public administration reforms, forestry management, demobilization, expenditures in the social sector, the status of HIV/AIDS, external assistance and aid coordination.

Sok An told donors the number of civil servants has been reduced by 2,079 employees as part of the public administration reform efforts.

The number of people below the poverty line fell slightly to 36 percent, compared to the 1993-94 level of 39 percent, Minister of Planning Chhay Than said.

British Ambassador George Edgar, who gave a presentation on governance, said Cambodia needs to strengthen the rule of law, establish better accountability and eliminate impunity.

Loeschner said although the government has taken steps to halt widespread illegal logging, more needs to be done.

Donors also were informed the government failed to gradually slash defense and that security spending and foreign direct investment declined from $240 million in 1996 to $120 million in 1998-99, a report by the Ministry of Econ­omy and Finance stated.

One of the top priorities in public spending is to reduce defense expenditures to give more money to social sectors, such as education, health and agriculture. “However, the cash disbursement in the first nine months of 1999 has not been satisfactory in terms of policy performance,” the government report stated.

In the first nine months of the year, disbursement to the health sector accounted for only 28 percent of the budgetary target of 75 percent. However, expenditures for security and defense in­creased by 10 percent compared with the same period last year.

The Ministry of Finance said actions have been taken to make sure the budget allocated to priority sectors is not cut, and a working group has been established with the Ministry of Health to review why expenditures by provincial health officials are so far below the allocation.

To increase general revenues, the government said that ad hoc tax exemptions will be avoided, the list of taxpayers subjected to the value-added tax will be ex­panded and tax collection will be improved by implementing on-site tax audits.

Collected customs duties in­creased by 33 percent compared with the same period last year, the government reported.

To increase customs revenue further, strict disciplinary actions will be taken against customs officials who cause revenue loss by pocketing duty payments, and a unified customs and tax rate will be introduced for imported cigarettes, the government report said.

(Additional reporting by Agence France-Presse)


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