Economic Reforms Needed for Aid to Resume

By Van Roeun

The key for Cambodia to get international aid back will be a de­monstrated effort at economic reform, the country’s top finance official said Friday.

“The better the reforms, the more aid packages we will have coming in,” Finance Minister Keat Chhon told ministers and senior officials from various ministries Friday in a strategy meeting at the Council for Devel­o­p­ment of Cambodia.

“We may have to struggle to get aid packages and loans, but we also have to be accountable for them.”

In particular, the finance minister named sustainable forestry management, public administration reform, the demobilization of the military and demining as areas the country needed to focus on.

“We have to highlight these special points to garner loans,” Keat Chhon said.

A Consultative Group for Cam­bodia meeting scheduled for October was postponed because of the political deadlock. It is now tentatively scheduled to be held in Tokyo in February.

Failures to cut the civil service rolls and to collect taxes were cited as reasons for the Inter­national Monetary Fund to shut its Phnom Penh office in 1997.

Getting aid back to Cambodia is a priority, Keat Chhon said. In recent years, foreign aid has accounted for roughly half of the government’s budget.

The Consultative Group meetings are Cam­bodia’s most important opportunity to appeal for needed funds. About 20 representatives from donor countries and international lending agencies have gathered each year at meetings since 1993.

Donors have pledged nearly $1 billion in grants and low-interest loans in the previous two meetings. During the last major do­nors’ meeting at Paris in July 1997, just days before fighting broke out in the capital, $450 million in aid was pledged. But a portion of this was suspended after the factional fighting of July 5-6, 1997 that ousted Prince Noro­dom Ran­ariddh as first prime minister.

The problem this year is that because of the delay in forming a new government, it may be too late in the funding cycle for Cambodia to benefit from aid and new projects in the coming year.

A report by the independent think tank Cam­bodian Devel­opment Resource Inst­itute last April warned that the Cambodian economy may feel the effects of a “significant gap” between the time when projects are approved and when they actually begin.

 

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