Experts React To Threat to Freeze Funds

After the release of a report that claimed the World Bank has threat­ened to withhold aid money to Cambodia, economists and dev­el­opment experts said such an ac­tion would be a major embarras­s­ment to the government but perhaps might boost future accountability and reform.

The Associated Press reported Saturday that the World Bank had sent two letters, one to Prime Min­is­ter Hun Sen and another to Fi­nance Minister Keat Chhon, threat­ening to freeze millions of dol­lars in assistance if the government did not repay $2.7 million al­legedly misused in a World Bank-funded demobilization project.

World Bank officials have re­peat­ed­ly declined comment on the re­port, calling the issue “confidential.”

Economists said Wednesday that if the World Bank were to suspend its funding, the country would be injured not so much by the loss of capital but by the loss of face.

“I think it’s very important for the whole story of development,” said Kang Chandararot, economist and director of the Cambodia In­­stitute of Development Study, ad­ding that other donors would like­ly use the World Bank’s action as a model to see that aid was well-spent.

According to the World Bank Web site, the Bank currently has 15 active projects in Cambodia, ran­ging from electrification to en­sur­ing biodiversity. The Bank pledged $45 million in aid at last month’s Consultative Group meeting.

Although the government would struggle without the money, and certain private sector pro­jects would face delays, the amount lost would not signifi­cant­ly hurt the nation, Kang Chan­dararot said.

“In terms of monetary effect, I don’t think there is any impact on the whole economy,” he said.

Sok Hach, director of the Eco­nom­­ic Institute of Cambodia, was cautious with his comments on the issue, because he too had been unable to independently verify the report.

“I think the impact would be substantial,” he said. “But I think it’s good when an aid agency is consistent with its own policy to fight corruption.”


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