Foreign Aid Drops in Latest OECD Update

Foreign aid to Cambodia dropped about 14 percent last year, according to updated data released this week—though the figures exclude China, one of the country’s most significant donors.

The data, from the Organisation for Economic Cooperation and Development, updated on Sunday and finalized for last year, includes foreign aid statistics as reported by major donors including Japan, South Korea, France and the U.S. as well as multilateral agencies such as the Asian Development Bank and the U.N. Development Program.

Actual payments of foreign aid fell from $970 million in 2014 to $830 million last year, marking the first decrease since 2004, while new commitments made by donors dropped from $1.47 billion to $1.171 billion, the data says.

Miguel Chanco, the Economist Intelligence Unit’s lead analyst for Asean, posted the statistics on Twitter on Thursday noting that the decrease came “in the wake of the govt’s crackdown.”

Since last year, opposition politicians and activists have repeatedly been jailed over charges many consider politically motivated, leading to international condemnation and increasing friction between the government and international donors.

Contacted by email, Mr. Chanco said foreign aid could be further dented if the government did not show a commitment to democracy moving forward.

“The upcoming election cycle in 2017-18 will be critical; if the polls are not conducted freely and fairly then I wouldn’t be surprised if foreign aid into Cambodia continues to slip,” he said.

Phay Siphan, a senior government spokesman, offered another explanation, saying that a fall in aid was natural as Cambodia’s economy grew and foreign countries switched their financing from aid to investment.

The country was upgraded to lower-middle-income status in July by the World Bank, a sign of increasing prosperity on the back of strong, 7-percent-per-year growth in gross domestic product.

Meanwhile, foreign investment to Cambodia ticked up marginally from 2014 to last year, from $1.404 billion to $1.413 billion, according to data from the government’s Council for the Development of Cambodia.

The biggest source of foreign investment has been China for five years running, according to the data, climbing in parallel with a raft of foreign aid pledges made by Beijing.

The rise in Chinese financing is representative of a shift in Cambodia’s geopolitical alignment, many have argued, allowing the country to move away from the censorious West toward the rights-blind Asian superpower.

Mr. Siphan said that “from experience,” international criticism was unlikely to be a factor in the fall in foreign aid.

Regardless of the domestic situation in Cambodia, he said, donors have “always increased aid from every year to every year. They never lowered down.”

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