IMF Delegation in Cambodia

An International Monetary Fund delegation is in Phnom Penh for its first visit here since the important lending institution decided to resume aid in October by giving an $80 million loan.

The imf group will stay a week to meet with government officials and discuss how they will use the $81.6 million, three-year loan, a Ministry of Finance official said. The 2000 budget, currently being debated in the National Assem­bly, also will be discussed.

The delegation will meet with the Council of Ministers and officials from the Finance, Agricul­ture and Commerce ministries.

The influential lender had a $120-million loan program for Cambodia, but canceled its $20-million installment in late 1996 partly because of the government’s inability to fight illegal logging and generate funds for the national budget.

The IMF decided to return to Cambodia, citing credible actions taken over the past year to streng­then budget management and governance, and favorable economic developments.

Government officials and the donor community hailed the IMF’s return as a sign that Cam­bodia has gotten back on its feet since the fighting in 1997.

“It shows a considerable sign of competence in the Cambodian economy,” said Kao Kim Hourn, executive director of the Cam­bo­dian Institute for Cooperation and Peace. “Of course, the positive outlook doesn’t mean Cam­bodia has an easy ride from now on.”

The proposed 2000 budget, for example, is being criticized by opposition leader Sam Rainsy and others as still skewed toward defense and security spending.

The National Bank of Cambo­dia received the first of seven IMF disbursements of $11.7 million each in October, which was placed in its foreign reserves. The next disbursement will become available after Cambodia meets criteria for March 2000.

Once Cambodia receives a disbursement, the government can use the money however it wishes, according to IMF regulations. The government requested the loan for its economic program for 1999-2002 and to support the riel.

Under Cambodia’s 1999-2002 economic program, the government is aiming to raise economic growth to 6 percent annually and lower inflation to 4 percent, the IMF said. The lending institution predicts Cambodia’s real Gross Domestic Product (GDP) will rise 4 percent this year.

 

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