An International Monetary Fund delegation acknowledged Cambodia’s progress on reforming its armed forces and civil service, but said the government still needs to take strong action in the area’s of revenue management and forestry before the resumption of monetary aid.
Further reforms in these two areas are “critical conditions” for the approval of an $80 million loan, said Chanpen Puckahitkom, assistant director for the IMF Asia and Pacific Department who led the five-member mission that arrived a week ago. The team will closely work with the government to promote the fiscal reform, she said.
Government and IMF officials said Tuesday evening that the two parties agreed on the steps the government needs to take before the delegation makes a recommendation to its Board of Executives on resuming aid. That recommendation must come by October, when the board meets, if aid is to be resumed this year.
“We have very tight schedules but we have very strong hope that we can make a recommendation [on resuming aid] to the board,” Puckahitkom said.
The IMF had a $120 million loan program for Cambodia but canceled its $20 million installment in late 1996, citing the government’s inability to collect revenue for the national budget and combat illegal logging. In March 1997, the IMF and the government set up an economic policy plan, indicating necessary reforms for resumption of assistance. After the new government formed, Cambodia asked for the IMF for a three-year, $80 million loan.
“We had good consultations and good results,” Financial Minister Keat Chhon said of this latest round of talks with the IMF. “The government will implement what we have committed to do and Prime Minister Hun Sen also promised to follow it step by step.”
Officials said that the two parties will meet in Washington later this month to review the government’s progress on reform. If the board will approve the recommendation, the first installment of the $80 million loan will be disbursed in the end of October.
The IMF provides funds to all but a handful of the world’s developing nations. Its assistance is generally aimed at supporting a nation’s currency, which helps it attract foreign investors and make outstanding loan payments.