The International Monetary Fund on Tuesday commended the government’s progress on promised reforms, but said Cambodia needs to improve revenue collection and accelerate civil service reform to receive the second installment of an $80 million loan package.
“[The government] has made sufficient progress,” Mario de Zamaroczy, IMF country representative, told reporters after the first six-month review since the loan was made. “The general mood is cautiously optimistic. Things are moving in the right direction.”
The briefing comes just a week before major donors are to meet in Paris to pledge a new aid package to Cambodia. The government plans to ask for $1.5 billion over the next three years, or about $500 million per year. Donors pledged $470 million at the last Consultative Group meeting in Tokyo in February 1999.
The IMF pulled its funding to Cambodia in late 1996, largely because the government failed to generate enough revenue for its budget and failed to halt uncontrolled logging.
But the IMF returned last October after the government showed a commitment to reforming its forestry management and banking systems.
The re-engagement of the influential IMF was a major benchmark for Cambodia. It sent a positive message to the international community and gave credibility to the government’s efforts to rebuild the country after three decades of civil conflict.
De Zamaroczy cautioned Tuesday that revenue collection and civil service reform are two major conditions for Cambodia to receive in July the second $11.5 million installment of a $81.6 million loan scheduled to be disbursed between 1999-2002.
The installments are based on assessments every six months of the government’s performance. An IMF mission recently completed the first assessment.
De Zamaroczy said Tuesday that the mission appreciated the government’s “credible actions” to crack down on illegal logging, develop a legal framework for the country’s financial and banking system and start a pilot program on military demobilization. The representative also praised the country’s fiscal performance in 1999 and said economic development roughly met its target.
But he said Cambodia needs to develop additional revenue sources in order to subsidize “weaker-than-expected revenue performance” in the first quarter of 2000. He did not elaborate on what the first-quarter figures show.
He also said that the government should develop a thorough plan to cut civil-service jobs to stay on target with budget goals in that area.
The IMF will review those two areas with government officials in an informal meeting outside of the CG meeting in Paris next week, he said.
Government spokesman Khieu Kanharith said Tuesday that the government pledges to continue “sincere” efforts to reform and develop the country in line with donors’ recommendations.
“We’re committed and determined to go ahead with reforms,” said the secretary of state for the Information Ministry. “But our political will alone can not achieve the goals. We need assistance from many foreign countries, not only financial but also technical assistance.”
Khieu Kanharith also said the IMF’s suggestions are useful to develop priorities. “What we need to have is to know where the efforts should be concentrated on.”