Economic growth for 2001 will remain at about 6 percent, even though the government did not follow through with all its predicted reforms for the year, the Ministry of Finance has reported to the International Monetary Fund.
Cambodia’s projected high growth rate comes even though flooding last year hurt some economic activity in the agricultural sector, according to a government report posted on the IMF Web site last week. Inflation was kept down by a quick disbursement of food relief that kept the price of food down, the report states.
The growth figure is calculated from economic activity in such sectors as tourism, export and agriculture.
The government said that steady exports in the garment industry and the continued growth in the tourism sector were responsible for the high growth rate. Inflation will also remain below 5 percent for the year, the government reported.
Independent analysts, however, say that while the governments predictions on inflation are accurate, the economic growth prediction may have to be reduced.
The Asian Development Bank predicted growth of the gross domestic product would be about 5 percent for 2001 and 6 percent for 2002.
While garment manufacturers have claimed in recent months that a worldwide slowdown is hurting their industry, it still remains Cambodia’s number one export sector, totalling about $1 billion per year.
Tourists continue to flock to the country, their numbers nearly doubling for the first six months of 2001 compared to the same time last year.
The Ministry of Finance is required to report to the IMF as a condition for receiving $82 million worth of loans aimed at poverty reduction. In the report, the government said that all of the benchmarks for IMF loans had been met, even if some of the planned reforms had not yet been implemented.
“Revenue performance in the first quarter of 2001 was below program expectations,” the government concedes in the report.
The government and its international multi-lateral donors are continuously looking for ways to increase the government’s budget revenue. Some of those planned reforms have met with difficulty, the government reported.
For example, the revision of the Investment Law has been stalled. But amendments “are still being discussed with a view to reaching agreement on the changes,” the government told the IMF.
An assessment team from the World Bank recommended earlier this year that the tax incentives for private investors be reduced, including tax holidays and reduced tariffs enjoyed by some. Private investors claim those changes will only hurt investment.
In a statement issued along with the government’s progress report, IMF Executive Director for Cambodia Dono Iskandar Djojosubroto praised the government’s reform of the banking system, but said there had been “some slippages or delays in Cambodia’s reform program.”
He encouraged donors to continue to give money to help combat the delays.
