World leaders signed a document at the UN development summit in Monterrey, Mexico
on March 22 that could affect foreign aid to Cambodia if donor nations hold to its
The Monterrey Consensus aims to end poverty and encourage sustainable development.
The agreement urges wealthy nations to increase aid to developing countries by billions
of dollars. In return, poor countries must battle corruption, adopt solid economic
policies, and spend funds more efficiently.
"It is an opportunity for donors to bring additional resources, but we need
to closely monitor progress," said Urooj Malik, country representative of the
Asian Development Bank (ADB). "We need to have a more serious effort in public
sector management and good governance."
The Consensus did not set targets for increased aid to the developing world, but
encourages industrialized countries to increase funding to the equivalent of 0.7
percent of their gross national product (GNP). GNP is a measure of the total value
of goods and services produced by a country's residents.
The thinking behind the new approach comes from research by the World Bank showing
that aid boosts growth in countries with sound policies, but nearly always fails
in poorly run regimes.
World Bank President James Wolfensohn said in a speech during the conference that,
"corruption, bad policies, and weak governance will make financial aid ineffective
- even counterproductive".
The Cambodian government has been widely criticized for corruption and weak economic
practices. The World Bank's website on Cambodia makes much of that point.
"Cambodia's poor revenue performance has resulted largely from weak governance:
poor enforcement of the country's tax laws, ad hoc tax and customs exemptions, corruption,
weak capture of significant forest revenues and limited capacity in tax and customs
administration," it states.
An IMF report on Cambodia dated March 1 stated: "Strengthening governance and
combating corruption have received high priority on the government's reform agenda,
with the implementation of the donor-endorsed Governance Action Plan and the establishment
of the National Audit Authority in mid-2001."
Observers hold mixed views on how serious the government is in combating corruption.
Chea Vannath, president of the Center for Social Development, said donors had to
take some responsibility for how their money was spent.
"The cup is half full or half empty," said Vannath. "[As regards]
corruption, there's nothing tangible yet, but we see a lot of effort to make things
She said donor money was often the source of corruption, adding that countries ought
to monitor more carefully the uses made of their funds.