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Logo of Phnom Penh Post newspaper Phnom Penh Post - Reform-linked loan on hold

Reform-linked loan on hold

The World Bank will delay releasing to the government the $15 million Structural

Adjustment Credit (SAC) which was due to be paid on September 30.

This marks the second delay in distributing the loan - the first date was June 30.

Release of the funds is conditional upon the government undertaking specific reforms.

The Ministry of Economy and Finance (MEF) said the delay was mainly due to slow progress

in passing amendments to the country's investment law, but the Post has determined

that it is also due in part to the government's lack of transparency in the ongoing

forestry reform process.

The SAC payment, which was originally scheduled for June 30 but was then delayed

until the end of September, is used by the government for general budgetary expenditures

such as civil servant salaries. There is no indication yet about a new date for the

SAC's release.

A senior official at the MEF told the Post the main reason the World Bank had postponed

distributing the loan was because proposed amendments to the investment law had not

been passed. A draft has been submitted to the National Assembly, which is now in

recess, but is not yet on the agenda.

"We need that money - $15 million is not a lot, but if we get it then that would

be a relief," he said.

The money, he explained, was required for the upcoming ASEAN meeting, civil servants'

salaries including the recently announced hike in teachers' wages, and preparations

for next year's general election.

While the delays in implementing investment law changes have irked the World Bank,

the dispute over forestry has also had some influence on its decision. Forestry observers

from international financial institutions (IFIs), NGOs and community representatives

have all spoken out recently over the lack of transparency in the forestry reform

process.

The trouble started after the government backtracked on its promise at the June donors'

meeting for immediate and complete transparency over releasing forestry documents.

The government is currently engaged, at donor prodding, in a full overhaul of the

forest concession system, which has been badly mismanaged over the past ten years

and caused significant detrimental social and environmental effects.

Part of the overhaul requires concessionaires to provide forest management plans

(FMPs) and environmental and social impact assessments (ESIAs). These documents are

to be subject to full public scrutiny by all stakeholders, a condition the government

agreed in June it would implement immediately.

But when stakeholders recently tried to access the information from the Ministry

of Agriculture, Forestry and Fisheries (MAFF), they were bluntly refused. Representatives

of villagers living inside concessions were rebuffed, as was Global Witness, the

government's partner in monitoring forest crime, and other interested parties.

The legal language of the SAC's conditions does not specifically mention transparency

in the FMP and ESIA process, but it does specify certain steps the government needs

to take to get the loan. Among these were drafting and approving legislation such

as the Forestry Law and the prakas regulating the concession review process.

However as NGO Forum pointed out at the end of August, the prakas contains commitments

to transparency that are being flouted. It is not clear whether the lack of implementation

of parts of the laws is regarded as a breach of the SAC conditions, but what is certain

is that this point is being discussed between the World Bank and the government.

The issue of a lack of transparency was taken up by the donor Working Group on Natural

Resources Management (WGNRM), whose co-chair is Urooj Malik, country representative

of the Asian Development Bank.

Malik and fellow co-chair Jean-Claude Levasseur of the UN's Food and Agriculture

Organization wrote to Agriculture Minister Chan Sarun and Finance Minister Keat Chhon

expressing their "deep concern" at the lack of transparency.

"It was agreed that the Government will ensure 'public disclosure and opportunity

for independent experts, including one observer from the WGNRM, to comment on the

[FMPs and ESIAs] prior to finalization of Government review'," they wrote on

August 20."The agreed timeframe for implementing these actions was immediate."

They pointed out that two meetings with Department of Forestry and Wildlife chief

Ty Sokhun had not resolved the issue, and said they were concerned there would be

insufficient time for adequate public review and comment on the FMPs and ESIAs.

Malik told the Post on September 11 that the working group expected to see the documents

"by the latest next month". He said 11 of the 14 concessions had submitted

plans, and confirmed that the deal to cancel those concessions which did not file

by the end of September still stood.

Asked whether the deadline of December 31 for the acceptance or rejection of each

FMP and ESIA had shifted, Malik replied that it was more important that the process

was transparent rather than it fit particular dates.

"As long as people are satisfied with the process - that is more important than

the timelines," he said, emphasizing that transparency was an integral part

of that satisfaction.

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