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Cambodia earns high marks in IMF study

Cambodia earns high marks in IMF study

T HE International Monetary Fund (IMF) is optimistic that economic stability and improvements in Cambodia will continue and lead to sustained growth and development of the country.

"In many areas there has been lots of progress, in terms of some macroeconomic aggregates which are available, the situation is stable, it's very good," Reza Vaez-Zadeh, senior IMF representative in Cambodia, said.

Achievements include contained inflation, a controlled budget, improvements in the government's foreign-exchange reserves and a reasonably stable exchange rate, Vaez-Zadeh said on Sept 29.

The latest edition of a monthly IMF report said Cambodia was "emerging from isolation as economic reforms take hold" and that financial stability has returned .

"Macroeconomic stability has been restored as a result of firm policy measures, exceptional donor support and a return of confidence," said the IMF Survey in its October edition, which was released on Sept 26.

It said the government has established an "initial track record of implementing firm economic policies" and prepared an economic programme to stabilize, rebuild and reform the economy during 1994-96, including an aim to maintain real economic growth of seven to eight percent annually.

The IMF report was optimistic about Cambodia's future prospects for maintaining "hard-won results" the government had made so far if strong policies were continued.

"With strong policies and the vital support of the international financial community, the challenge facing Cambodia will be to build on the hard-won results to date and establish a foundation for sustained growth and development," it said.

In May this year the IMF resident office in the capital, Phnom Penh, which had been closed since 1974, was reopened and the IMF approved a three-year loan to Cambodia worth $120 million for financial assistance, the report said.

"Economic activity rebounded and the balance of payments strengthened, permitting an increase in gross external reserves of almost $50 million, bringing the total to $70 million at the end of 1993," it said.

Vaez-Zadeh said the government so far had been able to contain all expenditures in its 1994 budget and Cambodia would not face major problems with the budget unless "a very huge drop in foreign assistance" caused an economic shortfall.

"The budget for 1994 has so far been implemented very well," he said, adding that all the financial targets the IMF has set in their agreement with the government had been achieved so far.

The IMF Survey hailed the August implementation of a liberal foreign-investment law and said domestic investment would increase to meet infrastructure needs in the public sector.

Cambodia, one of the poorest of the poor after more than two decades of war and turmoil, has taken great strides towards balancing its books and increasing domestic revenues in the past year.

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