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Donors Set to Meet Over Release of Aid

Donors Set to Meet Over Release of Aid

International donor countries who pledged $880 million in aid to Cambodia last year

are to meet soon to discuss the disbursement of the bulk of the assistance funds

following the successful conclusion of U.N.-sponsored elections in May, a senior

UN official said.

"There has been a bit of a pause in the last couple of months as people wait

and see how the elections go but we expect the International Committee for the Reconstruction

of Cambodia to meet some time between now and August and review Cambodia's needs,"

Roger Lawrence, the UN's chief economist in Cambodia said.

Concerns the peace process would collapse led many donor countries to slow the flow

of aid.

Lawrence said it was unlikely their would be a flood of foreign aid pouring into

the country in the near future but he said he expected the pace of assistance to

begin picking up once the constitutional government takes office.

"There is likely to be a slow but steady acceleration over the first few months

of the new government as the donor community begins to probe the absorptive capacity

of Cambodia," he said.

Two hundred million dollars has already been dispersed, mostly for projects designed

to refurbish or reconstruct the country's war-battered infrastructure.

Lawrence said there was a general misconception that the aid package involved "millions

of dollars that are going to come to Cambodia and will be lying around for people

to help themselves to." Most of the aid that has been pledged is in the form

of project aid and consists of capital goods and technical expertise.

The economist said the most urgent problem facing the new government would be to

close the budget deficit, which is currently running at nearly U.S. $10 million per

month although he noted there was "very little scope for cuts in expenditure."

Foreign diplomats have agreed on the need to find U.S. $30 million to help the fragile

new government through the transition period but have yet to come forth with the

funds.

Lawrence said he expected customs revenue would be a key contributor to the state

coffers, especially as business activity accelerates with the return of peace.

"The economy is being completely driven by the political situation. Now that

we have a different political outlook, the performance is very bright, activity has

picked up and prices are going down," he said.

"I think in the next six months we will continue to have a economy that will

be responding mainly to the emergence of political stability and the viability of

the new government."

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