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IMF/Bank suspend programs

IMF/Bank suspend programs

T HE International Monetary Fund (IMF) and the World Bank have indefinitely suspended

financial support programs to Cambodia due to the government's inability to meet

structural reform criteria, officials said.

The move, costing the government tens of millions of dollars in much- needed budget

and balance of payments soft loans from the two international lending organizations,

and comes as the government faces serious budgetary shortfalls and a flat economy

stemming from the coup in July.

The IMF will withdraw its representative to Phnom Penh and leave the post vacant

until the prospects for its support programmes improve, officials and diplomats confirmed.

"We need them [the IMF] to help us," said Undersecretary of State for Finance

Chea Peng Chheng, responding to the news. "I believe the IMF will return one

day when they understand Cambodia's situation."

The decisions to put a hold on both programs were confirmed by the World Bank's Liasion

Office Chief R. Natarajan who said that any continued negotiations between the bank

and the government over budget support would depend on a decision by the IMF to resume

its program in Cambodia.

The IMF had a $120 million, three-year program in Cambodia, approved in May 1994,

but only half of the loans to combat balance of payments problems were disbursed.

A $20m payment due last November lapsed because of IMF concerns about government

accounting for logging revenues.

Two further $20 million payments were scheduled for disbursement, but the program

has now "expired" according to sources.

The World Bank, providing funds to support budgetary shortfalls, had given a total

of $85m since 1993. According to Natarajan these funds were disbursed on schedule

and technically the program was not "suspended".

He said that other World Bank programs will continue and that additional "non-budget

support" projects may be considered.

Financial analysts said that the impact on the budget from the IMF and World Bank

decisions will be great. "To put it mildly, government revenues will not reach

the budgetary requirements this year," said one. He noted that shortfalls were

projected at 150 billion riels (about $47 million), not accounting for inflation.

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