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.