Press Statement of the IMF Mission
to Cambodia

An International Monetary Fund (IMF) mission visited Cambodia during November 7-22, 2002 to:

• conduct the 2002 Article IV Consultation discussions;



• review progress under Cambodia's economic program supported by the IMF's Poverty Reduction and Growth Facility (PRGF) as approved by the IMF's Executive Board on October 22, 1999;

In assessing economic and financial developments in the context of the Article IV consultation discussions, the mission and the authorities concurred that:

• Economic performance in 2002 has been broadly favorable, although real GDP growth is expected to slowdown to 4½ percent due to the drought followed by flooding. Inflation remained below 5 percent owing largely to a sustained cautious fiscal stance. Looking to the medium-term, increasing the growth rate to a level sufficient to reduce poverty will require significant efforts to increase agricultural productivity, diversify the economy, and improve overall competitiveness.



• Poverty-reducing growth rates will need to be FDI-led, which in turn will require sustained efforts by the government, including increased revenue, reform of the civil service, increases in priority spending, durable improvements to infrastructure, reductions in the uncertainty surrounding the business environment, and substantial progress toward better governance.

Performance under the program has been broadly satisfactory, and sustained implementation of commitments under the program should allow completion of the sixth and final review under the current three-year arrangement. These include:

• persevering with reforms to public expenditure and cash management while respecting budgetary targets;



• securing the transfer of the government's share of revenue under select contracts with the private sector;



• announcing the government's intention to privatize the Foreign Trade Bank; and



• maintaining the suspension of logging activity until management plans and agreements on restructured concessions are in place.