Press Release: Statement by IMF Managing Director Rodrigo de Rato on his Visit to Cambodia
August 1, 2007
Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), made the following statement today in Phnom Penh:
"I am delighted to be the first Managing Director of the IMF since 1993 to visit Cambodia. I have had the privilege today of meeting Samdech Prime Minister Hun Sen, as well as the President of the National Assembly Samdech Heng Samrin. I also met the Senior Minister of Economy and Finance, Keat Chhon; the Governor of the National Bank of Cambodia, Chea Chanto; the Senior Minister of Commerce, Cham Prasidh, and other Ministers and senior officials in the government's economic team.
"I have been impressed by the rapid growth of Cambodia's economy, and by the overall prudent approach to implementing macroeconomic policies. Sound fiscal and monetary policies have helped boost confidence and increase private sector activity, and these trends should continue in 2007. We expect the economy to grow by around 9 percent this year, with inflation remaining low.
"In my meeting with Prime Minister Hun Sen, I noted that good macroeconomic performance, when sustained, provides a strong foundation for higher living standards and poverty reduction. It is important in the period ahead to make further progress in tackling some of the key challenges to sustaining growth and ensuring its benefits are shared equitably. I was pleased to learn about the strong growth in government revenues this year.
I encouraged the government to continue its efforts to improve revenue administration and broaden the tax base in the 2008 budget, and to use the proceeds to increase much-needed spending on high-quality infrastructure projects, strategic civil service reform, and priority areas such as health and education.
"The discovery of oil is positive news for Cambodia, and I agreed with the authorities that ensuring the economy benefits fully from the reserves is a key challenge. I welcomed the efforts underway in the Ministry of Economy and Finance to develop an appropriate fiscal regime for the oil sector. And I supported the Prime Minister's decision to amend the Law on Taxation with provisions for oil-sector taxation, and emphasized the importance of transparency in the management of oil revenues.
"More broadly, continued improvements in governance are important not only for enhancing the investment environment in Cambodia but also for strengthening the linkages between growth and poverty reduction. I welcomed the progress being made in reforming public financial management systems; successful implementation of this program would contribute to strengthening governance in the use of public resources over the long term.
"The banking sector is expanding rapidly. Financial sector growth is critical for Cambodia's economic development, and my discussions with Governor Chea Chanto naturally focused on the banking system. We fully shared the view that strong supervision is essential for safeguarding the health of the banking system, and I was pleased to learn that efforts to enforce the regulatory environment would be enhanced.
"Finally, I had the opportunity to have breakfast this morning with Youth Star Cambodia, where I heard young Cambodian volunteers speak about their experiences and their views on developments at the community level.
"In all my discussions, I have found a strong and encouraging sense of optimism for the future of Cambodia. I am confident that this optimism is well placed, and that with good policy implementation, strong economic growth will continue."