The age of choice: Cambodia in the new aid landscape

Research reports and studies
January 2013
Romilly Greenhill
Economic and political context

Strengths:

  • Since the mid-2000s, Cambodia – a low-income country – has shown strong economic growth performance, with annual growth at around 10%, despite a small dip in 2008/2009 due to the financial crisis.
  • Offshore oil and gas have recently been discovered.
  • FDI inflows of 7% of GNI in 2010 were higher than the low-income country average.

Weaknesses:

  • After its long history of conflict under the Khmer Rouge regime, the country remains fragile and tends to prioritise political stability over other governance-related goals.
  • Despite strong economic growth, ODA still accounts for 58% of central government expenditure.
  • Although China counts Cambodia as a key ally, it is not considered geopolitically important by DAC donors.

Government priorities for the terms and conditions of development assistance:

  • Cambodia wants to access more external finance. The government is unlikely to refuse funding regardless of the source (i.e. traditional donor or non-traditional providers).
  • The country aims to improve its leadership and control over foreign aid and phase out project implementation units.
  • Development assistance is expected to be aligned with national policy preferences. This is more important than alignment with country systems.

Arenas for negotiations:

  • There are several technical working groups, which feed into a Donor-Government Committee. The latter meets three to four times a year.
  • Most non-traditional sovereign development partners do not participate in these meetings but discuss their support bilaterally with the government. China’s participation in the coordination rounds is rather passive.

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