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Cambodia: Staff Report for the 2010 Article IV Consultation—Informational Annex

International Monetary Fund
Published Date:
February 2011
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Annex I Cambodia: Fund Relations

As of September 30, 2010

I. Membership Status: Joined: 12/31/1969; Article VIII

II. General Resources Account:

SDR MillionPercent Quota
Fund Holdings of Currency87.50100.00

III. SDR Department:

SDR MillionPercent Allocation
Net cumulative allocation83.92100.00

IV. Outstanding Purchases and Loans:

SDR MillionPercent Quota
PRGF arrangements0.000.00

V. Financial Arrangements:



Amount Approved

(SDR Million)
Amount Drawn

(SDR Million)

VI. Projecte d Obligations to Fund: (SDR million; based on existing use of resources and present holdings of SDRs)

Principal Charges/Interest0.

VII. Multilateral Debt Relief Initiative:

As part of the Multilateral Debt Relief Initiative (MDRI), the IMF Executive Board on January 5, 2006 approved relief on 100 percent of debt incurred by Cambodia to the IMF before January 1, 2005. This resulted in the forgiving of all of Cambodia’s outstanding debt to the IMF, a total of SDR 56.8 million (about US$82 million). The authorities intend to spend the resources over a number of years, initially on rural irrigation projects. The National Bank of Cambodia (NBC) transferred the full MDRI proceeds to the Ministry of Economy and Finance effective March 2006.

VIII. Safeguards Assessment:

A voluntary safeguards assessment of the National Bank of Cambodia (NBC) was completed in January 2010, at the request of the authorities. The assessment updated the previous voluntary assessment completed in March 2004. It found that the NBC had taken steps to strengthen aspects of its safeguards framework, although important measures proposed in 2004 are still outstanding or in progress. Some new risks have emerged in the area of external audit. The assessment made appropriate recommendations.

IX. Exchange Rate Arrangement and Payments System:

Cambodia’s exchange regime is classified as stabilized. The official exchange rate, which is expressed in riels per U.S. dollar, applies to all official external transactions conducted by the central government and state enterprises, and is used for accounting purposes by the NBC. It is determined by the foreign exchange market, with the official rate adjusted to be within 1 percent of the market rate on a daily basis.

Cambodia accepted the obligations of Article VIII, Sections 2, 3, and 4 on January 1, 2002. Cambodia maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.

X. Article IV Consultation:

Cambodia is on the standard 12-month Article IV consultation cycle. The last Article IV consultation discussions were held in Phnom Penh during September 9–23, 2009. The Executive Board discussed the staff report (IMF Country Report 09/325) and concluded the consultation on November 18, 2009.

XI. Technical Assistance:

Technical assistance is currently focused on bank supervision, monetary operations, public financial management, customs administration, and macro-financial statistics. Delivery is through a resident advisor at the NBC, peripatetic experts, and short-term visits from headquarters.

XII. Resident Representative:

The resident representative office was closed in October 1997 and re-opened in October 1999, headed by an IMF Resident Representative until June 2010. Since then, the IMF’s Resident Representative for Indonesia, Mr. Milan Zavadjil has also assumed the responsibilities for the Cambodian IMF office.

Annex II ambodia: World Bank-IMF Collaboration

1. The Bank and the IMF country teams for Cambodia, led by Mr. Mathew Verghis (Lead Economist, EASPR) and Mr. Olaf Unteroberdoerster (IMF Mission Chief for Cambodia), maintain a close working relationship and have an active dialogue on a range of macroeconomic and structural issues.

2. Recent key areas of cooperation and coordination includes:

  • (i) Macroeconomic policy advice to the authorities: The IMF and the World Bank staff have consulted each other on key macroeconomic policy messages to the authorities and avoid sending conflicting messages. We have adopted a joint stance on the complex question of the 2009 national accounts (for which our best estimates suggest a contraction of GDP, while the Cambodia National Institute of Statistics suggests a slightly positive growth of 0.1 percent). The two teams also regularly share information outside missions and discuss and exchange institutional views on key macroeconomic developments. Bank staff share and discuss the monthly fiscal monitor and the quarterly review of macroeconomic developments. IMF staff share policy notes and other mission preparatory documents.

  • (ii) Financial Sector Reform/TA and FSAP: World Bank and IMF teams have worked closely while undertaking the March 2010 FSAP. The two teams sent respective representatives jointly in 2009 to appraise the authorities about the purpose, structure, output, and requirements of an FSAP. The two teams also regularly communicated on financial sector developments throughout the assessment. Following the recommendations advanced by the FSAP team, it is expected that technical assistance will be deployed in subject areas akin to the FSAP, which will assume close coordination between the IMF and the World Bank.

  • (iii) Public Financial Management and Tax and Customs Administration Reform: Both institutions are working to strengthen coordination of work on public financial management, and tax and customs administration reform. Both teams share as much as possible the work done in this area.

  • (iv) Article IV Consultations: IMF Article IV consultations regularly share their macroeconomic data with the World Bank and hold working sessions to try and reconcile macroeconomic data sets. The collaboration is closest on the Debt Sustainability Analysis, a joint product, but extends more broadly into other areas of the Consultation as well. This is extremely important for both institutions in Cambodia’s data scarce context. World Bank staff are also invited to and do participate in some of the key meetings.

  • (v) Structural reforms: The IMF staff and the World Bank teams have worked together to share views on a range of other issues, including structural reforms for a better investment climate (and competitiveness issues), rural development, and de-dollarization.

3. It is recognized that the modality of the partnership will be tested by the departure of the resident representative at the end of June 2010. While the IMF maintains an office in Phnom Penh, with local staff, the Resident Representative (Mr. Milan Zavadjil) is now based in Indonesia and visits Cambodia every six to eight weeks. Collaboration has continued to be excellent so far, but will inevitably require adjustments to these new circumstances. This is in particular the case for the IMF’s involvement on the Public Financial Management Reform Program, for which the previous resident representative had played a very active role.

4. Based on the above intensive partnership, the World Bank and the IMF share a common view about Cambodia’s macroeconomic and structural reform priorities. These include:

  • Promoting long-term growth and diversification: While Cambodia has been very successful at achieving sustained rapid growth since the late 1990s, the global crisis has highlighted some of the vulnerabilities of this performance. In particular, the lack of diversification and the weaker progress in rural development are key challenges.

  • Sustaining the recovery: As of September 2010 (the IMF just concluded its Article IV consultation mission), the recovery is well under way. However it needs to be sustained with appropriate fiscal consolidation and continued management of the banking sector risks.

  • Increasing fiscal space: Increase fiscal space—better enforcement of revenue policy should be a priority of fiscal policy. Additional fiscal space should be well targeted to areas that would increase growth potential (e.g., infrastructure related constraints) or target the most vulnerable (e.g., to implement the recently developed Social Safety Net strategy). We also agree on the importance of public sector compensation reform, if planned in a coherent fiscal framework and accompanied with necessary human resource reforms.

  • Strengthening the banking system: The joint World Bank/IMF FSAP includes a number of recommendations to tighten bank supervision and develop a crisis resolution framework, in order to safeguard the stability of the banking system and facilitate its continued development in support of economic growth.

  • Improving governance: Both the World Bank and IMF have stressed the critical role of governance in improving the quality of service delivery and the business environment. For instance, in the Article IV consultations, the role of EITI and the recently-adopted Anti-Corruption Law were stressed.

5. The teams are committed to continue the close cooperation going forward. Appendix I details the specific activities planned by the two country teams over the period September 2010—August 2011 along with their expected deliveries.

Appendix 1. Cambodia: Joint Managerial Action Plan, September 2010–August 2011

TitleProductsProvisional and actual timing of missionsExpected and actual delivery date
A. Mutual information on relevant work programs
The World Bank’s work program in the next 12 monthsMacroeconomic monitoring
Semi-annual updates (regional)October 2010; April 2011
Recent economic developments (slides)Approx once per quarter
Growth and diversification

Policy notes on “growth beyond the crisis,” “tax incentives,” “special economic zones,” and “social and poverty impact of the crisis”
October / November

Financial sector
Risk sharing facility (joint IDA / IFC)December 2010
FSAP follow upSeptember 2010
Public sector management
PFM reform programSeptember 2010
Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER)December 2010
Options for compensation reform (background papers)March 2011

Trade Facilitation and Competitiveness Program (including customs automation) and Trade Development Support Program
November 2010
The IMF’s work program in the next 12 monthsMacroeconomic policy analysis and advice
• Article IV consultation and staff visitsThird quarter 2011
• Policy notes on requestOngoing
Technical assistance

• Fiscal
  • Cash Management

  • Government accounting

  • Customs reform

• Financial sector
  • Ongoing work for FSAP

  • Resident banking supervision advisor

  • Technical Assistance

B. Agreement on joint products and missions
Joint products in the next 12 months Debt sustainability analysis2010 Article IV ConsultationDuring Article IV Consultations
FSAPOngoing until the Board in late October 2010

Annex III Cambodia: Relations with the Asian Development Bank

(As of August 31, 2010)

From 1992 through August 31, 2010, the Asian Development Bank (AsDB) approved funding of $1,254.7 million including 49 loan projects of $1,064.8 million with low interest, and 13 Asian Development Fund (ADF) grants of $189.9 million ($42.0 million in 2005; $7.8 million in 2006; $37.0 million in 2007; $30.3 million in 2008; and $72.8 million in 2009) to Cambodia for structural reform programs. To date, 33 loan projects for a total of $732.9 million and two ADF grants of $14.5 million have been completed.

The sector composition and loan/grant amount of the remaining active portfolio as of August 31, 2010 are: (i) agriculture and natural resources $123.4 million; (ii) education $76.6 million; (iii) energy $64.3 million; (iv) finance $10.0 million; (v) health, nutrition, and social protection $9.0 million; (vi) industry and trade $15.6 million; (vi) law, economic management, and public policy $6.1 million; (viii) transport and communication $163.3 million; and (ix) water supply, sanitation, and waste management $39.0 million.

The AsDB’s overarching goal in Cambodia is sustainable poverty reduction. The AsDB’s Country Strategy and Program (CSP 2005–09) midterm review, finalized in August 2007, concluded that the strategic thrust of the AsDB in Cambodia remains appropriately targeted on poverty reduction through broad-based private sector-led growth, inclusive social development, and stronger governance for sustainable development. The new Country Partnership Strategy (CPS 2010–13) is under preparation and guided by the AsDB’s long-term strategic framework (Strategy 20201) to support implementation of the government’s updated National Strategic Development Plan 2009–13 (NSDP Update2). The AsDB’s Country Operations Business Plan (COBP 2009–12) strongly focuses on the priority areas of agricultural and rural development, private sector development, governance and capacity development, and regional economic integration in the Greater Mekong Sub-region (GMS).

Interventions in agricultural and rural development focus around the Tonle Sap basin area and are geared to improving livelihoods of the poor through management of water resources and irrigation assets, as well as agriculture extension services and crop diversification; expanding the connectivity internally between rural roads and the provincial and national network, and externally with emerging subregional transport corridors; fostering the development of smallholder agricultural producers; and widening access for the poorest to rural water supply and sanitation while strengthening local community management capacity.

In the area of private sector development, the AsDB assists the government’s effort in improving competition policy and regulatory efficiency; strengthening the investment climate and innovation; and continuing trade policy reforms and trade facilitation (customs and sanitary and phytosanitary standards for food safety). Assistance has also been provided to help the Government improve its competitiveness at the GMS level through reducing border-related costs and distortions; improving physical infrastructure; enhancing transport and trade facilitation, including promoting compliance with SPS standards. Later interventions would be more focused on improving the trade facilitation and logistical links to the subregion as systems and procedures become more developed and integrated. The AsDB assistance in the financial sector has helped the government in improving financial intermediation; enhancing the resilience of the financial sector; promoting good governance; and improving financial sector efficiency. Education-related interventions help to promote equitable access to quality secondary education and technical and vocational education and training to achieve the Cambodia Millennium Development Goals and sustainable growth. There is also a gradual increase in the AsDB private sector operations such as an intervention to expand trade finance. Other infrastructure loans and investment opportunities are being sought, including in the areas of (i) energy, (ii) transport, (iii) agribusiness, and (iv) water and sanitation.

With respect to governance and capacity building, the COBP includes a programmatic approach to public financial management (PFM) reform with interventions to underpin rolling out of PFM to rural development line ministries (support for budget preparation and execution, financial management and reporting, procurement and development of internal audit capacities in these ministries) and strengthen the capacity of the National Audit Authority. At the same time, the AsDB will also promote good governance through assistance to the government led-decentralization and de-concentration reform, namely support to functional assignments and fiscal decentralization and decentralized services deliveries. The assistance in PFM for rural development together with sector interventions will reinforce decentralization and de-concentration reforms, particularly in functional assignments and expenditures responsibilities. Assistance is also planned to support the implementation of the anti-corruption law passed in April 2010.

AsDB: Loan/Grant Commitments and Disbursements to Cambodia, 1992–2010(In millions of U.S. dollars, as of August 31, 2010)



192010 (Projected)6156.890.286.0

$10 million loans and $42 million grants approved in 2005.

$62 million loans and $7.8 million grants approved in 2006.

$35.1 million loans (including $8 million ordinary capital resources (OCR) loans to private sector) and $37 million grants approved in 2007.

$53.8 million loans and $30.3 million grants approved in 2008.

$71.7 million loans and $72.8 million grants approved in 2009.

$95.0 million loans and $61.8 million grants are expected to be approved during third and fourth quarters of 2010.

$10 million loans and $42 million grants approved in 2005.

$62 million loans and $7.8 million grants approved in 2006.

$35.1 million loans (including $8 million ordinary capital resources (OCR) loans to private sector) and $37 million grants approved in 2007.

$53.8 million loans and $30.3 million grants approved in 2008.

$71.7 million loans and $72.8 million grants approved in 2009.

$95.0 million loans and $61.8 million grants are expected to be approved during third and fourth quarters of 2010.

Annex IV Cambodia: Statistical Issues

As of September 30, 2010

I. Assessment of Data Adequacy for Surveillance
General: Data provision is broadly adequate for surveillance. Extensive technical assistance (TA) has been provided by the IMF, UNDP, Asian Development Bank, and World Bank, as well as from bilateral partners (namely Japan and Sweden), leading to substantial capacity improvements in compiling and reporting macroeconomic statistics. However, various shortcomings in macroeconomic data still hamper timely and comprehensive analysis.
National Accounts: The National Institute of Statistics is leading efforts to improve the consistency of national accounts statistics with the United Nations’ System of National Accounts 1993, to expand the range of annual national account aggregates, and to produce a quarterly national accounts series since June 2005, with IMF technical assistance. However, the quality of GDP estimates remains hampered by the lack of comprehensive and reliable source data on a production and expenditure basis, in part stemming from the need to address resource constraints and improve data collection techniques. The authorities have not yet published the 2009 national accounts.

Price statistics: A new consumer price index series was introduced starting in January 2009. However, geographical coverage of the series is limited to Phnom Penh. Statistics Sweden is currently providing TA on price statistics, including on compiling a production price index.
Government finance statistics: The Ministry of Finance and Economy began implementing reforms to the government accounting system and budgetary nomenclature in 2007 based on the Government Finance Statistics Manual (GFSM) 2001, with IMF TA. In addition, several STA missions have assisted with GFS compilation procedures within the GSFM 2001 framework. IMF TA in April 2008 assisted with establishing a bridge between the government’s new chart of accounts (COA) and the GSFM 2001 classifications so that accounting records can be used as source data in compiling GFS. However, use and coverage of the COA has been limited and not fully integrated to activities such as the disbursement of external loans and grants, the government’s budget reserve fund, and capital expenditures.
Monetary and financial statistics: The National Bank of Cambodia (NBC) compiles the balance sheet and survey for the central bank and other depository institutions in accordance with the IMF’s Monetary and Financial Statistics Manual. Since August 2005, the NBC has reported monthly monetary and financial statistics to STA using the Standardized Report Forms. The NBC received TA during the FSAP on the compilation of financial soundness indicators (FSIs). The NBC now compiles monthly core FSIs and shares them with IMF staff irregularly. The non reliability and inconsistency of data reported by banks still poses a challenge to the interpretation of FSIs.
External sector statistics: Despite recent improvements, more work is needed to improve balance of payments statistics. Customs data have substantial coverage and valuation problems arising from the use of reference prices and limited recording of non dutiable imports, underreporting of re-exports, and weaknesses in customs controls. Enterprise transactions, such as payment for imported services, income payments, and portfolio investment abroad are excluded or underreported. Foreign direct investment, which is believed to be large, relies excessively on approvals. Gaps exist in external debt statistics, in particular, on the stock of public and publicly-guaranteed debt by maturity, on bilateral donor disbursements, and on external debt service. Gaps exist in official transfers (e.g., grants) and in external statistics, and no data are available for private external debts.
II. Data Standards and Quality
Cambodia participates in the IMF’s General Data Dissemination SystemNo data ROSC are available
III. Reporting to STA (Optional)
Cambodia sends regular data reports to STA for publication
Cambodia: Table of Common Indicators Required for Surveillance(As of September 30, 2010)
Date of latest ObservationDate ReceivedFrequency




Frequency of Publication1
Exchange RatesSept. 2010Sept. 2010DDW
International Reserve Assets and Reserve Liabilities of the Monetary Authorities2Sep. 2010Sep. 2010BiweeklyBiweekly, 4 week lagN/A
Reserve/Base MoneyAug. 2010Sep. 2010MM, 4–6 week delayM
Broad MoneyAug. 2010Sep. 2010MM, 4–6 week delayM
Central Bank Balance SheetAug. 2010Sep. 2010MM, 4–6 week delayM
Consolidated Balance Sheet of the Banking SystemAug. 2010Sep. 2010MM, 4–6 week delayM
Interest Rates3Aug. 2010Sep. 2010MM, 4–6 week lagM
Consumer Price IndexAug. 2010Sep. 2010MM, 2–4 week lagM
Revenue, Expenditure, Balance and Composition of Financing4—General Government5Aug. 2010Sep. 2010MM, 4–6 week lagM
Revenue, Expenditure, Balance and Composition of Financing4—Central GovernmentAug. 2010Sep. 2010MM, 4–6 week lagM
Stocks of Central Government and Central Government-Guaranteed Debt6Dec. 2009Sep. 2010AA, 6 month lagA
External Current Account BalanceQ2, 2010Sep. 2010QQ, 2 month lagQ
Exports and Imports of Goods and ServicesQ2, 2010Sep. 2010QQ, 2 month lagQ
GDP/GNPDec. 2008Jun. 2009AA, 6 month lagA
Gross External DebtJun. 2010Sep. 2010MM, 4–6 month lagA
International Investment Position7Aug. 2010Sep. 2010MQ, 2 month lagM

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), and Not Available (N/A).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I), and Not Available (N/A).

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

The Asian Development Bank’s Strategy 2020 available at:

The National Statistic Development Plan (NSDP) update available is available at:

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