CDC - Second Cambodia Development Cooperation Forum

SESSION IX MULTI-YEAR INDICATIVE FINANCING FRAMEWORK

Delivered by Lead Development Partner Facilitator
Qimiao Fan
World Bank Country Manager for Cambodia
at the
CAMBODIA DEVELOPMENT COOPERATION FORUM

Phnom Penh, December 5, 2008

Excellencies, Ladies and Gentlemen

The development partners of Cambodia are very pleased to have the opportunity to give our indication of the medium-term financing that we will provide to support the Government's implementation of the National Strategic Development Plan and to achieve the Cambodian Millennium Development Goals.

At the last CDCF we moved away from the exercise of pledging to the provision of a medium-term financing framework for the NSDP. This is an important step forward in enhancing aid effectiveness.

The Aid Effectiveness Report has shown that official development assistance to Cambodia is expected to increase from 2007 to 2008 by 12%, with estimated total disbursements in 2008 of USD 888 million. With the multi-year indicative financing framework (MYIFF) as presented by his Excellency Keat Chhon, development partners have provided their indicative resource allocations for the three years to come, 2009, 2010 and 2011, with a total of [USD 951.5]¹million indicated for 2009.

In real terms (given rapid inflation) and as a share of GDP, it is welcome to see a stabilisation of official development assistance (ODA). ODA decreased as a percentage of GDP from 13% in 2000 to 9% in 2007 and is estimated at 9% in 2008 and 9% in 2009.

It is also welcome to see the increase from new partners, which accounts for a significant part of ODA since 2007. We look forward to working closely with the new development partners, and hope we will be able to identify together opportunities of closer collaboration that will be for the mutual benefit of not just the new partners and the traditional partners, but more importantly for the Cambodian people. In particular we support increasing the coverage of the MYIFF to include all of Cambodia's development partners. Only with the comprehensive reporting of aid funds can the national budget of Cambodia be comprehensive, and therefore efficient and effective.

Government and development partners have the shared ambition of achieving the long-term progress and prosperity of Cambodia and its people, and our resources are provided in the spirit of partnership that is critical for the success of these mutual goals. As I outlined in my opening remarks, Cambodia faces complex challenges in ensuring sustainable and equitable development in the years to come. In particular during this CDCF we have focused our dialogue on the need to integrate separate institutions and processes for planning, budgeting and aid management, and the need to strengthen transparency and accountability in the management of Cambodia's public finances and natural resources. We look forward to working with the Government on these crucial issues, in the technical working groups and in monitoring achievement of our 2009 JMIs. We are committed to sustain the quantity, and improve the quality, of the support we provide to the Government. Both Government and development partners signed up in Accra this year to ensuring that aid is transparently mobilised in priority areas that impact on the poor. To this end we fully endorse the Government's intention, as set out in phase two of the Rectangular Strategy, to strengthen good governance and ensure that all government activities are increasingly more transparent and accountable. We also fully endorse the suggestions made in his Excellency Yanara's presentation to further enhance aid effectiveness.

We wholeheartedly support the Government in establishing this more comprehensive and robust planning exercise. We are committed to improving the predictability of our aid. Predictable aid is an essential component of the move to a more medium-term budgeting and expenditure framework, which will enable us to get meaningful alignment between goals, policies and spending. We look forward to seeing the multi-year indicative financing framework fully reflected in the Government budget, as approved by the National Assembly. In particular it would be important to have both domestically and externally financed expenditure approved by the National Assembly with clear allocation by sectors.

It is not just the volume of our commitments that matters; the predictability of living up to our pledges and disbursing as planned is also important. And this is particularly important given the current global financial downturn. While the extent of the impact of this downturn on the economy and Cambodia's people is still unknown, it is certain that it will have a negative impact on the levels of investment, growth and revenue for the next couple of years. During these challenging times it is critically important that we development partners maintain our support to the Cambodian Government in its work to reduce poverty and to protect the poor and to lay the foundation for sustainable long-term growth. Indeed, given the severe financial crisis in many of our development partners' own countries, the increased support to Cambodia in 2008 and 2009 is a clear indication of the strong commitment of all DPs to support Cambodia and its people in meeting all challenges ahead. We look forward to our continued and strengthened partnership.

Thank you.