Countries and Regions

	Table of Contents
p. 22 of 22 BACK | NEXT I. Country Performance Assessment II. Poverty Reduction and Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work IX. Local Cost Financing

Country Assistance Plans - Cambodia

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IX. Local Cost Financing

114. While substantial progress has been made in improving fiscal revenues over the past several years, domestic resource mobilization is still very low. Cambodia remains dependent on significant external resources to achieve high rates of poverty-alleviating economic growth. The pressure on counterpart financing is heightened also by several short-term macroeconomic issues. First, the IMF PRGF program requires strict government control over spending levels. Second, while demobilization and public administration reform programs may have long-term fiscal benefits, in the short term they will require more expenditures, reducing the resources available for local cost financing. Third, weak budget mechanisms make operation and maintenance extremely difficult to fund, particularly at the local level. Finally, as both aid agencies and the Government attempt to compensate for the hiatus in new lending in the 1997- 1998 period, there will be a large number of projects coming on stream at the same time. Therefore, while ADB will assist the Government in mobilizing more domestic resources, there is a clear justification for ADB to continue financing a reasonable proportion of local costs.

Back VIII. Economic and Sector Work	Country Assistance Plans - Cambodia