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Annual Report 2002 : Mekong

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Cambodia

Economic performance

Cambodia’s GDP growth rate slipped from 6.3% in 2001 to 4.5% in 2002. The growth of agriculture sector output, which accounted for nearly 40% of GDP, was hampered by structural factors and compounded by drought and floods. Industry sector growth, led by garments, slowed relative to 2001, while growth of the services sector, led by tourism, increased. Inflation was low and the nominal exchange rate stable.

The fiscal deficit was 5.9% of GDP, fully financed by grants and external borrowing. The share of government current expenditures for its priority sectors (health, education, agriculture, and rural development) was 32.9%, up from 30.3% in 2001. The current account deficit of 8.1% of GDP was financed through official transfers and capital inflows in concessional loans and foreign direct investment. Export growth, led by garments, was overtaken by import growth.

ADB operations

Operational strategy: ADB’s strategy focuses on economic growth and poverty reduction. For broad-based rural development, the strategy promotes water resource management, decentralization, natural resource management, and agriculture sector reform. The social development focus is on sectorwide initiatives in education and health, and complementary support in water supply. To promote private sector development, the nation’s road network is being developed. Governance is promoted in economic planning, public finance, and legal reform; and gender issues are a focus in all interventions.

Policy dialogue: Policy dialogue focused on public financial management; decentralization; agriculture and natural resource management; education; and civil service, financial sector, and governance reforms including anticorruption initiatives. Policy dialogue between the consultative group of funding agencies and the Government emphasized forestry management, public administration reform, and legal and judicial reform (see the Special Theme Chapter). ADB helped prepare the National Poverty Reduction Strategy. Further support was provided to the country’s increasing involvement in the Greater Mekong Subregion (GMS) Program, culminating in a Summit of GMS Leaders in November in Phnom Penh (see Box).

Loans, technical assistance, and grants: Six loans totaling $116.5 million were approved in 2002, including Cambodia’s component of the regional GMS project for developing tourism, environmental management of Tonle Sap, health sector support, financial sector program, commune council development, and road improvement under the GMS. Seventeen technical assistance totaling $6.5 million and seven grants totaling $23.4 million were approved (see tables 1, 6, 7, 24, 25, and 35 in the Statistical Annex).

Project implementation: Since joining ADB in 1966, Cambodia has received 27 loans totaling $677 million, of which 23 were active at the end of 2002. Contract awards totaled $64.4 million, bringing the cumulative figure to $395.3 million. The contract awards ratio for 2002 was 23.7%—slightly higher than ADB’s average of 22.6%. Disbursements in 2002 totaled $78.9 million, bringing cumulative disbursements to $330.3 million. The disbursement ratio was 30.3%—higher than the ADB-wide average of 22.2% (see tables 14–23 in the Statistical Annex).

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