Economic and political context
- 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.
- 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.