Cablegate: Encouraging Central Government Budget Transparency

VZCZCXYZ0006
PP RUEHWEB

DE RUEHPF #0816 3030921
ZNR UUUUU ZZH
P 300921Z OCT 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 1327
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC 0821

UNCLAS PHNOM PENH 000816

SENSITIVE
SIPDIS

STATE FOR EAP/MLS AND EEB/IFD/OMA - B. SAUNDERS

E.O. 12958: N/A
TAGS: PREL EFIN EAID ECON CB
SUBJECT: ENCOURAGING CENTRAL GOVERNMENT BUDGET TRANSPARENCY

REF: STATE 81177

SENSITIVE BUT UNCLASSIFIED

1. (SBU) SUMMARY: Pol/Econ Chief October 22 delivered
reftel demarche to the Ministry of Economy and Finance
(MoEF), reiterating that improvements in budget transparency
would be a key focus in future years. The MoEF highlighted
the ministry's diligent implementation of the Public
Financial Management Reform (PFMR) program as a positive
development, as well as growing cooperation with the National
Assembly, the Ministry of Planning and the line ministries.
However, the lack of capacity to implement a transparent
national budget that conforms in all respects with
international standards remains a major obstacle for the
Cambodian government. The MoEF acknowledged its recent
agreement to receive technical assistance from a U.S.
Treasury advisor on the budget, and promised to coordinate
closely on developments in the national budget planning and
implementation process. END SUMMARY.

2. (SBU) Pol/Econ Chief highlighted the concern for both
budget income and expenditures, given that Cambodia takes at
least two years to account for budget expenditures. Chan
Sothy, Director of the MoEF Department of Investment and
Cooperation, took on board the need to achieve concrete
improvements in budget transparency and highlighted recent
efforts in the PFMR, Phase 2, which was launched in December,
2008 for another five years. Chan observed that Cambodia had
only emerged from conflict in 1998 and that the Khmer Rouge
in the mid-1970s had eradicated the country's capacity to
deal effectively with a national budget. Nonetheless, he
asserted that the RGC was committed to budget transparency
and would provide the Embassy with information about its
progress.

3. (SBU) COMMENT: This demarche was coordinated closely
with a newly arrived U.S. Treasury Officer who will be
working directly with the MoEF on budget issues. We have
received excellent initial cooperation from the MoEF since
the technical advisor's arrival on October 19. We expect to
see continued good cooperation from the MoEF in the months
ahead, and an accurate report of the challenges Cambodia
faces in achieving budget transparency and the iterative
improvements made in reaching that goal.
RODLEY

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