World Bank watches Cambodia's handling of new-found oil wealth

Oil and gas will provide the key revenues of the Cambodian economy in the coming years, making the need to strengthen public financial systems even more pressing, a World Bank official said.
"Oil and gas revenues will be the key revenue of the Cambodian economy so we would expect to see the Cambodian government strengthen the public financial system," World Bank country economist for Cambodia, Robert Taliercio, told. "We have to be careful of oil and gas exploration here and pay attention to how the government does on this issue," he said.

He said the World Bank was monitoring the situation closely and was issuing a report on the matter every six months. Key systems coming under the public financial system include a formalized tax system and anti-corruption laws in a post-war economy widely seen as being riddled with graft.
The Cambodian government had promised donors it would pass an anti-corruption law by the end of 2006, but Hun Sen admitted recently that this target now looked unlikely.

Cambodian oil reserves have been discovered in several blocks in offshore waters and significant inland reserves located under Tonle Sap Lake are also expected. US giant Chevron is currently engaged in exploratory drilling in Block A, a site which alone has been estimated to contain up to 500 mm barrels of oil.
Estimates of potential oil and gas revenue for the impoverished nation have ranged up to 1 bn $ a year. Full-scale production is expected to begin by 2010, but donors have already voiced concerns that without adequate checks and balances in place the benefits of the discovery may be siphoned off by the rich and powerful and not be felt in the nation's wider economy.