Cambodia emerged in the early 1990s from30 years of conflict, the brutal Khmer Rouge era, and adecade of Vietnamese occupation, with one of the world’slowest per-capita incomes, and with social indicators farbehind those of neighboring Southeast Asian countries.Physical infrastructure had been largely destroyed. UnitedNations intervention led to a peace agreement in 1991, a newconstitution, elections, and formation of a coalitiongovernment, although a reduced level of conflict andpolitical instability continued until the late 1990s. Thegovernment began a process of economic liberalization in thelate 1980s which has been sustained. The donor worldresponded rapidly to Cambodia’s huge resource need with ahigh level of concessional aid which has been sustained.Since the mid-1990s the economy has been growing steadily;by 2006, per-capita incomes were double the 1998 level andthe incidence of poverty had been significantly reduced.Social indicators have improved, generally to above theaverage for low-income countries, but are still well belowthose for most Southeast Asian countries. The Bank hasfocused on governance issues with increasing intensity ineach succeeding country assistance strategy, and has workedwith other donors in a number of areas. Progress has beenmade on certain governance-related issues such as publicfinancial management, including expenditure reorientation,the poverty focus in health and education services, andsupport for decentralized, community-based development programs.
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