The news that the Global Fund backed down on its demand for government officials to provide receipts for their travel expenses came as no surprise to long-time observers of Cambodia’s entrenched foreign aid sector.

Millions of dollars of grant money from the Global Fund to fight malaria sat idle last year due to an impasse over travel expenses with the National Malaria Center (CNM), which was the centre of a corruption scandal in 2013.

The government flatly refused to agree to new financial reporting standards, but amid rising fears of drug-resistant malaria strains developing in Cambodia, the Global Fund relented on its central demand for receipts, opting instead for other financial reporting requirements.

The case, the observers say, is emblematic of a system in which, despite billions of dollars spent over decades, donors remain “hostage” to a government that has the final say over where the money really goes.

Although the deal was hailed by its government brokers, it roiled others, like longtime anti-corruption crusader and opposition lawmaker Son Chhay.

“I think that this is not acceptable,” he said. “You cannot give in to corruption … Maybe in the past [getting] receipts was difficult, but today I can get a receipt eating in the street!”

Sebastian Strangio, the author of Hun Sen’s Cambodia, said Cambodia’s government has long put aid agencies in a bind to maximise control.

“On one hand they can pull out and leave all the people to their fate and risk drug resistant malaria spreading into Thailand and Cambodia, or they can stay and accept the government’s conditions for continuing this work. I think it’s accurate when people say [the government] has sort of taken people hostage on this issue,” he said.

“What you see in these sorts of situations is development agencies gradually being worn down and gradually accepting the conditions put in place by the Cambodian government.”

Ear Sophal, the author of Aid Dependence in Cambodia, said in an email that despite a slew of corruption and mismanagement scandals in the past, donors have “never really learn[ed] their lesson”, citing the World Bank mulling new loans despite a 2011 freeze over the Boeung Kak evictions.

“There’s always tomorrow, and the authorities know this,” he said.

Meanwhile, Cambodia has barely budged in its consistently low rankings on corruption.

In its annual Corruption Perceptions Index released last week, Transparency International found that Cambodia ranked 150 out of 168 – dead last in Southeast Asia.

“I think it is time for the donors to press harder on demanding holistic and fundamental reforms from the Government as a pre-condition to their aid money to the Government,” said Preap Kol, executive director of TI Cambodia, via email.

Attempts to reach the CNM and Ministry of Health yesterday were unsuccessful.

But during a conference announcing an ambitious malaria reduction program on Wednesday, officials made it clear what was at stake.

“If we don’t have the budget, what is the problem we will face in the future?” CNM director Huy Rekol told a donor when asked about the impasse.

Global Fund spokesman Seth Faison said in an email that Cambodia needed measures to “maximize the effectiveness of programs that promote health and fight infectious disease”.

“That requires a combination of firm adherence to principles of strict financial supervision, with flexibility on specifics when needed.”

Additional reporting by Alessandro Marazzi Sassoon