"It is arguable whether and to what extent the project had a positive impact on what actually happened in the field," the report said.

When the Bank project was approved in 2000, over-exploitation of timber resources and illegal logging were threatening to exhaust Cambodia's forest resources in as little as five years, the bank said in a statement.

The five-million-dollar project focused on addressing the critical but difficult issue of preventing illegal logging, it said.

Ian Porter, the Bank's country director for Cambodia, vowed to improve the scheme, saying: "Many poor communities depend on access to forest products for their livelihoods.

"This is too critical an issue for the World Bank to simply walk away."

In a statement, the Bank conceded to many of the problems cited in the review and vowed to overhaul the project.

"But it acknowledged the (review) panel's finding that the project did not finance logging or directly cause the damages from unsustainable logging in the country," it said.

Since the late 1990s, instances of illegal logging have dropped in number dramatically and the total area under forest concessions has decreased during the life of the project, it added.

Global Witness, a British-based forestry watchdog, last year had accused the World Bank of condoning illegal logging for failing to reform the system that awarded concessions.

Illegal logging is a major environmental issue in Cambodia. Vast tracts of forest that had been protected by years of war are increasingly under threat since the fighting ended in 1998.

Related Links
World Bank