World Bank approves financing of 274 million USD for Cambodia’s economic recovery

Tourists visit Pub Street in Cambodia's Siem Reap province. (Photo: AFP/VNA)

Hanoi (VNA) – The World Bank’s Board of Executive Directors on December 20 approved a financing of 274 million USD to support reforms that will boost growth and strengthen Cambodia’s resilience, the World Bank announced on December 21.

According to a statement by the lender, the operation supports reforms that will streamline the business registration processes, promote competition, and expand access to finance for small and medium enterprises.

Other reforms will enhance fiscal resilience, including by improving the management of Public Private Partnerships and facilitating the issuance of government debt in the domestic market.

The operation will also facilitate the timely provision of relief to a broader set of vulnerable households in the event of a natural disaster or economic shock.

Cambodia’s economy was badly affected by the COVID-19 pandemic, with GDP contracting by 3.1% in 2020, the country’s first recession in 30 years.

Simulations show that the poverty rate increased by 2.8 percentage points, pushing about 460,000 individuals into poverty.

The Cambodia’s government responded quickly and effectively to the pandemic, assisting business and vulnerable families, but the associated rise in spending has meant that fiscal consolidation will be required in the period ahead.

Maryam Salim, World Bank Country Manager for Cambodia, said that while Cambodia’s ‘Living with COVID-19’ strategy has helped rebuild the economy, the country remains vulnerable to downturns in external demand and disruptions in global supply chains.

“This new operation will help Cambodia boost private sector competitiveness, strengthen its fiscal position, and provide assistance to its most vulnerable people,” he said.

The operation is anchored in the government’s post-pandemic Economic Recovery Plan, which has three broad objectives of recovery, reform, and resilience, and builds on the 200 million USD Cambodia Relief, Recovery, and Resilience Development Policy Financing operation approved in 2021.

The financing provided by this operation will help to alleviate some of the fiscal pressures that the government is now facing, having run relatively large deficits in recent years. The 274 million USD credit is provided by the International Development Association (IDA), the World Bank’s fund for the poorest countries./.