Cambodia, ADB Sign $230 Million in Agreements for Inclusive Growth

PHNOM PENH, CAMBODIA – The Government of Cambodia and the Asian Development Bank (ADB) today signed grant and loan agreements worth $230 million to reduce poverty and promote inclusive growth in Cambodia.

“The agreements signed today mark a significant milestone in the 20 year partnership between the Royal Government and ADB in scaling up development initiatives to reduce poverty and build sustainable economic growth,” said H.E Deputy Prime Minister and Minister of Economy and Finance Keat Chhon, who signed the agreements at the Ministry of Economy and Finance.

The agreements are for six development projects: the Promoting Economic Diversification Program, the Decentralized Public Service and Financial Management Program, the Third Education Sector Development Program, the Greater Mekong Subregion (GMS) Southern Economic Corridor Towns Development Program, the GMS Flood and Drought Risk Management and Mitigation Project, and the Medium-Voltage Sub-Transmission Expansion Sector Project.

“These initiatives will improve the quality of life for poor and vulnerable people, further develop the economy by helping the government roll out a series of policy reforms and measures to expand trade and investment, diversify the country’s economic base, and help transform Cambodia into an open and market-based economy,” said Eric Sidgwick, ADB Country Director for Cambodia, who signed the agreements on behalf of ADB. “They reflect ADB’s ongoing efforts to achieve inclusive growth through harnessing the synergies between a range of interventions,” he continued.

The $25 million Promoting Economic Diversification Program will help Cambodia generate investment and improve the business environment for the private sector, particularly small firms, by cutting regulatory costs and the time it takes to open up a business, expanding access to finance, and reforming trade and customs policies.

Lack of decentralization of service delivery has led to development disparities across Cambodia. ADB is providing a policy and project-based loan of $37.5 million to improve access to basic services, including health and sanitation, rural road rehabilitation, and agriculture expansion. The project will build 40 district offices in poor rural areas.

To address education inadequacies, the $30 million Third Education Sector Development Program will expand access to lower secondary education by building 60 new schools in 11 of the poorest provinces, while expanding 28 existing schools in eight provinces. The program will also provide 22 primary schools with lower secondary classrooms, and improve the quality of lower secondary education through key policy reforms and interventions, including improved school-based management.

ADB is assisting Cambodia to strengthen the economic competitiveness and investment attractiveness of the Southern Economic Corridor through the $47.9 million GMS Corridor Towns Development Project. This will help the Cambodia corridor towns of Battambang, Bavet, Neak Loeung and Poipet develop into economic hubs by improving their urban infrastructure and strengthening the skills of provincial and local authorities.

Also as part of ADB’s activities in the GMS, the $44.8 million GMS Flood and Drought Risk Management and Mitigation Project will upgrade irrigation systems and infrastructure in Pursat province, strengthen national flood forecasting centers, and provide  support to farmers for community-based disaster risk management. Improved drought management and irrigation structures should benefit farmers on about 16,000 hectares of land, while at least 10,000 people will gain from improved flood management.

Electricity shortages have held back businesses and quality of life in Cambodia, where household electrification is among the lowest in Southeast Asia. The $45 million Medium-Voltage Sub-Transmission Expansion Sector Project will finance more than 2,100 kilometers of 22 kilovolt sub-transmission lines to deliver reliable and cost-effective grid electricity in Kampong Thom, Kampong Cham, Siem Reap, Kandal and Banteay Meanchey provinces, and cut household power expenses by up to 60%.

For the agreements signed today, $209.5 million is funded by a loan from the Asian Development Fund. A $9 million loan and a $10.2 million grant come from the Strategic Climate Fund while the Government of Sweden is providing a co-financing grant of $1.5 million for the GMS Flood and Drought Risk Management and Mitigation Project.