Understanding World Bank's Latest Financing To Bolster Cambodia’s Economic Growth And Resilience
On June 20, 2024, the World Bank announced its Directors approved USD $275 million in credit to support Cambodia’s efforts to promote long-term economic growth and resilience.
This follows on from the USD $274 million first Cambodia Growth and Resilience Development Policy Financing approved in 2022 and the latest financing comes from low-interest International Development Association funds for developing countries.
What Will The World Bank Financing Be Used For?
World Bank said the monies will be used to “promote reforms that boost private sector competitiveness, strengthen the country’s fiscal position, and provide assistance to the most vulnerable.”
Maryam Salim, World Bank Country Manager for Cambodia added, “While Cambodia’s economy has recovered from the impacts of the COVID-19 pandemic and subsequent shocks, the focus is now shifting toward achieving sustained high-quality growth. This new operation will boost private sector competitiveness, strengthen the government’s fiscal position, and provide assistance to the most vulnerable Cambodians.”
Cambodia’s economy has been rebounding but it is highly concentrated in terms of products, export markets, and financing sources, while the nation is also highly vulnerable to climate change impacts, particularly floods and droughts.
The Cambodia Water Security Improvement Project is one such project set to benefit which aims to improve water security, increase agricultural productivity, and build resilience to climate risks. This project will take five years and is run by the Ministry of Water Resources and Meteorology and the Ministry of Agriculture, Forestry, and Fisheries.
The latest round of World Bank financing is hoped to address some of these headwinds and support reforms to:
- Create an environment conducive to fair competition among firms
- Enhance fiscal resilience by improving spending efficiency
- Mitigating risks associated with capital expenditure and public-private partnerships.
- Strengthen the government’s capacity to raise financing through sovereign bonds
International Programme Funding For Cambodia
Official development financing to Cambodia fell by 30 per cent to USD $2.3 billion in 2022, said a Lowy Institute report.
Other sources of funding, such as from the Swedish government, will be phased out in 2024 for the bilateral development cooperation with Cambodia. The Swedish government had provided approximately USD $17 million to civil society groups in Cambodia focusing on strengthening human rights, democracy and the rule of law.
Meanwhile, the Asian Development Bank (ADB) announced that it had provided approximately USD $4.8 billion for 207 development activities in Cambodia by the end of 2023.