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The funds are meant to help the country cope with the impact of COVID-19
PHNOM PENH--The Asian Development Bank (ADB) on July 8 approved a $250 million loan to help the Cambodian government rebuild the country's economy that has been severely affected by the Coronavirus Disease 2019 (COVID-19) pandemic.
According to the ADB's press release, this loan will go toward strengthening the country's healthcare system, increasing social assistance to the poor and vulnerable, and providing economic stimulus to businesses including small and medium-sized enterprises.
“This assistance will help the government mitigate the adverse health, social and economic impacts of the pandemic,” said ADB President Masatsugu Asakawa, according to the press release. “Cambodia has a record of sound macroeconomic management but COVID-19 threatens to undermine progress in poverty reduction, especially among vulnerable groups such as women and migrant workers.
“This loan is part of ADB’s long-term engagement plan that focuses on supporting Cambodia’s economic recovery and fiscal sustainability,” he added.
Cambodia is highly vulnerable to the situation generated by COVID-19 due to its open economy, narrow economic base and highly mobile population, the ADB said.
According to its press release, Cambodia’s economy is expected to contract by 5.5 percent this year due to the decline in tourism; lower exports of garments, footwear and travel goods; and a slowdown in construction activity. The downturn may push an additional 1.3 million people into poverty.
Last March, Cambodia launched a comprehensive response to COVID-19, with an initial package of measures totaling $815.7 million, or 3.2 percent of the projected gross domestic product for this year. These included support to the healthcare system to prepare for a potential surge in COVID-19 cases, and support to workers and enterprises including a capital injection of $150 million for bank lending to small and medium-sized businesses.
The stimulus package has included $300 million for cash grants to poor and vulnerable households in the government’s IDPoor database. This database, which includes 2.4 million households, is being expanded to include households affected by COVID-19.
The ADB’s COVID-19 Active Response and Expenditure Support (CARES) Program is funded through the COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of ADB’s $20 billion expanded assistance to developing member countries’ pandemic response, which was announced on 13 April.
The CARES program includes a country engagement framework that will ensure the government and ADB continue a policy dialogue around the implementation and monitoring of Cambodia’s COVID-19 response, according to the ADB release. The framework will also include consultations with the private sector and civil society organizations.
The program is linked to ongoing ADB support for public finance management reforms whose goal is to strengthen governance and transparency and improve efficiencies in budget and policy development, expenditure tracking and audit, the press release read.
Developed in coordination with other development partners, the CARES program builds on ongoing ADB support for COVID-19 measures such as providing international checkpoints with temperature-screening equipment and ensuring regular updates to the Ministry of Health’s website featuring daily COVID-19 surveillance report, among other information.
The program is part of a long-term strategy of investment projects and technical assistance, which is aligned with ADB’s country partnership strategy for Cambodia for 2019–2023 and will support the post-COVID-19 recovery.
Established in 1966, the ADB aims to achieve a prosperous and sustainable Asia and the Pacific by 2030 while eradicating extreme, according to its release.