ADB, Cambodia Continue Financial Sector Reforms to Spur Growth, Cut Poverty [... or to line up the pockets of corrupt gov't officials?]

03/12/2010
FinChannel.com

The FINANCIAL -- The Asian Development Bank (ADB) Board of Directors on December 2 approved a loan and grant of $15 million equivalent to the Government of Cambodia to promote the development of a sound, market-based financial sector.

According to ADB, the loan and grant will finance the final subprogram of the Second Financial Sector Cluster Program, which incorporates reform actions designed to improve public confidence and financial intermediation, strengthen sector resilience, promote good governance, and enhance system efficiency.

Key actions of the program include steps to improve check clearance and settlement amongst commercial banks and the government, regulations to guide interbank transactions, the promotion of deposit-taking by microfinance institutions in compliance with new prudential requirements, and improved prudential supervision of banks and microfinance institutions. It also promotes greater transparency in the insurance industry, measures to combat money laundering, and a new integrated accounting system at the National Bank of Cambodia.

"Finance sector development helps reduce poverty by cutting transaction costs for economic activities and expanding the reach of the formal finance sector to lower income groups, including rural microenterprises," said Samiuela Tukuafu, Principal Financial Sector Specialist in ADB's Southeast Asia Department.

The immediate gains generated by the program, which began in 2007, include new and increased loans of $1.52 billion, the creation of over 12,000 jobs, and the opening of over 980 new branches of banks and microfinance institutions throughout Cambodia.

The loan of $10 million equivalent from ADB's concessional Asian Development Fund has a 24-year term, including an 8-year grace period with an interest rate of 1% during the grace period and 1.5% for the balance of the term. The grant of $5 million also comes from the Asian Development Fund. The National Bank of Cambodia is the executing agency for the overall program, with the Ministry of Economy and Finance and Ministry of Commerce the implementing agencies.

With tons of cash from the ADB, Cambodia is still a dirt poor country

ADB provides large amount of assistance to Cambodia in past decades

April 20, 2009
Source: Xinhua

The Asian Development Bank (ADB) provided Cambodia with 940 million U.S. dollars of loans and 120 million U.S. dollars of grants until December 2007, national media said on Monday.

Meanwhile, Cambodia has won 94 million U.S. dollars of aid from ADB in relevant technical projects during the same period, Chinese-language newspaper the Sinchew Daily quoted an ADB press release as saying.

The kingdom also benefited from 810 million U.S. dollars of grants and 1.05 billion U.S. dollars of loans that ADB provided to its member countries in 2008, according to the press release.

Cambodia became a member country of the ADB in 1966, later retreated from the organization due to its civil war, and then regained its membership in 1992.

ADB Supports Cambodia's Push to Diversify Economy

05/12/2008
finchannel.com

The FINANCIAL -- The Asian Development Bank (ADB) is providing a loan and grant financing for a program that supports the Cambodian government's drive to expand the private sector and diversify its economic base beyond garments, tourism, and construction.

ADB is extending a 24-year, $20-million loan to be sourced from its concessional Asian Development Fund to finance reforms designed to improve the business climate and trade facilitation for the private sector. It is also providing a $2 million grant to build up the capacity of the country’s sanitary and phytosanitary management systems.

The loan is for the first subprogram of the Promoting Economic Diversification Program – a cluster of three subprograms that will help roll out a series of government policy reforms and measures to create a more stable macroeconomic environment, to lower the cost of doing business for private firms, to expand trade, and to improve food safety standards. The Program also helps implement ADB’s Greater Mekong Subregion technical work on trade facilitation at the national level.

The recent global commodity price and financial shocks have slowed Cambodia’s economic growth rate in 2008 and lower growth is projected for 2009. These shocks highlight the country’s vulnerability due to its narrow economic base.

“The challenge for Cambodia is to sustain a high economic growth rate, accelerate the creation of productive jobs and to continue its poverty reduction efforts — difficult tasks with half of the population under 20 years old and more than 85% employed in the informal sector,” said Kelly Bird, Senior Economist with ADB’s Southeast Asia Department.

The Program supports the government’s own efforts to diversify the economy. Based on ADB estimates, reforms planned under the full Program could add 2.4% to Cambodia’s gross domestic product, boost employment levels by 4.3% for males and 6.3% for females, and cut the incidence of poverty by a further 2.7%.

One innovative feature of the overall Program is the inclusion of policy ‘triggers’ or milestones that pave the way for technical assistance projects designed to support private sector competitiveness. One example is the grant for the improvement of sanitary and phytosanitary management which was approved after the government met a series of policy milestones under subprogram 1. Another one in the pipeline is a matching grant technology project targeting small enterprises under subprogram 2.