ADB Approves $800M in Loans Over 5 Years

The Asian Development Bank (ADB) on Monday announced $800 million in concessional loans to Cambodia over five years, with most of the funds allocated to developing infrastructure, the public sector and education.

Jan Hansen, senior country economist for ADB, said the funding—approved under the Bank’s Country Partnership Strategy for 2014 to 2018—aims to help Cambodia diversify its economy as it expands.

“Cambodia is expected anytime soon to graduate from a low income country to a middle income country,” Mr. Hansen told reporters at the launch of the strategy. “It could happen this year or next year at the latest.”

Middle-income countries are defined as having a gross national income (GNI) per capita of at least $1,045. According to the World Bank, Cambodia’s GNI per capita was $950 last year. But ADB says 40 percent of the population still lives on less than $2 a day.

Although ADB did not release specific details of projects Monday, it says the strategy will support agricultural commercialization and the development of roads and water supply, enhance the accessibility and quality of education, and help improve the management of public sector finances.

ADB country director Eric Sidgwick said Cambodia must start becoming more competitive in preparation for losing the trade benefits it currently enjoys, such as the European Union’s “Everything But Arms” program, which gives least developed countries duty-free and quota-free access to the E.U. market for all exports with the exception of armaments.

“As you gradually become successful…over time you lose the preferences that you currently enjoy,” Mr. Sidgwick said. “[Cambodia] is still benefiting from this protection. But by the time that this protection is lifted, the economy has to be more diversified and…competitive.”

Last week, ADB released a report saying that although Cambodia’s key industries—garments, agriculture, tourism and construction—have been vital to the country’s economic expansion, the sectors are reaching their limits and diversification is crucial to sustainable growth.

Sandra D’Amico, vice president of the Cambodian Federation of Employers and Business Associations, said it was crucial that Cambodia moves to diversify more quickly.

“We are not a low wage country anymore and need to find ways to compete on more value-added production as well as productivity to remain competitive and attractive as an investment destination,” Ms. D’Amico said via email.

[email protected]

Related Stories

Latest News