The Export-Import Bank of China on Wednesday signed off on two agreements to provide a total of $121 million in loans to Cambodia at a ceremony at the Ministry of Finance, which was presided over by former Finance Minister Keat Chhon.
Mr. Chhon, who was replaced by Aun Porn Moniroth as the country’s finance minister on September 26, was invited to the event as an honorary patron and said that the agreements would help realize projects he and Chinese Ambassador Bu Jinguo had agreed upon in August.
“The two concessional loan agreements concerning $121 million that His Excellency Li Ruogu, the chairman of the Export-Import Bank of China, and His Excellency Aun Porn Moniroth just signed this moment are a forward step to implement the project to develop the A Chang irrigation system in Kompong Chhnang province, and the project to build the 115 kilovolt electrical transmission line from Phnom Penh to Bavet City,” Mr. Chhon said.
“Until now, the People’s Republic of China has granted cooperation finances of about $2,856 million for development projects and infrastructure in Cambodia, such as roads, bridges, irrigation, ports and electricity,” he added.
At the ceremony, Mr. Chhon also offered his thanks for agreements from Chinese firms to help fund the creation of an oil refinery in Kampot province and to help Cambodia reach its milled rice export targets.
“I congratulate the signing of the memorandum of understanding between the Rural Development Bank [RDB] of Cambodia and the Export-Import Bank of China granting finance through cash—without any capital guarantees from the state to the RDB—to achieve the plan of exporting 1 million tons of milled rice from 2015,” Mr. Chhon said.
Soft loans from China have come under fire from sectors of the aid community in the past decade, with critics saying they are handed out to bloated development projects with few or no guarantees of transparency. And while soft loans are supposed to be made at terms more generous than market rates, critics have said that Chinese soft loans are still less competitive than similar agreements from international development facilities.
Sun Kunthor, president of the RDB, said that the new loan from the Export-Import Bank of China is “higher than a concessional loan and lower than a commercial loan. It is about 4 to 6 percent.”
Mr. Chhon said the government would ensure the latest Chinese loans are managed in line with principles of good governance.
“I will ensure that the Royal Cambodian Government will use these cooperation finances with transparency and accountability to develop Cambodia economically and socially,” he said.