Chinese Bank Signs Off on $121M in Soft Loans to Cambodia

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.