Debt Still Plagues ADB Effort to Fix Railway Woes

In its first annual review of efforts by the Asian Development Bank (ADB) to make amends for the thousands of Cambodian families hurt by a railway project the lender is funding, the bank’s Compliance Review Panel said it was making progress on five of six recommended fixes but lagging on the last.

After a formal complaint from the families, and an ADB-commissioned review, the bank in February last year admitted to making major mistakes in the planning and follow-through of a $142-million project to rehabilitate the country’s dilapidated railway system, mistakes that forced some 1,000 families out of their homes. Two months later, it came out with a government-approved action plan aimed at bringing the project in line with ADB safeguards, which insist that the bank project not leave affected families worse off.

In its report, released Monday, the panel says it is happy to see that the bank and government had “invested considerable time, funds and effort” in the plan.

“Significant progress has been made with regards to five out of the six recommendations approved by the [ADB] board…. Nonetheless, more effort is still required to bring the project into full compliance,” it says.

Of the six recommendations, the panel said the bank had “not complied” with one calling for loan-repayment-assistance for families that took on heavy debts because of their evictions.

The government refused to help with the scheme, forcing the bank to reach out to the Australian Embassy, which in turn provided a grant to World Vision so that it could follow through with the program, which will let families replace their current loans with new ones on better terms. The report says the new loans will be offered to relocated families in Phnom Penh first.

The report adds that the ADB had “partially complied” with the other five recommendations. They included finding families that were undercompensated for land they lost to the project and paying them the additional compensation they deserve, improving facilities and resettlement sites, and expanding an existing program for helping affected families earn more money.

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