The World Bank has approved $200 million worth of International Development Association (IDA) credit for Cambodia’s fight against the ongoing COVID-19 pandemic and broader economic recovery.
World Bank Country Manager for Cambodia Inguna Dobraja said in a press release on Friday that the funds would go towards the introduction of reforms to improve the nation’s business environment, as well as measures to strengthen public finance management and revenue-mobilization institutions.
“There is a clear need in Cambodia to provide quick-disbursing resources in support of a comprehensive, government-led program that will protect the poorest from the impacts of the crisis and assist with the country’s economic and social recovery,” she said.
The project is intended to help Cambodia endure the COVID‐19 crisis by providing targeted relief to affected people, promoting structural reforms and building resilience against future economic shocks, the bank said.
Cambodia’s economy is projected to grow at 4 percent in 2021, after contracting by 3.1 percent in 2020, thanks to a revitalization of global demand. Goods exports have gradually adjusted, growing at 12.2 percent during the first four months of 2021, while the share of garment exports in total goods (excluding gold) exports declined to 45.6 percent.
But Cambodia’s growth outlook remains highly uncertain. The nation’s recovery is largely dependent on the course of the virus and the pace at which the vaccine can be rolled out.
The sectors most impacted by the crisis include garment and textile manufacturing, tourism and construction, which account for much of Cambodia’s employment, creating additional challenges for a sustained economic recovery.
“In the absence of significant mitigation measures, the pandemic could result in sharp rises in unemployment and poverty, with the number of people falling into poverty expected to swell by nearly one million,” the World Bank said.
Meas Soksensan, a spokesman at the Ministry of Economy and Finance said the fund will help to mitigate the economic shock.
“We applaud all sources of funding that contribute to the economic recovery, which is important,” he said. “For the government, we will use the funds properly in line with the World Bank’s common vision, because now we need to do something to restore the economy, both stabilizing and promoting recovery.”
Soksensan said previously that the government had set aside more than $800 million to support the economy in 2021, and had reserved more than $1.14 billion in 2020.
The government, which is in the process of preparing a post-COVID-19 Economic Recovery Plan, has also been providing a cash support program for poor families and vulnerable people as well as supporting small and medium enterprises through the Rural Development and Agriculture Bank, SMS Bank, and Credit Guarantee Corporation of Cambodia.
According to the Ministry, the government spent $100 million in 2020 on direct cash support for workers as well as work-related training, and allocated $160 million in 2021 to support suspended workers.
The Ministry of Labour announced earlier this week an allowance of more than $11 million to be distributed to garment workers who were caught in lockdowns earlier this year. The social protection allowance would be provided to almost 275,747 garment workers from a total of 513 factories in Phnom Penh, Kandal and Preah Sihanouk provinces. Each worker will receive a one-off payment of $40.
San Chey, executive director of the Affiliated Network for Social Accountability, welcomed the funding, saying that the fight against COVID-19 and future economic recovery needed cooperation between the public and private sectors.
“If we look in general at economic and public health, it is very important to pay attention during this pandemic context,” he said, “We want to see the three parties [government, private sector and civil society] work together to address the joint issue of COVID-19.”
Chey said that the government’s cash transfer to poor and vulnerable people during the pandemic had been a good measure to mitigate the impact of COVID-19.
“We understand that the government’s policy of cash transfer projects has also provided a good result,” he said.
Vorn Pao, the president of the Independent Democracy of Informal Economic Association (IDEA), said that he had asked the Ministry of Economy and Finance to register 170 vulnerable and poor families to receive cash transfers in early June, saying that the ministry had allocated one week for those working in the informal sector and poor families that were facing hardship in locked down zones to register for assistance. However, the request had been refused by local authorities.
“The government should make it easy for people to register for assistance and should cooperate with NGOs to spread the information publicly,” he said.
The World Bank said the project is part of a package of budget-support operations being provided by a number of Cambodia’s development partners, including the Asian Development Bank (ADB), the European Union (EU), and the Japan International Cooperation Agency (JICA). The World Bank Group has committed over $125 billion to fight the health, economic, and social impacts of the pandemic. The Bank is also providing $12 billion to help low- and middle-income countries purchase and distribute COVID-19 vaccines, tests, and treatments.
According to the Ministry of Health, Cambodia on Friday recorded 759 new cases of COVID-19 and 16 deaths. So far, Cambodia has a total of 46,065 COVID cases, with 509 deaths.