Cambodian Journalists Alliance Association

World Bank Approves $275 million for Economic Growth and Resilience

View of tall buildings in Phnom Penh, June 7, 2024. (CamboJA/Pring Samrang)
View of tall buildings in Phnom Penh, June 7, 2024. (CamboJA/Pring Samrang)

The World Bank approved $275 million credit from its International Development Association funds to support Cambodia’s efforts to ensure long-term economic growth and resilience. It would also aid reforms to boost private sector competitiveness.

The World Bank has so far approved $119.5 million this year to enhance the labor skills of 33,000 Cambodians and improve the labor market, as well as the quality of education for more than 1,500 schools across Cambodia.

“While Cambodia’s economy has recovered from the impact of the pandemic and subsequent shocks, the focus is now shifting towards achieving sustained high quality growth,” said Maryam Salim, World Bank country manager for Cambodia.

“This new operation will boost private sector competitiveness, strengthen the government’s fiscal position, and provide assistance to the most vulnerable Cambodian,” she added.

The credit for the Second Cambodia Growth and Resilience and Development Policy Financing Project addresses challenges holding back the country’s efforts to shake off lingering economic efforts of the COVID-19 pandemic. It builds on the $274 million Cambodia Growth and Resilience Development Policy Financing, first approved in 2022. 

Ministry of Economy and Finance spokesperson Meas Soksensan said the World Bank’s loan is to partly help the tax sector. This means that the money is used to help reform the tax administration and develop tax strategies to create more competition in the management of the tax sector.

“If we have the budget, we would use it accordingly and they [World Bank] will have clear indicators, which are in line with the government,” he said, adding that this was the first pledge, followed by the implementation.

Asked about the private sector, he said the ministry does not have any mechanism to provide direct funding to private companies. 

“I do not know, unless we ask the World Bank if they have a mechanism [that allows] the use of the budget they approved. How would they use it?” Soksensan said.

Economic researcher​ and director of the Center for Policy Studies Chan Sophal opined that the World Bank loan would greatly help Cambodia stimulate economic growth by creating a more conducive environment for the private sector and reforming its credit programs.

“Our country now needs more credit as the economy slows, so has government revenues,” he said, adding that Cambodia needed more foreign loans. 

Sophal said the good thing was that currently Cambodia did not have too much foreign debt, which is still “at a low level”, at about 30% of gross domestic product. 

“So we still have space to borrow, especially favorable debt or low interest rates,” he added, noting that the “important thing is to use debt effectively”.