Phnom, Penh, Cambodia (27 January 2011)
Cambodia’s Deputy Prime Minister and Minister of Economy and Finance H.E. Keat Chhon and the Asian Development Bank (ADB) today signed grant and loan agreements worth $44 million for three development projects.
The agreements cover the Financial Sector Program (Cluster 2, Subprogram 4), the Second Greater Mekong Subregion (GMS) Communicable Disease Control Project, and the GMS Biodiversity Conservation Corridors Project.
ADB is providing loans of $10 million and grants of $5 million under the Financial Sector Program (Cluster 2, Subprogram 4), which supports development of a sound, market-based financial sector. This is achieved by improving payment clearance and settlements in the commercial banking sector, putting in place prudential supervision of banks and microfinance institutions, and promoting good governance and deposit-taking by microfinance institutions in compliance with improved prudential requirements. It also promotes greater transparency in the insurance industry, measures to combat money laundering, and a new integrated accounting system at the National Bank of Cambodia.
The program, which began in 2007, has led to increased bank lending of $1.52 billion, the creation of over 12,000 jobs, and the opening of over 980 new branches of banks and microfinance institutions throughout Cambodia.
“Financial sector development helps improve public confidence and expands the reach of the formal finance sector to lower income groups including rural microenterprises,” said Putu Kamayana, ADB Country Director for Cambodia.
To support the government’s drive to minimize economic impact of public health threats, ADB is providing $10 million in grants to expand surveillance response systems to control dengue outbreaks, and prevent the spread of communicable diseases in the GMS countries such as cholera, typhoid, and HIV/AIDS, as well as tropical illnesses such as Japanese encephalitis and schistosomiasis.
This is part of the $49 million Second GMS Communicable Disease Control Project, which also targets improvements in the disease control capacity of health services and communities in border districts of Cambodia, Laos and Viet Nam. The community-based communicable disease control systems funded by the project cover around 1.7 million people living in 116 border districts in the three countries. About one-third of the population in the target areas belong to ethnic minority groups.
The richly diverse forest areas in the GMS countries have come under increasing pressure from hydropower development, road construction, mining and plantation agriculture. The $19 million grant for the Cambodia part of the GMS Biodiversity Project is part of the $69 million GMS Biodiversity Conservation Corridors Project, which aims to conserve more than 1.9 million hectares of threatened forest, home to over 170,000 mostly poor, ethnic minority groups in Cambodia, Lao PDR and Viet Nam.
The project will include planting indigenous trees to restore habitats in over 19,000 hectares of degraded forest land. It will also raise the capacity of national and provincial agencies and community-level groups to plan and sustainably manage forests, while supporting security of land tenure for poor households and ethnic minority groups dependent on forest resources. The project will also support small scale community infrastructure with funds going to communes and villages for potable water, sanitation, and waste management improvements, as well as upgrades of market access roads.
“These GMS projects will support sustainable economic growth by preventing public health threats, reducing negative impacts on economic productivity, trade and tourism, and conserving threatened forest land. They will contribute to poverty reduction and income generation for poor and disadvantaged communities, including ethnic minorities,” Mr. Kamayana added.
With the signing today, ADB has approved a total of $160.8 million in Asian Development Fund grants and loans for Cambodia in 2010, plus an additional $36.8 million mobilized from co-financing partners such as the Korean Economic Development Cooperation Fund, the OPEC Fund for International Development and the Nordic Development Fund.
In 2009, ADB approved a total of $16.1 billion in financing operations through loans, grants, guarantees, a trade finance facilitation program, equity investments, and technical assistance projects. ADB also mobilized co-financing amounting to $3.2 billion.
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