ADB Approves $250 Million Loan to Support Cambodia's COVID-19 Response
The Asian Development Bank (ADB) approved on 8 July 2020 a $250 million loan to help the Government of Cambodia respond to the coronavirus disease (COVID-19) pandemic by strengthening the country’s health care system, increasing social assistance to the poor and vulnerable, and providing economic stimulus to businesses, including small and medium-sized enterprises.
“This assistance will help the government mitigate the adverse health, social, and economic impacts of the pandemic,” said ADB President Masatsugu Asakawa. “Cambodia has a record of sound macroeconomic management but COVID-19 threatens to undermine progress in poverty reduction, especially among vulnerable groups such as women and migrant workers. This loan is part of ADB’s long-term engagement plan that focuses on supporting Cambodia’s economic recovery and fiscal sustainability.”
Cambodia is highly vulnerable to the negative impacts from COVID-19, due to its open economy, narrow economic base, and highly mobile population. ADB expects Cambodia’s economy to contract by 5.5% in 2020 due to the decline in tourism; lower exports of garments, footwear, and travel goods; and a slowdown in construction activity. The downturn risks pushing an additional 1.3 million people into poverty.
In March, Cambodia launched a comprehensive response to COVID-19, with an initial package of measures totaling $815.7 million, or 3.2% of projected gross domestic product in 2020. These included support to the health system to prepare for a potential surge in COVID-19 cases and to workers and enterprises, including a capital injection of $150 million to support bank lending to small and medium-sized businesses. The stimulus package includes $300 million for delivery of cash grants to poor and vulnerable households in the government’s IDPoor database. This database includes 2.4 million poor households and is being expanded to include households that have been impacted by COVID-19.
ADB’s COVID-19 Active Response and Expenditure Support (CARES) Program is funded through the COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of ADB’s $20 billion expanded assistance for developing member countries’ pandemic response, which was announced on 13 April.
The program includes a country engagement framework that will ensure the government and ADB continue a policy dialogue around the implementation and monitoring of Cambodia’s COVID-19 response. The framework will include consultations with the private sector and civil society organizations. The program is also linked to ongoing ADB support for public finance management reforms to strengthen governance and transparency and improve efficiencies in budget and policy development, expenditure tracking, and audit.
The CARES Program was developed in coordination with other development partners and builds on ongoing ADB support to procure temperature screening equipment for international checkpoints and ensure regular updates to the Ministry of Health’s website that feature the daily COVID-19 surveillance report, among others. It is part of a robust pipeline of investment projects and technical assistance that is aligned with ADB’s country partnership strategy for Cambodia for 2019–2023 and will support the post-COVID-19 recovery.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
This news update was originally posted on the ADB website.