Logo of Phnom Penh Post newspaper Phnom Penh Post - ADB signs $180M in loans to Cambodia

ADB signs $180M in loans to Cambodia

Workers construct a section of the road on the southern outskirts of Phnom Penh in 2014.
Workers construct a section of the road on the southern outskirts of Phnom Penh in 2014. Heng Chivoan

ADB signs $180M in loans to Cambodia

The Asian Development Bank (ADB) yesterday signed a $180 million package of loans and grants to Cambodia that are meant to improve the country’s roads, water supply and small-scale farms.

One $70 million loan will go towards improving 147-kilometres’ worth of flood-prone stretches of National Road 1 and National Road 6 in Prey Veng, Siem Reap and Svay Rieng provinces.

Another $50 million loan will go towards improving and expanding sewage infrastructure and water treatment plants in the provincial capitals of Battambang, Kampong Cham, Siem Reap and Sihanoukville. The loan was accompanied by a $10 million grant from the Japanese government to build an energy-efficient wastewater treatment plant in Battambang province.

The third project – comprising a $45.7 million loan and $4.3 million grant – will go toward increasing the productivity of smallholder farmers in provinces in the Tonle Sap river basin.

“All three projects have the common goal: To reduce poverty and accelerate Cambodian livelihood, in both the urban areas and rural areas,” Finance Minister Aun Porn Moniroth said at the signing ceremony in Phnom Penh yesterday.

ADB Country Director Samiuela Tukuafu declined to answer questions yesterday about the exact interest rates of the loans, but noted that they were all concessional, which generally means they are more favourable for the borrower than a market-rate loan.

“We look forward to working closely with our colleagues in government to successfully implement all three projects for the benefit of the Cambodian people,” he said.

The ADB’s two largest donors are the US and Japan, both of which have expressed concern at the Cambodian government’s recent moves to dissolve and jail its primary political opposition.

But Sophal Ear, associate professor of diplomacy and world affairs at Occidental College in Los Angeles, said a loan this size would likely have been years in the making, though he noted the ADB was rarely concerned about internal politics.

“Well, obviously, rewarding a country that kills democracy with a $200 million loan isn’t a great thing,” Ear said. “But the ADB isn’t probably thinking that far. Democracy isn’t in their charter. The internal political system is not a consideration, and if they loan to Vietnam and Laos, goes their thinking, why not to Cambodia.”

The ADB has lent a total of $2.29 billion to Cambodia, and given an additional $455 million in grants.

At the end of 2016, Cambodia’s stock of external public debt, including arrears, stood at around $6.45 billion, or about 32 percent of the country’s GDP, according to the International Monetary Fund.

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