New Country Engagement Plan for Cambodia Outlines More World Bank Group Support to Help Reduce Poverty

May 19, 2016

Four new projects to focus on Cambodia’s development priorities

WASHINGTON, May 19, 2016—The World Bank’s Board of Executive Directors today discussed the 2016-2017 Country Engagement Note (CEN) for Cambodia and approved financing for four projects to provide many communities across Cambodia with better roads, sustainable sources of water, improved livelihoods from agriculture, and increased access to health care.

The CEN sets out the strategy of the World Bank Group to support Cambodia’s goal of reducing the incidence of poverty by at least one percentage point per year, as indicated in the country’s 2014-2018 National Strategic Development Plan. The strategy aims to help Cambodia further improve its business climate and make its products more competitive in global markets. It also aims to improve social and infrastructure service delivery, generate opportunities for the poorest people, and reduce their vulnerability through policies, investments and programs to build assets and create more jobs.

“Cambodia’s economic performance has been impressive, with its economy growing more than 7 percent per year on average over the last decade and the extreme poverty rate falling from 52 percent in 2004 to 17 percent in 2012,” said Victoria Kwakwa, World Bank’s Vice President for East Asia and the Pacific. “We look forward to working actively with Cambodia in its efforts to improve the economic and social conditions of all Cambodians, lift millions more out of poverty and address continued vulnerability of formerly poor Cambodians.”  

The financing program under the CEN includes seven investment projects, totaling about $250 million of funding from the International Development Association, or IDA, the Bank’s fund for the poorest. The program is focused on development priorities for Cambodia and reflects the results of in-country consultations and requests by the government for World Bank Group investment financing and advisory support.

During the implementation of the CEN, the Bank Group will conduct a Systematic Country Diagnostic, which will help identify opportunities and challenges, as well as solutions for reducing poverty and sharing the benefits of growth among many poor Cambodians. The Bank will also provide analytic and advisory services requested by the government, with a focus on trade and investment, macroeconomic and financial sector management, and public sector management and social infrastructure.

The International Finance Corporation, a member of the World Bank Group that focuses on the private sector in developing countries, will expand its engagement with about $200 million in investments and about $10 million in advisory services in finance, infrastructure, and trade and competitiveness over the period of 2016-2017.

The Multilateral Investment Guarantee Agency, the Bank Group’s political risk insurance arm, stands ready to offer political risk insurance and guarantees to investors in sectors such as finance, manufacturing, agribusiness and services, and infrastructure.

“Our new engagement with Cambodia starts with projects aimed to bring tangible benefits for Cambodians,” said Ulrich Zachau, Country Director of the World Bank for Southeast Asia. “We will help finance projects to make health care more affordable, improve roads, and support poor villagers who depend on agricultural livelihoods and fishing.  We will also continue our close partnership with Cambodia to share international experience and help build local capacity, strengthen institutions and improve governance.”

The four newly-approved development projects will be supported by $130 million in concessional credits from IDA. Repayments are stretched over 25 years to 40 years, including a grace period of five to 10 years.

Health Equity and Quality Improvement: The $30 million World Bank funding will build upon two innovative Cambodian health financing mechanisms. First, the Health Equity Funds help cover the costs of health services for the nation’s three million poor people, reducing their out-of-pocket costs and providing reliable financing for health facilities. Second, redesigned Service Delivery Grants will improve quality of health services, including health-facility management, staff attendance and the coverage of health services.

The project will be jointly financed by the government, the World Bank, and a 50 million multi-donor trust fund with contributions from the Australian government, the German Development Bank and the Korea International Cooperation Agency. Japan’s Policy and Human Resources Development trust fund with the World Bank will also provide an additional $1 million to strengthen monitoring and evaluation.

Mekong Integrated Water Resources Management: The $15 million project aims to improve the management of fisheries and water resources, and help reduce rural poverty in the Mekong River Basin in northeast Cambodia.

Road Asset Management II: The $60 million project aims to improve 218 kilometers of roads resilient to seasonal flooding, shortening travel times and providing better connectivity along national road corridors in Kampot, Preah Sihanouk, Tbong Khmom, and Kratie provinces.

Land Allocation for Social and Economic Development Project II: The $25 million project will provide agriculture extension services to previously landless and land-poor families in 14 communities across five provinces. More than 5,000 families from these communities will receive agricultural livelihood support and benefit from better roads, schools and health clinics. Many families have benefited from the project’s predecessor, which helped them receive land.

The CEN benefited from extensive consultations with stakeholders across Cambodia, including national and local governments, Parliament, local and international civil society, private and business sector, academia, development partners and UN agencies. The CEN envisions the World Bank Group’s renewed full engagement in Cambodia, following a pause in new IDA financing commitments since 2011. In the last five years, the Bank has maintained an active presence in Cambodia by disbursing funds under existing projects.  

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