ADB provides $15m to help financial sector development

via CAAI

Monday, 06 December 2010 15:00 Catherine James

THE Asian Development Bank has approved a further US$15 million in funding for the Cambodian government’s five-year plan for financial sector reform.

Asian Development Bank’s Senior Country Economist for Cambodia Peter Brimble told the Post yesterday that the majority of the $15 million funding would go towards general budgetary support for the Kingdom’s government to achieve reforms laid out in the National Strategic and Development Plan.

In a statement, which was released on Friday, the ADB said that the key aims of the program included steps to improve cheque clearance and settlement among banks and the government, regulations to guide interbank transactions, help for microfinance institutions to comply with new deposit-taking requirements, and improved prudential supervision of banks and MFIs.

Specific projects which were earmarked for funding included a new integrated accounting system at the National Bank of Cambodia, the ADB statement said.

The ADB’s board of directors approved the move late last week, bringing its total funding for the programme to around $45 million.

The latest $15 million tranche is made up of a $10 million loan under a 24-year term of 1 percent interest per year or 1.5 percent interest at balance of the term, and a $5 million grant.

According to the organisation’s website, further loans of $15 million per year and technical assistance grants of up to $800,000 been proposed for at least the next three years.

The National Strategic and Development Plan, which runs from 2006 to 2010, is part of the government’s broader Financial Sector Development Strategy.

That strategy was drafted with the ADB’s assistance in 2001 and updated in 2007.

The ADB claimed in its statement that the program, since 2007, was responsible for the creation of over 12,000 jobs in the Kingdom, the opening of over 980 bank and MFI branches, and new and increased loans of more than $1.5 billion.

The National Bank of Cambodia, which is the executing agency for the program, could not be contacted for comment yesterday.