The Asian Development Bank (ADB) on Wednesday approved a $250 million loan to help the Cambodian government respond to the Covid-19 pandemic by strengthening the healthcare system and increasing social assistance to the poor and vulnerable.

An ADB press release said the loan provides 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.

“Cambodia is highly vulnerable to the negative impacts of Covid-19 due to its open economy, narrow economic base, and highly mobile population.

“The ADB expects Cambodia’s economy to contract by 5.5 per cent 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 push an additional 1.3 million people into poverty,” it said.

Cambodia launched a comprehensive response to Covid-19 in March, with an initial package totalling $815.7 million, or 3.2 per cent of projected gross domestic product (GDP) in 2020.

It included health system support to prepare for a potential surge in cases and to sustain workers and enterprises during the pandemic. It also included a capital injection of $150 million to support bank lending to small and medium-sized businesses.

The stimulus package further includes $300 million for delivery of cash grants to poor and vulnerable households in the government’s ID Poor database. This database has 2.4 million poor households and is being expanded to include those that have been impacted by Covid-19, said the press release.

ADB president Masatsugu Asakawa said 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 the ADB’s long-term engagement plan that focuses on supporting Cambodia’s economic recovery and fiscal sustainability,” he said.

The ADB’s Covid-19 Active Response and Expenditure Support (Cares) Programme is funded through the Covid-19 pandemic response option (CPRO) under the ADB’s Countercyclical Support Facility.

CPRO was established as part of the ADB’s $20 billion expanded assistance programme for developing member countries’ pandemic response, which was announced on April 13.

Government spokesman Phay Siphan told The Post on Wednesday that he was unaware of the ADB loan in detail or for what purpose the loan would be used.

He said overall government spending falls into two categories – current spending and development spending.

“First is current spending for which we have enough. There is no problem in paying salaries. The second is investment spending on public services.

“We have stopped some investment spending because of the Covid-19 crisis. Besides, we need money to be released to other areas as needed to help the private sector stabilise the economy,” he said.