PHNOM PENH, Oct. 18 (Xinhua): The Asian Development Bank (ADB) has approved a US$40 million loan to support Cambodia's efforts to expand access to credit among micro, small, and medium-sized enterprises (MSMEs) and implement reforms to boost financial stability, said its press release on Monday.
The third subprogram of the Inclusive Financial Sector Development Program follows two previous subprograms, which were implemented from 2016 to 2019 to help the Cambodian government develop an efficient and stable financial sector by bolstering financial inclusion and financial stability.
"The government of Cambodia has made significant strides in preserving financial stability and improving crisis management amid the COVID-19 pandemic," said ADB financial sector specialist Benita Ainabe.
"Under the new subprogram, the government has adopted key legislation supporting a national financial inclusion strategy and launched several initiatives to increase access to finance, including Cambodia's first-ever small and medium-sized enterprise public credit guarantee scheme," she said.
In Cambodia, access to financial products and services for the poor is limited and financial literacy is low, the press release said, adding that only 21.7 percent of the country's adult population have a bank account and MSMEs struggle to access financing and microinsurance.
Businesses are often hampered by limited access to long-term finance because of a lack of collateral, the absence of government support such as guarantees, and financial illiteracy, the press release said, adding that only 18 percent of Cambodians are considered financially literate.
The press release said that the pandemic, real estate lending, and faster credit growth have heightened risks to Cambodia's financial stability and the country's financial infrastructure is underdeveloped, further restricting access to finance and market development.
The new subprogram supports government efforts to help MSMEs recover from the pandemic by expanding access to credit, it said.
Also, it helps finance reforms to enhance financial stability, including streamlining cross-sector institutional supervision, strengthening credit risk management, and introducing innovative payment systems, the press release said. - Xinhua