The Asian Development Bank (ADB) signed two loan agreements with the Ministry of Economy and Finance on Tuesday for a total of $140 million to boost the quality of Cambodia's workforce through technical and vocational education and training (TVET) and improve public service delivery by local administrations through reforms to public finance and decentralization.

According to a statement on the Ministry of Economy and Finance's Facebook page, the funding project is divided into two subprograms.

“Subprogram 1, Decentralized Public Service and Financial Management Program, aims to support the work efficiency of sub-national officials in Cambodia refer to making it easier for people to access public services. By focusing on strengthening sub-national administrative capacity and expenditure management," it said.

The program is expected to cost a total of $40 million in a full ADB concessional loan.

Subprogram 2, Skills Development for the Future Economy Program, aims to improve current and future employment rates through policy reform and project investment to strengthen skills development.

The program will strengthen training in environmentally-friendly industries as well as increase resources for developing skills to respond to employee requirements.

This program is planned to spend a total of $131.30 million, of which $100 million are ADB concessional loans, the statement said.

According to the same statement, ADB has provided a total of $4.9 billion in cooperative financing for Cambodia. Of this amount, $4.4 billion was provided in concessional loans for the project implementation of 137 programs, and $568 million was provided in grant funding for the project implementation of 70 programs.

Hong Vannak, an economic researcher at the Royal Academy of Cambodia, told Kiripost that the additional ADB loan agreement is based on Cambodia's potential projects, which are considered beneficial to developing human resource skills and enhancing community livelihoods.

When asked if the additional loan of $140 million would affect Cambodia's feasibility to repay its foreign loans, given that Cambodia has already received a $4.9 billion loan from ADB, Vannak said that based on the Government's development plan and the feasibility of repaying the loans, Cambodia is still able to repay its foreign loans.

“To meet domestic development needs, the Cambodian Government needs to borrow money from the ADB to finance its development projects. ADB has studied Cambodia's feasibility and income to repay before approving concession credit of Cambodia can afford to repay the loans. If Cambodia's debt reaches a certain level, the ADB will likely stop lending money to Cambodia," he mentioned.

However, Vannak believes that Cambodia's foreign loans have not reached the debt ceiling compared to Laos and Sri Lanka, for example. The additional loan of $140 million from ADB will not have a negative impact on the Cambodian economy, he noted.

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