World Bank CEO
World Bank CEO Kristalina Georgieva attends a thematic forum of the second Belt and Road Forum for international cooperation in Beijing, China, April 25, 2019. (Photo: REUTERS/Jason Lee)

The World Bank has pledged financial support to help boost the Cambodian economy, Cambodia's Ministry of Economy and Finance confirmed. The bank is set to approve $1 billion in funding for the development of the country's key sectors.

According to the Khmer Times, the bank's board of directors is expected to approve the billion-dollar soft loan later this month. The funding is part of the cooperative deal with Cambodia that should cover four years, from 2019 to 2023.

Acting Minister of Economy and Finance Vongsey Visoth said while the World Bank has finally expressed its willingness to support the country's economic drive, Cambodia still needs to push itself forward.

"Cambodia is facing structural issues, including a narrow economic base, lack of skilled labor, lack of infrastructure, and fast urbanization which requires high levels of investments," Visoth pointed out.

Economists previously suggested that the Cambodian government should explore initiatives for boosting infrastructure, the local workforce, and urbanization schemes so the economy can be propelled towards levels that other Asian countries have achieved.

Cambodia still owes $1.141 billion from the World Bank as of last year and while another billion-dollar fund will be released within the next four years, there should be a solid plan on how these debts will be repaid while prioritizing the country's needs, analysts said.

Records from last year shocked the world as it was revealed that Cambodia's economy ballooned by 7.5 percent in 2018. It was a four-year high that was propelled by increased export activities to the United States.

In April, after last year's revenue and economic growth rates were revealed, the World Bank said Cambodia's developments were driven by footwear and garment exports to the U.S., Reuters reported.

At that time, economists were optimistic about the country's potential expansion in the coming years. However, things started getting gloomy when it was revealed that the European Union (EU) could suspend its Everything But Arms (EBA) agreement with Cambodia due to alleged human rights violations.

Since then, talks about uncertainties regarding the Cambodian economy emerged. It is worth noting that the EU is one of Cambodia's top export destinations for bicycles, clothing, and footwear.

Earlier this month, the World Bank projected that Cambodia's export value to the bloc may be reduced by up to $654 million if the EBA deal is suspended. According to the Phnom Penh Post, the estimated figure excluded bicycle exports.

The EU already imposed tariffs on Cambodian rice imports in January, with the bloc stating that local farmers complained of not being prioritized. Cambodia has since been calling on the European Commission to retract its decision.