• Economics

Cambodia's Central Bank Partners with IFC to Boost Green Finance, Support Climate Action

• By Xinhua News Agency
• December 20, 2023 9:55 AM

PHNOM PENH -- The National Bank of Cambodia (NBC) and the International Finance Corporation (IFC) signed on Tuesday a cooperation agreement to boost financing for climate-friendly projects, supporting the country's transition towards a green economy, said a joint press statement.

Cambodia is currently ranked 62 out of 191 countries on the 2022 Inform Risk Index -- a global, open-source risk assessment for humanitarian crises and disasters, the statement said, adding that the country is highly exposed to flooding and recurrent droughts that have worsened over the years.

Without proper adaptation and mitigation measures, climate change could cost up to 9 percent of Cambodia's gross domestic product by 2050 while increasing the poverty rate by up to six percentage points by 2040, according to a World Bank report.

The report estimates the country would need up to 36 billion U.S. dollars in additional investment from both public and private sectors over the next three decades to achieve its climate goal of carbon neutrality by 2050.

"The financial sector plays a pivotal role, helping unlock capital for climate-friendly projects, but this will require the right policies and creation of an enabling environment," said the NBC's deputy governor Yim Leat.

"We are committed to crafting a robust green finance policy framework to create a supportive financial ecosystem to channel and incentivize investment into green projects in Cambodia in support of the government's climate ambition as outlined in the Nationally Determined Contribution under the Paris agreement," he added.

The partnership is expected to help strengthen the regulatory framework by developing a national taxonomy in line with best international practices, which will help define green assets qualifying for green investment.

"This agreement supports Cambodia's ambitious plans to address climate change risks and foster a strong green finance market," said Asad Yaqub, IFC resident representative for Cambodia.

With support from the Facility for Investment Climate Advisory Services, the project will be implemented in three years and the national taxonomy is expected to be in place by 2025, he said.