Experience with this program validated the four reasons for the choice the policy-based lending (PBL) programmatic approach as most suitable for the development of the finance sector of Cambodia. First, financial sector development is a gradual process that requires proper sequencing. Key foundational reforms of the banking subsector must be in place before progressing to more complex reforms of the nonbank subsector. This program saw an expansion of the nonbank financial sector, but more needs to be done to bolster growth, expertise, and infrastructure in light of increased capital market operations. For example, insurance companies and pension funds are the ideal investors in corporate and government bonds, which typically provide the longer maturities required as part of their investment strategy. Liquid investment markets sustain insurance and pensions and support sustainable economic development, and they should remain a priority of the government.
Inclusive Financial Sector Development Program