CREDIT NUMBER 7244-KH Financing Agreement (First Cambodia Growth and Resilience Development Policy Financing) between KINGDOM OF CAMBODIA and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 7244-KH FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between KINGDOM OF CAMBODIA ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing financing in support of the Program (as defined in the Appendix to this Agreement). The Association has decided to provide this financing on the basis, inter alia, of: (i) the actions which the Recipient has already taken under the Program, and which are described in Section I of Schedule 1 to this Agreement; and (ii) the Recipient's maintenance of an adequate macroeconomic policy framework. The Recipient and the Association therefore hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient a credit, which is deemed as Concessional. Financing for purposes of the General Conditions in an amount equivalent to two hundred seventy-four million Dollars ($274,000,000) (variously "Credit" and "Financing"). 2.02. The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance. 2.03. The Payment Dates are January 15 and July 15 in each year. 2.04. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 2 to this Agreement. 2.05. The Payment Currency is Dollar. 2.06. Without limitation upon the provisions of Section 5.05 of the General Conditions, the Recipient shall promptly furnish to the Association such information relating to the provisions of this Article II as the Association may, from time to time, reasonably request. -2- ARTICLE III - PROGRAM 3.01. The Recipient declares its commitment to the Program and its implementation. To this end, and further to Section 5.05 of the General Conditions: (a) the Recipient and the Association shall from time to time, at the request of either party, exchange views on the Recipient's macroeconomic policy framework and the progress achieved in carrying out the Program; (b) prior to each such exchange of views, the Recipient shall furnish to the Association for its review and comment a report on the progress achieved in carrying out the Program, in such detail as the Association shall reasonably request; and (c) without limitation upon the provisions of paragraphs (a) and (b) of this Section, the Recipient shall promptly inform the Association of any situation that would have the effect of materially reversing the objectives of the Program or any action taken under the Program including any action specified in Section I of Schedule I to this Agreement. ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01. The Additional Event of Suspension consists of, namely, a situation has arisen which shall make it improbable that the Program, or a significant part of it, will be carried out. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Additional Condition of Effectiveness consists of, namely, the Association is satisfied with the progress achieved by the Recipient in carrying out the Program and with the adequacy of the Recipient's macroeconomic policy framework. 5.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. 5.03. For purposes of Section 10.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty (20) years after the Signature Date. Kt -3- ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is its Minister at the time responsible for finance. 6.02. For purposes of Section 11.01 of the General Conditions: (a) the Recipient's address is: Ministry of Economy and Finance Street 92 Sangkat Wat Phnom, Khan Daun Penh Phnom Penh Kingdom of Cambodia; and (b) the Recipient's Electronic Address is: E-mail: gdicdm@mef.gov.kh 6.03. For purposes of Section 11.01 of the General Conditions: (a) The Association's address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Association's Electronic Address is: Telex: Facsimile: E-mail: 248423 (MCI) 1-202-477-6391 thayati@worldbank.org -4- AGREED as of the Signature Date. KiNG By ed Representative Name: AUN PORN MONIROTH , Ph.D Depvt4t5 Prrme MWiTnSr Title: l1n-s4ý o4 ezonom4 e»i ndFmant- Date: a v 5 £043 INTERNATIONAL DEVELOPMENT ASSOCIATION By Aut orized Representative Name: Marjor §ål;nrn Date: -5- SCHEDULE 1 Program Actions; Availability of Financing Proceeds Section . Actions under the Program The actions taken by the Recipient under the Program include the following: 1. To streamline and standardize the process of business registration, the Recipient has: (i) promulgated the Amendments to the Law on Commercial Enterprises on January 29, 2022, and published said Amendments in the Royal Gazette No. NS/RKM/0122/003; and (ii) promulgated the Amendments to the Law on Commercial Rules and Register on January 29, 2022, published said Amendments in the Royal Gazette No. NS/RKM/0122/002. 2. To promote competition and curb anti-competitive practices, the Recipient: (i) has promulgated the Law on Competition on October 5, 2021 and published said Law in the Royal Gazette No. NS/RKM/1021/013; (ii) has established the Competition Commission of Cambodia as evidenced by the Prime Minister's Sub-decree No. 37 dated February 17, 2022; and (iii) has appointed the members for the Competition Commission of Cambodia as evidenced by the Prime Minister's decision No. 47 dated July 14, 2022. 3. To enhance access to finance for small and medium enterprise affected by the COVID 19 pandemic, the Recipient has: (i) through MEF approved the Tourism Recovery Co-Financing Scheme (TRCS) as evidenced by MEF's press release dated May 17, 2022 reporting MEF's approval of TRCS; and (ii) through the Credit Guarantee Corporation of Cambodia (CGCC), initiated the Women Entrepreneurs Guarantee Scheme (WEGS) as evidenced through the CGCC's Decision No. 61 dated July 19, 2022, for initiating the implementation of WEGS. 4. To control fiscal costs, the Recipient has adopted a decision to phase out the current civil service pension scheme and enroll new hires in the National Social Security Fund, as evidenced by MEF's decision No. 133 dated October 11, 2022. 5. To support fiscally sustainable and resilient infrastructure investment and help ensure value for money, the Recipient has: (i) promulgated the Law on Public-Private Partnerships on November 18, 2021 and published said Law in the Royal Gazette No. NS/RKM/1 121/018; and (ii) issued a Sub- Decree approving the Standard Operating Procedures for the Public Private Partnership Projects to strengthen the overall institutional and legal -6- framework for PPP project's approval and implementation, as evidenced by the Prime Minister's Sub-decree No. 174 dated August 31, 2022. 6. To establish an authorizing regulatory framework for the issuance of local currency government bonds, the Recipient has issued three relevant Prakas supporting the implementation of the Law on Government Securities, as evidenced by issuance of: (i) the Prakas on the Issuance of Government Securities by MEF dated March 3, 2022; (ii) the Prakas by the National Bank of Cambodia on the Usage of Government Securities in Monetary Operations by the National Bank of Cambodia dated June 30, 2022; and (iii) the Prakas on the Organization and Functioning of Departments and Units under the Supervision of the General Department of International Cooperation and Debt Management of the Ministry of Economy and Finance, Number 252, issued by MEF on April 8, 2022. 7. To facilitate the timely provision of relief to vulnerable households in the event of a climate-related or economic shock, the Recipient has issued a decision to expand eligibility criteria for the IDPoor database to include at-risk (near-poor and vulnerable) households to improve the Recipient's capacity to rapidly identify households most in need of assistance, as evidenced by the Prime Minister's Decision No. 67SSR dated October 5, 2022. Section H. Availability of Financing Proceeds A. General. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of this Section and such additional instructions as the Association may specify by notice to the Recipient. B. Allocation of Financing Amounts. The Financing is allocated in a single withdrawal tranche, from which the Recipient may make withdrawals of the Financing proceeds. The allocation of the amounts of the Financing to this end is set out in the table below: Allocations Amount of the Financing Allocated (expressed in USD) (1) Single Withdrawal Tranche 274,000,000 TOTAL AMOUNT 274,000,000 -7- C. Withdrawal Tranche Release Conditions. 1. No withdrawal shall be made of the Single Withdrawal Tranche unless the Association is satisfied: (a) with the Program being carried out by the Recipient; and (b) with the adequacy of the Recipient's macroeconomic policy framework. D. Deposit of Financing Amounts. 1. Notwithstanding the provisions of Section 2.03 of the General Conditions: (a) the Recipient shall open, prior to furnishing to the Association the first request for withdrawal from the Financing Account, and thereafter maintain a dedicated account in Dollars ("Foreign Currency Dedicated Account") with National Bank of Cambodia; and (b) all withdrawals from the Financing Account shall be deposited by the Association into the Foreign Currency Dedicated Account. 2. The Recipient, within thirty (30) days after the withdrawal of the Financing from the Financing Account, shall report to the Association: (a) the exact sum received into the Foreign Currency Dedicated Account; (b) the details of the account to which the Cambodia Riel equivalent of the Financing proceeds will be credited; (c) the record that an equivalent amount has been accounted for in the Recipient's budget management systems; and (d) the statement of receipts and disbursement of the Foreign Currency Dedicated Account. E. Audit. Upon the Association's request, the Recipient shall: 1. have the Foreign Currency Dedicated Account audited by independent auditors acceptable to the Association, in accordance with consistently applied auditing standards acceptable to the Association; 2. furnish to the Association as soon as available, but in any case, not later than six months after the date of the Association's request for such audit, a certified copy of the report of such audit, of such scope and in such detail as the Association shall reasonably request, and make such report publicly available in a timely fashion and in a manner acceptable to the Association; and 3. furnish to the Association such other information concerning the Foreign Currency Dedicated Account and their audit as the Association shall reasonably request. F. Closing Date. The Closing Date is October 31, 2023. -8- SCHEDULE 2 Repayment Schedule Date Payment Due Principal Amount of Credit repayable (expressed as a percentage) * On each January 15 and July 15: commencing January 15, 2029 to and 8.33334% including January 15, 2034 [onJuly15,2034 8.33326% * The percentages represent the percentage of the principal amount of Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.05 (b) of the General Conditions. -9- APPENDIX Definitions L. "Amendments to the Law on Commercial Enterprises" mean the Recipient's Amendments to the Law on Commercial Enterprises, promulgated on January 29, 2022, to remove the minimum capital requirements and introduce the regulations of sole proprietorships. 2. "Amendments to the Law on Commercial Rules and Register" means the Amendments to the Law on Commercial Rules and Register, promulgated on January 29, 2022, to remove the requirements to submit proof of company seal and paid-in minimum capital during company registration. 3. "CGCC' means the Credit Guarantee Corporation of Cambodia established by Sub-decree No. 140 dated September 1, 2020, whose mission is to provide credit guarantees to lenders for risk sharing and improving financial inclusion. 4. "COVID-19" means the coronavirus disease caused by the 2019 novel coronavirus (SARS-CoV-2). 5. "Foreign Currency Dedicated Account" means the account referred to in Part D. 1(a) of Section II of Schedule I to this Agreement. 6. "General Conditions" means the "International Development Association General Conditions for IDA Financing, Development Policy Financing", dated December 14, 2018 (revised on August 1, 2020, April 1, 2021, and January 1, 2022). 7. "IDPoor" means the Recipient's identification of poor households that are issued an equity card, which entitles family members to receive a range of services including health services. 8. "Law on Government Securities' means the law promulgated by the Recipient on December 26, 2020, and published in the Royal Gazette on April 6, 2021, that provides a general framework to manage listing, trading, and managing government securities transparently, accountably, effectively, and efficiently as well as assuring sustainability of public debt management. 9- "Law on Public-Private Partnerships" means the Recipient's Law Number NS/RKM/ 1121/018 issued on November 18, 2021. 10. "Law on Competition" means the Recipient's Law Number NS/RKM/1021/013 issued on October 5, 2021. -10- 11. "MEF" means Ministry of Economy and Finance, or any successor thereto. 12. "MoSVY" means Ministry of Social Affairs, Veterans and Youth Rehabilitation, or any successor thereto. 13. "National Social Security Fund" means the fund providing the basic social security to workers in the Recipient's private sector. 14. "PPPs" means public-private partnerships. 15. "Program" means the program of objectives, policies, and actions set forth or referred to in the letter dated November 15, 2022 from the Recipient to the Association declaring the Recipient's commitment to the execution of the Program, and requesting assistance from the Association in support of the Program during its execution and comprising actions taken, including those set forth in Section I of Schedule I to this Agreement, and actions to be taken consistent with the program's objectives. 16. "Signature Date" means the later of the two dates on which the Recipient and the Association signed this Agreement and such definition applies to all references to "the date of the Financing Agreement" in the General Conditions. 17. "Single Withdrawal Tranche" means the amount of the Financing allocated to the category entitled "Single Withdrawal Tranche" in the table set forth in Part B of Section II of Schedule I to this Agreement. 18. "Tourism Recovery Co-Financing Scheme" means the financing scheme provided by the SME Bank of Cambodia intended to support the tourism sector, which was severely impacted by the pandemic, and to help prepare for the return of national and international tourists. 19. "Women Entrepreneurs Guarantee Scheme" or "WEGS" means the guarantee facility offered by the Credit Guarantee Corporation of Cambodia that offers guarantees for new loans to assist small and medium enterprises in accessing finance during the recovery from the COVID-19 pandemic.