Tag Archives: Cambodia economy

Export risk to growth says IMF

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THE International Monetary Fund has warned Cambodia’s export reliance on the United States and European markets is a “significant risk” to the Kingdom’s continued financial recovery.

While the IMF was upbeat in its yearly economic assessment of the Kingdom about a turnaround in growth since 2009, saying an export-led recovery was underway, it cautioned that significant risks “continue to cloud growth prospects”.

“The fragility of the global recovery exposes Cambodia’s narrow export base with its heavy reliance on the US and European markets to significant downside risks,” the annual report released late on Monday said.

It encouraged the government to continue to improve tax collection efforts, calling it “the best hope for Cambodia to meet the dual objective of securing fiscal sustainability and mobilising resources for its development needs”.

It recommended increasing  the incentives for people to use the riel over the US dollar, describing de-dollarisation as a critical step towards monetary independence.

The IMF said it expected Cambodia’s gross domestic product growth to rise gradually to between 6 and 7 percent “over the medium term”.

Source: The Phnom Penh Post

ADB provides $15m to help financial sector development

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THE Asian Development Bank has approved a further US$15 million in funding for the Cambodian government’s five-year plan for financial sector reform.

Asian Development Bank’s Senior Country Economist for Cambodia Peter Brimble told the Post yesterday that the majority of the $15 million funding would go towards general budgetary support for the Kingdom’s government to achieve reforms laid out in the National Strategic and Development Plan.

In a statement, which was released on Friday, the ADB said that the key aims of the program included steps to improve cheque clearance and settlement among banks and the government, regulations to guide interbank transactions, help for microfinance institutions to comply with new deposit-taking requirements, and improved prudential supervision of banks and MFIs.

Specific projects which were earmarked for funding included a new integrated accounting system at the National Bank of Cambodia, the ADB statement said.

The ADB’s board of directors approved the move late last week, bringing its total funding for the programme to around $45 million.

The latest $15 million tranche is made up of a $10 million loan under a 24-year term of 1 percent interest per year or 1.5 percent interest at balance of the term, and a $5 million grant.

According to the organisation’s website, further loans of $15 million per year and technical assistance grants of up to $800,000 been proposed for at least the next three years.

The National Strategic and Development Plan, which runs from 2006 to 2010,  is part of the government’s broader Financial Sector Development Strategy.

That strategy was drafted with the ADB’s assistance in 2001 and updated in 2007.

The ADB claimed in its statement that the program,  since 2007, was responsible for the creation of over 12,000 jobs in the Kingdom, the opening of over 980 bank and MFI branches, and new and increased loans of more than $1.5 billion.

The National Bank of Cambodia, which is the executing agency for the program, could not be contacted for comment yesterday.

Source: The Phnom Penh Post