Cambodia: Policymakers still unsure of additional economic response to the COVID-19 crisis

• Apr 15, 2020

Cambodian policymakers have more time to think of additional measures to mitigate the economic shock of the COVID-19 pandemic on the country, according to the National Bank of Cambodia’s director-general Chea Serey.

Referring to the effect COVID-19 has already had on the country’s key industry sectors, Chea Serey said to international media outlet CNBC, “On the bright side, we weren’t completely caught off guard especially when it comes to our factory workers [due to policies already in place surrounding the recent EBA decision]. However, on the not-so-bright side, we were not prepared for the big impact on the tourism industry as is the case for many other countries too.”

To mitigate the economic shock of the pandemic, the government has announced a $2 billion reserve budget to help the Kingdom’s economic pillars, including agriculture and banking and also helping unemployment in the garment and tourism sector. The central bank has also eased liquidity for the banking sector.

“Will it be enough? Time will tell. But from now till the end of the year, we should be ok and from now till then, it will give the government more time to think of additional measures too,” Chea added.

Prime Minister Hun Sen also announced last month that the government is considering a disbursement of between $500 and $600 million to solely help the banking sector. Although details on how this will be distributed are still vague.

Te Taing Por, president of the Federation of Association of Small and Medium Enterprises of Cambodia said he is not sure how the $2 billion stimulus package will be utilised for the Kingdom’s Small and Medium Enterprises (SMEs). In addition, the government-funded SME Bank that was set up to fund the sector, particularly for agriculture business, was not designed for the COVID-19 outbreak.

“This week, funds have already been raised from 34 banks and microfinance institutions reaching $97 million. I am now working between those banks and various SMEs to help them get access to these loans, sending loan application forms to all my SMEs members,” Te Taing Por said

Van David, a Senior Associate at PLATFORM IMPACT, told Khmer Times yesterday that while this assistance is good for registered business, the issue is a majority of Micro Small Medium Enterprise (MSMEs) are informal and therefore will not qualify for any government assistance.

“These would be the people that may get hit hardest in terms of negative economic impact. The same issue will apply for risk mitigation and again this will be very limited because a majority of businesses here are informal.

“Many of the 750,000 staff working in the garment factories will also not be spared due to lack of raw materials and the cancellation of orders by many buyers that will force production to be suspended,” he added.

According to Van, policymakers should be currently focusing on austerity, not stimulus programmes. Government budgets should be cut and distributed to emergency needs now, then a stimulus package should be implemented post-COVID-19 when consumers can spend again.

Source: https://www.khmertimeskh.com/50713245/policymakers-still-unsure-of-additional-economic-response-to-the-covid-19-crisis/