PHNOM PENH, Jan. 22 (Xinhua) -- The government must lower the reserve rate of banks so that financial institutions can loan more money and fuel the economy in the grips of a financial slowdown, national media reported on Thursday.
The National Bank of Cambodia, in an attempt to lower inflation and cool the lending market, began requiring in May 2008 that banks double their reserves from 8 to 16 percent of all their foreign currency.
"Inflation is coming down particularly in food and energy costs(since December 2008) and now the danger is the economy slowing down, so at some stage (the government) might relax some of its policies on credit squeezing," English-Khmer language newspaper the Cambodia Daily quoted John Brinsden, vice president of the Acleda Bank, as saying.
The reserve rate has significantly cut Acleda's ability to issue loans, he said, adding that outstanding loans at Acleda grew just 5 percent in the last six months of 2008 after the central bank doubled the reserve rate.
Prior to that, in the first six months of 2008, outstanding loans at Acleda grew 50 percent to more than 450 million U.S. dollars, he said.
"We just do not have the funds we would like (available)," he added.
The Cambodian economy enjoyed double-digit increase during the 2005-2007 period, but down to below 10 percent in 2008 and will further slide to around 5 percent in 2009, according to the forecasts by experts and international financial institutions.
The National Bank of Cambodia, in an attempt to lower inflation and cool the lending market, began requiring in May 2008 that banks double their reserves from 8 to 16 percent of all their foreign currency.
"Inflation is coming down particularly in food and energy costs(since December 2008) and now the danger is the economy slowing down, so at some stage (the government) might relax some of its policies on credit squeezing," English-Khmer language newspaper the Cambodia Daily quoted John Brinsden, vice president of the Acleda Bank, as saying.
The reserve rate has significantly cut Acleda's ability to issue loans, he said, adding that outstanding loans at Acleda grew just 5 percent in the last six months of 2008 after the central bank doubled the reserve rate.
Prior to that, in the first six months of 2008, outstanding loans at Acleda grew 50 percent to more than 450 million U.S. dollars, he said.
"We just do not have the funds we would like (available)," he added.
The Cambodian economy enjoyed double-digit increase during the 2005-2007 period, but down to below 10 percent in 2008 and will further slide to around 5 percent in 2009, according to the forecasts by experts and international financial institutions.
2 comments:
Yes but if Cambodian banks are allowed to issue too many loans, more bad loans will happen. It would repeat what the seven USA financial giants and major banks around the world are experiencing. Than Hun Sen government will have to jump in to help them.
hey, the law requires that all banks must reserve a certain amount of money in order to stay in business. this golden rule goes with any bank in the world as well. even in the USA, banks must have a certain reserve in order to meet the federal requirement to stay in business. and cambodia is no exception, either. my respect the law, this way, cambodia can weed out the bad banks and keep only the good banks that are in business with cambodia interest was well for the long-term, not short-term, quick profit then leave cambodia. believe, cambodia is not that dumb, we want to attract good, long-term investment and businesses to our country, too; so, if you are weak and poor, cambodia is not the place for your business, my dear. look elsewhere around the world. we are a country, not a corporate entity of sort sort. must have cambodia interest as well for the investment and business because in the long-run, that's how businesses make prolit, not from short-term. short-term profits are for gamblers only. god bless cambodia.
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