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| The IMF has called upon Cambodia's central bank to tighten the credit market |
9 January 2013
BBC News
The International Monetary Fund has warned that a credit boom in Cambodia poses a threat to economic growth.
Banks have been cutting interest rates to win customers and private sector credit has increased by almost a third in the past 12 months, the fund said.
This means that borrowing levels are now equal to 37% of the country's total economic output, well above the median for most other low-income nations.
A similar surge in 2008 saw a real-estate boom and bust, the fund warned.
If the current rate of growth in the private credit market continues then it may signal overheating, according to the International Monetary Fund (IMF).
Tighter conditions
The National Bank of Cambodia, the country's central bank, has taken some steps to tighten and slow lending.
It most recently raised the amount of money that banks need to hold in reserve, making it harder for them to access the cash needed to lend.
However, the IMF said that raising the reserve requirement "does not automatically mean tighter credit conditions" and further steps were needed.
"Cambodian banks still have excess liquidity, a number of them are lowering interest rate spreads to compete for market share, and some increasingly rely on cheaper external funding from foreign banks," it explained.
The IMF advised the central bank to implement measures which are not just effective in reducing credit growth, but also cause the least amount of distortion in the market.
4 comments:
IMF ploy to entrap its victims by playing the easy credit game. They call the shots and you better know when to fold them before they deplet the money supply and left the borrowers out to dry. It's a con game of the world bankers.
I WOULD RATHER PLAY TONDITE (តុងទីន)!
The International Monetary Fund sure know how to turn off money supply like turn off the water in the faucet.
Cambodian leaders have no clue what they get themselves into! How many Cambodian experts out there really understand money supply?
No suprise to me. this is what I predicted last 5 years, when i was working with one Commercial Bank in Cambodia.
It doesn't make sense while cambodia population GDP per capita earn only 800USD/year (less than 80$/month); while the loan portfolio are paying 50$/month. Which mean, they have only 30$ left for their supplied.
There area bout 2.5B USD has been distributed as Loan in Cambodia with 5M Loan client for maximum 5 year term.
The estimation, at least need to pay 100USD/month for Loan repayment, while most cambodian can earn only 80USD/month.
Another words, 50% of money in Cambodia are Loan.
Another alert is that, Cambodia will face the cashflow problem, alert by World Bank last few year go.
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