Economic outlook improves for Cambodia

Fri, 9 Oct 2009
ABC Radio Australia

Cambodia says its foreign currency reserves have risen above two and a half billion US dollars, despite forecasts that the country's economy would contract this year.

Prime Minister Hun Sen says his country has increased its international reserves by more than 20 per cent since the end of 2008.

His comments came during a speech marking the 30th anniversary of the rebuilding of the country's national bank, which was destroyed by the Khmer Rouge.

In September the International Monetary Fund (IMF) predicted Cambodia's economy would contract by two-and-three-quarters percent this year because of the impact of the global economic slowdown.

But the IMF praised the national bank for its supervision of commercial banks hit by non-performing loans.

Cambodia reserves top US$2.5b

Oct 8, 2009
AFP

PHNOM PENH - CAMBODIA'S foreign currency reserves have topped the US$2.5 billion (S$3.5 billion) mark despite forecasts that the country's economy will contract this year, the premier said on Thursday.

Hun Sen revealed in a speech that the country has increased its international reserves by 21.48 per cent since the end of last year, when they stood at just over $2 billion.

'Despite receiving the impact of the global economic and financial crisis, we can ensure international reserves will continue increasing remarkably,' he said.

'As of the end of August 2009, calculated international reserves had reached $2,522 million,' he added, in the speech marking 30 years since Cambodia rebuilt its national bank that was destroyed under the Khmer Rouge.

After several years of double-digit growth fuelled mainly by tourism and garment exports, Cambodia was buffeted by 2008's global economic downturn.

Last month the International Monetary Fund predicted Cambodia's economy will contract 2.75 per cent this year amid the slowdown, but praised the national bank for its supervision of commercial banks hit by non-performing loans.

Khmer Intelligence News - 25 March 2009

25 March 2009

King Sihamoni discreetly left Cambodia (2)

King Norodom Sihamoni very discreetly left Cambodia earlier this week for China and/or France.

Retired King Sihanouk not to testify before Khmer Rouge Tribunal (2)

A compelling reason for Retired King Norodom Sihanouk not to return from China to Cambodia is related to the fact that the Cambodian government doesn't want him to testify before the Khmer Rouge Tribunal in Phnom Penh. Many people want to see this embarrassing tribunal disbanded as soon as possible by creating as many (political, procedural, judicial, administrative, financial) problems as possible.

Reasons for looming instability (2)

Among the reasons for the London-based Economist Intelligence Unit to include Cambodia among the world's most politically risky countries in the face of the global economic crisis are: systemic land grabbing possibly leading to a land revolution in this predominantly agricultural country, unparalleled social injustices as reflected by the increasing gap between the privileged few and the vast majority of the population who live in dire poverty, unprecedented corruption destroying the nation's social fabric (Cambodia is also ranked among the world's most corrupt countries), government's unwillingness or inability to tackle the economic and financial crisis without undermining the very foundations of the regime.

Ke Kim Yan was rehabilitated thanks to Vietnam (2)

Leaders of the Vietnamese Communist Party have recently intervened in favor of disgraced former army chief Ke Kim Yan, who finally avoided prosecution for alleged involvement in illegal land deals and was appointed as Hun Sen's 10th deputy prime minister. Vietnam wants to secure political stability in Cambodia by preventing dangerous power struggle within the CPP leadership.

Foreign currency reserves evaporating (2)

The National Bank of Cambodia has seen its foreign currency reserves evaporate. NBC Governor Chea Chanto indicated at a recent Council of Ministers meeting that the country is seriously suffering from a rapidly deteriorating current account balance (sharp drop in exports and tourism) and capital outflows (reversal of foreign investment inflows). Taking also into account fiscal revenue shortfalls and subsequent budgetary problems, the government will be unable to meet its obligations in the next few months. See “Sharp drop in customs revenue” and “State budget for 2009 in jeopardy” (KI News, 11 March 2009).
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11 March 2009

Sharp drop in customs revenue (2)

In the 2008 state budget, the Customs Department accounted for over 60 percent of all tax revenue, which is a relatively high figure in the region. For 2009, it should collect US$585 million, a figure that now looks impossible to achieve given the ongoing economic slowdown.

For the first two months of 2009, customs revenue reached only US$64 million compared to US$86 million for the same period last year, which represents a 25 percent drop [adjusted for the collection of a US$7 million duty pertaining to 2008].

State budget for 2009 in jeopardy (2)

The government will soon be obliged to revise downward the state budget for 2009 that was adopted last December because it is unable to collect the projected revenue. See above news “Sharp drop in customs revenue” while knowing that the fall in revenue also holds for other sources of income. The projected 2009 budget amounts to US$1.75 billion compared to US$1.37 billion for the 2008 budget, representing a 28 percent increase. This 28 percent increase will likely evaporate and be replaced by a decrease instead. Cambodia is facing the world economic crisis with a collapsing budget, let alone a strong budget with an appropriate economic stimulus package.