Govt must consider stimulus package: Sam Rainsy

Thursday, 07 May 2009
Written by Sam Rainsy
Letter to The Phnom Penh Post

Dear Editor,

In "ADB to launch $3bn fund" (May 4, 2009), the final paragraph elaborates on how governments in Asia are battling the global economic crisis. "Governments across the region have boosted spending and slashed interest rates in a bid to stimulate domestic demand to offset crashing external demand for exports."

The above assertion does not apply to Cambodia, where there has been no significant increase in government spending over the last 12 months, while interest rates have remained practically unchanged at a very high level: up to 8 percent per annum for deposits in US dollars and up to 30 percent per annum for loans also in US dollars, given that some 95 percent of the money supply is made up of greenbacks.

Even though the state budget for 2009 - as approved by the National Assembly last December ($1.75 billion) - shows a 28 percent increase on paper over the 2008 budget ($1.37 billion), its actual implementation indicates no significant increase, if any, over last year's spending. The shortfall in expenditure is due to a shortfall in revenue associated with the current economic slump.

As of today, the government has informed the National Assembly of no plan whatsoever to update, revise or adjust its budget as a possible reaction to the current economic and financial situation, which keeps deteriorating. I am only talking about the regular state budget as adopted every year by the National Assembly. I am not referring to any special measure, budget or plan.

Contrary to all neighbouring countries, no economic stimulus package has been conceived and implemented to cope with the world economic meltdown. The government has apparently no comprehensive and consistent plan to face the unfolding crisis.

I, therefore, insist that the government shows responsibility and seriously considers the $500 million economic stimulus package that I have suggested (see "SRP calls for government bailout" in the January 19 edition of the Post).

This $500 million package would be the first emergency measure designed to alleviate the fallout from the world crisis and to prevent economic, social and political upheavals with incalculable consequences for Cambodia's stability and long-term development.

Sam Rainsy
Member of Parliament

Opposition renews calls for $500 million stimulus package

Thursday, 29 January 2009
Written by Sam Rith and Sebastian Strangio
The Phnom Penh Post

SRP and HRP claim falling agricultural prices are hurting Cambodia's export economy, but govt officials say they have $3 billion in reserve.

OPPOSITION lawmakers have made renewed calls for the government to prepare a US$500 million economic stimulus package, claiming the Kingdom's export-oriented economy is being hit hard by falling global prices for agricultural produce.

In a letter sent Tuesday to Prime Minister Hun Sen, 18 parliamentarians from the Sam Rainsy Party (SRP) and Human Rights Party (HRP) restated a request that $500 million be set aside to protect the economy against further degradation.

"Due to a dramatic drop in the price of agricultural produce ... the income as well as the livelihoods of millions of Cambodian farmers has worsened dramatically," stated the letter.

"We hope that the government will prepare measures to help our farmers maintain their livelihoods."

In particular, the letter called for government support of agricultural prices and the provision of low-interest loans to those in financial need, reiterating the contents of a letter SRP President Sam Rainsy sent to Hun Sen on January 16.

‘Lucky' economy

But CPP lawmaker Cheam Yeap dismissed opposition claims, saying Cambodia had been "lucky" to avoid the worst impacts of the crisis and that it has large funds set aside that would cushion the country against financial instability.

"We have prepared things in advance," he said. "Each year we have a reserve budget of between $200 and $300 million. Now we have almost $3 billion in the National Treasury that has not yet been used."

In response, Sam Rainsy dismissed the government's claims it was ready to weather the storm.

"What the government has actually set aside for the fiscal year 2009 as "unplanned expenditures" - $144 million compared with $132 million for 2008 - is not adequate to cope with the deteriorating situation," he wrote in a January 26 letter to the Post.

Export woes

Economist Sok Sina agreed with Sam Rainsy that falling prices would harm the Cambodian economy, saying that grass-roots benefits - such as cheap petrol and rice - were outweighed by the overall decline in prices of agricultural produce.

"The price of petrol has declined, but not much else," he told the Post.

"Low prices benefit many rice consumers, but not if you look at the economy as a whole. Cambodia is a rice-exporting country, and if the price of rice is low, the Cambodian economy will not benefit."

He said that the opposition's call made economic sense, although it lacked details.

"I think it's a good idea. If you look at the budget plan for 2009, you can see [it] has increased compared to 2008. Credit and aid has also increased," he said.

SRP lawmaker Son Chhay called for the Minister of Economy and Finance Keat Chhon to answer concerns set out in the letter when the National Assembly next convenes.

"It is necessary for the public to know about the government's program," he said.