Logo of Phnom Penh Post newspaper Phnom Penh Post - ‘Gov’t spending on vulnerable sectors crucial in recovery’

‘Gov’t spending on vulnerable sectors crucial in recovery’

Content image - Phnom Penh Post
The IMF has projected a 2.8 per cent contraction in the Cambodian economy this year, and a sharp rebound next year to 6.8 per cent growth. Hong Menea

‘Gov’t spending on vulnerable sectors crucial in recovery’

The government should prioritise its spending on vulnerable sectors in order to boost economic activity and create more jobs during these trying times, according to an International Monetary Fund (IMF) official.

Jonathan D Ostry, the acting director of the IMF’s Asia and Pacific Department, was responding to a question asked by The Post at a press briefing on the October 2020 Asia Pacific Regional Economic Outlook held late on Wednesday.

Topping the list of factors that had prompted the Washington DC-based lender to revise down its projections for growth in the Asia-Pacific were – a collapse in the tourism industry and disruption in non-tourism exports such as garments, according to Ostry.

He pointed out that both have put a significant strain on the Cambodian economy.

“Since our previous update, there were numerous order cancellations, and, you know, these are both tourist and goods exports I think lie behind the weaker outlook.

“In terms of the policy imperatives, I think, again, what we have advised is a careful prioritisation of expenditure to make sure that fiscal resources reach those who are most vulnerable, those at the bottom of the income scale, those in the informal sectors and so forth whose employment opportunities may have been hit really badly.

“With the sort of baseline recovery in global demand for some of Cambodia’s main exports like garments, and some recovery in tourism, it should be possible for the recovery that we envisage for 2021 to materialise,” Ostry said.

Ministry of Tourism spokesman Top Sopheak told The Post on Thursday that international tourist arrivals had dwindled down to 1.22 million in the first eight months of the year, sinking 72 per cent from the 4.36 million recorded in the year-ago period.

“We aren’t seeing international tourist arrivals – nigh on nil – just a handful of foreigners working and living in the country. But the Ministry of Tourism has predicted that the number of international tourists will pick up from mid-2021, if a vaccine were to be officially endorsed,” he said.

Garment Manufacturers Association in Cambodia (GMAC) secretary-general Ken Loo echoed Ostry’s sentiment that international industrial orders would soon enjoy a notable rise, especially from the US.

On Monday, Minister of Economy and Finance Aun Pornmoniroth voiced his confidence that “Cambodia’s economic activity can retain a semblance of business as usual, with a better-than-expected fiscal situation, above all, in terms of tax revenue.

“This’d be a godsend for the implementation of the 2021 budget, allowing for greater budget space and lower-than-expected use of government savings.

“Recently though, fallout from the floods have been putting strain on the state’s burden, notably in the rehabilitation of transport and irrigation infrastructure,” he said.

According to him, the government is preparing a Post-Covid-19 Recovery Plan, which is a medium-term consideration that is designed to quickly return economic growth to pre-Covid-19 levels.

On October 13, the IMF projected a 2.8 per cent contraction in the Cambodian economy this year, and a sharp rebound next year to 6.8 per cent growth.

And according to Wednesday’s report, global growth has been revised to minus 4.4 per cent this year and 5.2 per cent next year.

The Asia-Pacific is also starting a tentative recovery, but at differing speeds for most countries, the IMF said.

Economic activity in the region is expected to slide by 2.2 per cent this year, due to a sharper-than-expected downturn in key emerging markets, and then grow by 6.9 per cent next year, it added.

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Hun Sen gets 4th Covid shot, urges compatriots to follow

    Prime Minister Hun Sen and his wife Bun Rany on January 14 received their fourth dose of Covid-19 vaccine and called on compatriots to follow suit as the Omicron coronavirus variant continues to spread in the community. This marks the launch of Cambodia's fourth-dose vaccination campaign,

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • Singapore backs Cambodia's efforts on Myanmar

    Singaporean Prime Minister Lee Hsien Loong supports Cambodia in its efforts to seek a solution to the ongoing Myanmar crisis as the chair of ASEAN. Lee expressed his support during a meeting with Prime Minister Hun Sen via videoconference on January 14, with the talks focused