Emerging markets and developing economies like Cambodia with far fewer resources to tackle the ongoing crisis will need to prioritise critical spending for health and support for the poor, a chief economist at the Washington DC-based International Monetary Fund (IMF) said on October 13.
Gita Gopinath told the October 2020 World Economic Outlook Press Briefing via video link: “The Covid-19 pandemic continues to spread with over one million lives tragically lost so far. Living with the novel coronavirus has been a challenge like no other, but the world is adapting.
She said developing countries must also “ensure maximum efficiency, but they will also need continued support in the form of international grants, concessional aid, and in several cases, debt relief.
“Now where debt is unsustainable, it should be restructured sooner than later to free up finances to deal with this crisis.
“This is the worst crisis since the great depression, and it will take significant innovation on the policy front at both the national level and the international level to recover from this Great Lockdown. The challenges are daunting, but there are reasons to be hopeful.”
She said policies must centre as “aggressively” as possible on escaping lasting economic fallout.
“Governments should continue to provide income support to households and work to preventing rising bankruptcies and job destruction through supporting vulnerable but viable firms,” Gopinath added.
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.
The government has launched six rounds of measures to stimulate economic growth as the Kingdom prepares for a post-Covid-19 world. The measures aimed to ensure that poor and vulnerable families continue to receive assistance during this difficult time.
The latest round of measures came late last month and centred on the garment, textile, tourism and civil aviation sectors, which the government labelled as the hardest hit.
For the garment sector, the government will continue to provide $40 per month to factory workers who lost their jobs or had their work suspended.
The programme will continue for another three months until the end of December this year. Factory owners have to add $30 to the handout, increasing the total disbursement to $70.
Meanwhile, tourism sector employees, including those who work at hotels, guesthouses, restaurants and travel agencies, will receive $40 a month for three months as well. The employers must provide as much money as possible in addition to the $40.
Registered hotels, guesthouses, restaurants and travel agents will be exempt from taxes for the next three months.
The exemption only applies to tourist businesses in Kampot, Preah Sihanouk, Kep and Siem Reap provinces, Phnom Penh, Svay Rieng province’s Bavet town and Banteay Meanchey province’s Poipet town.
The government also delayed taxes for social protection schemes, exempted patent and building taxes and delayed General Department of Taxation audits of travel agents and operators in the tourism sector.
Poor and vulnerable families will continue to receive cash subsidies for another three months, from October to December.
A government press release said: “The government will continue to regularly follow the situation of Covid-19, the situation of the economy and finance in the framework of the region and the world.
“Hopefully, it examines and assesses the impact of Covid-19 on the main sectors of Cambodia’s economy to update essential measures. It is also prepared to lay out more new measures in the framework of economic strategy after the Covid-19 crisis.”
According to Gopinath, government policies “should be designed with an eye to placing economies on parts of paths of stronger, equitable, and sustainable growth.
“Investments in health, digital infrastructure, green infrastructure and education can help achieve productive, inclusive and sustainable growth,” she said.