International Monetary Fund (IMF) managing director Kristalina Georgieva on April 7 said the Cambodian economy is expected to grow 4.2 per cent this year, following a 3.5 per cent contraction in 2020, but cautioned that local governments around the world should proceed with prudential policies and proactive management.
Kristalina made the comment at the opening press conference of the virtual 2021 Spring Meetings of the IMF and World Bank.
The global outlook is brighter, she said, adding that the world economy is predicted to expand six per cent, buoyed by additional policy support and Covid-19 vaccination campaigns that have reached millions of people.
“This is adding to the exceptional and coordinated actions taken over the past year. And yet, while there is light, the crisis continues to cast a dark shadow,” she said, adding that a small number of “advanced and emerging market economies”, led by China and the US, are powering ahead as “weaker and poorer countries” are lagging behind in this multi-speed recovery.
“We also face extremely high uncertainty, especially over the impact of new virus strains and potential shifts in financial conditions. And there is the risk of further economic scarring from job losses, learning losses, bankruptcies, extreme poverty and hunger.
“Policymakers must take the right actions now by giving everyone a fair shot – not just into people’s arms, but also in people’s lives and in vulnerable economies,” Kristalina said.
She noted three essential priorities to be addressed by individual governments – first, a “fair shot at the vaccine”, ramping up the production and distribution of Covid-19 jabs and avoiding export controls.
This entails funding the Covid-19 Vaccines Global Access (COVAX) Facility and ensuring that surplus jabs arrive at poorer countries, she said.
Second is a “fair shot at recovery” or, for the most part, strengthening the resilience of vulnerable households and economically-viable firms, which she noted is a task that calls for fiscal measures and favourable financial conditions.
And third is a “fair shot at the future” which is “perhaps the most consequential decision that any government can make this year”, she said.
“The focus should be on scaling up public investment – in green projects and digital infrastructure, in people’s health and education – to ensure that everyone can benefit from the historic transformation to greener, smarter, and more inclusive economies.
“To unlock this potential, countries will need sufficient public revenues, and they would need more efficient spending. In many cases, this will mean more progressive taxation and an agreement on questions like minimum taxation for companies and international tax rights.
“This has to be coupled with stronger support for poorer countries as they fight the crisis and seek to invest in the future,” Kristalina said.
On March 30, Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth told the 7th Joint Meeting of the ASEAN Finance Ministers and Central Bank Governors that the government had allocated nearly $2 billion to stave off the spread of the novel coronavirus and to address the economic impact on key sectors through eight rounds of mitigation measures.
He said the government remained committed to implementing reform policies aimed at increasing the country’s competitiveness and creating a favourable environment for the private sector to do business and invest domestically and abroad.
The government allocated $1.164 billion in 2020 and has earmarked $719 million for this year, he said.
On March 25, the government announced its eighth round of economic mitigation measures, which centre on garments, textiles, footwear, travel goods, bags and tourism.
The government in April-June will continue to provide $40 per month to workers in the sectors as part of its cash handout programme amid the pandemic.
Factory and enterprise owners must add $30 to the handout, increasing the total disbursement to $70. On the other hand, employers in the tourism sector are encouraged to voluntarily provide as much money as possible.
According to Vissoth, the government is preparing to launch a three-pronged 2021-2023 economic recovery plan.
The first part of the strategy, dubbed “Revival and Survival”, focuses on building a solid foundation for economic recovery.
“Reform” grapples with transforming crises into opportunities, with a focus on the diversification and protection of economic competitiveness.
And “Resilience” concentrates on achieving effective preparedness for possible crises going forward, from either natural causes or human activity.