Logo of Phnom Penh Post newspaper Phnom Penh Post - MEF sounds warning bell over credit growth risk

MEF sounds warning bell over credit growth risk

MEF sounds warning bell over credit growth risk

The Ministry of Economy and Finance has raised concerns about the rapid growth of credit and real estate sectors, which it says could pose risks to Cambodia’s economic growth, while emphasising that policy measures were being taken to mitigate these risks.

Vongey Vissoth, secretary of state at the Ministry of Economy and Finance, said yesterday during a public forum organised by the ministry that while the country was in a better fiscal position than a few years ago, there were structural weaknesses that needed to be addressed.

“Our message is that we are moving ahead, but in front of us there is some turbulence,” he said. “We must be ready and prepared to respond.”

Cambodia’s 6.9 per cent growth in 2015 and projected growth of 7 per cent this year could be derailed by risks emerging from the banking and financial sector, and its links to credit growth in the real estate sector, he added.

“Our banks play an important role in pushing economic growth and to make structural changes,” Vissoth said. “It has also created risk because the size of loans is huge and we are concerned about these loans.”

He said Cambodia’s much-lauded microfinance (MFI) sector had seen tremendous growth and profits, but high interest rates and the agricultural fallout from drought conditions across the country could put the sector at risk.

“The MFI sector is not small – the size and scope is not small anymore,” he added.

Officials at the forum also highlighted the salient features of the government’s budget performance last year, prospects for this year’s spending, as well as fiscal management measures, which they said have kept the country’s expenditure and loan repayment commitments in check.

Mey Kalyan, senior adviser to the Supreme National Economic Council, said the ministry has been working with stakeholders, like the World Bank and International Monetary Fund, on public financial management measures, which was now yielding results.

“The situation is more manageable now and better than some other ASEAN countries,” he said.

He said fiscal technicalities, like inflation, current account deficit, and revenue and spending management, have had an effect only because of increased capacity at the ministry.

MOST VIEWED

  • New US bill ‘is a violation of Cambodian independence’

    After a US congressmen introduced bipartisan legislation that will enact sanctions on Cambodian officials responsible for “undermining democracy” in the Kingdom, government officials and the ruling Cambodian People’s Party on Sunday said they regarded the potential action as the “violation of independence and sovereignty

  • Angkor Wat named as the top landmark for the second year

    Travel website TripAdvisor has named Cambodia’s ancient wonder Angkor Wat as the top landmark in the world for the second year running in their Travelers’ Choice Award 2018, an achievement Cambodian tourism operators expect will attract more tourists to the Kingdom. The website uses traveller

  • Ministry’s plan for net sparks fears

    The government has ordered all domestic and international internet traffic in the Kingdom to pass through a Data Management Centre (DMC) that has been newly created by the state-owned Telecom Cambodia, in a move some have claimed is an attempt to censor government critics. Spokesman

  • Hun Sen detractors ‘will die’

    Prime Minister Hun Sen on Wednesday said those who curse or insult him would eventually die without a plot of land to bury their bodies after being killed by lightning, suffering the same fate as those who recently died in Thmar Baing district in Koh