Logo of Phnom Penh Post newspaper Phnom Penh Post - Balance of payments gap rises to $124m

Balance of payments gap rises to $124m

Balance of payments gap rises to $124m

T HE country's current account deficit widened to $124.1 million last year, up 31

percent from $94.4 million in 1992, according to a newly-released National Bank

of Cambodia (NBC) report.

The current account deficit figure is made up

from goods, services and income accounts and is partly offset by a surplus in

net current transfers of $150.2 million. The report stressed that the current

account figures are only estimates and the accuracy of the data they are based

on is very variable.

In the goods sector the deficit rose by 9 percent to

$195.7 million, continuing a trend of widening trade gaps since 1991. Overall

imports rose in 1993 by 8 percent, with imports rising by 7

percent.

Imports for the year amounted to $479.3 million, of which 21

percent, or $101.6 million was made up of humanitarian and development aid

materials. Other large imports were cloth, 16.3 percent of total imports,

cigarettes 13.5 percent, petroleum products 8.5 percent, electrical consumer

goods 8.3 percent, construction materials 5.7 percent and drinks 4.4

percent.

The report added: "In addition to meeting consumer demand within

Cambodia, substantial quantities of imported goods were re-exported to

neighboring countries."

Exports for 1993 were estimated at $283.6 million

of which 64 percent, or $181.4 million was estimated to be re-exports of

imported goods. Timber exports accounted for a further 29.8 percent and rubber

exports 5 percent.

In the services sector there was a deficit of $36.1

million in 1993, up from $13.9 million the year before, while in the income

category the deficit amounted to $42.6 million last year, slightly less than the

equivalent 1992 figure of $46.6 million.

The NBC report put the nation's

capital account at $178.5 million in the black for 1993, but this figure was

partly offset by a $59.7 million debit on the financial account.

The

inflation rate during the first quarter of this year was 4.34 percent, with

prices rising by 1.24 percent in March, an increase over February's figure of

0.88 percent.

But the survey pointed out that inflation was still

decelerating when compared to the first quarter of 1993, when the Untac

operation drove it upwards.

The NBC report attributed two percent of the

first quarter rise in inflation this year to increases in the prices of beef,

fermented fish paste, trousers, haircuts, beer and toothbrushes.

At the

end of March the exchange rate stood at 2,480 riel to the dollar, with the riel

softening by 0.4 percent over the previous month. Over the first quarter of the

year the riel fell in value from 2,402 to 2,477 to the dollar, a decline of 3.12

percent.

During March the price of gold rose 1.8 percent to 115,000 riel

per chi, while during the quarter the average price per chi was 115,300 riel, up

from 107,133 riel during the final quarter of last year, the report

said.

An increase in broad money supply, as measured by M2, of 10 percent

during March was mainly attributed to foreign currency deposits reaching a new

high of 213 billion riel, thanks to an 18 percent rise.

The growth in M2

in February had been 7.5 percent and March's figure reversed a trend towards

deceleration in the increase of money supply.

But the report said that

the underlying trend on money supply is still one of deceleration if the narrow

M1 measure is taken into account. During the first quarter of this year M1

expanded by 7.6 percent as against 11.6 percent during the final quarter of last

year.

The government sharply reduced the amount it is in credit to the

banks from 170.6 billion riel in February to 85 billion riel in March, according

to the report. This was attributed to a three-fold increase in government

deposits with banks from 47.5 billion riel in February to 133 billion riel in

March, which in turn was put down to large inflows of foreign aid and changes in

the government's cash holdings.

The report said: "What needs to be

underlined is that gross claims on government by the banking system have

remained practically unchanged at about 218 billion [riel] since December 1993,

reflecting [the] government's determination not to resort to monetization of the

budget deficit."

Credit extended to the private sector by banks rose 11

percent in March to reach 187.7 billion riel.

The banking system's

foreign exchange assets also rose sharply during the month by 124.3 billion riel

to reach 453 billion riel. This was largely attributed to the inflow of foreign

aid into the government sector.

The report said: "The uptrend in foreign

exchange assets sustained during the quarter is indeed encouraging."

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