The opposition party has called on microfinance institutions to renegotiate payment terms with flood-affected loan holders.
This year’s floods have affected 20 provinces and more than 1.7 million people, with 31,314 households evacuated, according to the Humanitarian Response Forum.
The Cambodia National Rescue Party has asked that institutions lower interest rates to 1 per cent for a year, and waive repayments and land and asset foreclosures for six months.
In a party report on post-flood indebtedness due to be released today, the CNRP says those seriously affected by floods should be allowed to rebuild their livelihoods without the burden of loan repayments.
“The impact of indebtedness on families is severe, and given trends for borrowing linked not only to farming but also to healthcare, there is a need to take urgent action to relieve pressure on the flood-affected population and renegotiate payment terms,” the report says.
CNRP public affairs head Mu Sochua said the opposition was not proposing “writing a blank cheque” to all families, but just to those most at risk, such as the estimated 20 per cent who live below the poverty line.
The most recent data from the Cambodia Microfinance Association (CMA) shows that over 1.3 million Cambodians are current clients of micro-credit institutions.
Sochua said MFIs were still giving out loans to flood-affected families who have little other choice than to borrow to pay for their basic needs, including healthcare.
“How can you not be sick if you drink that floodwater, if you live in that water and if you do your business in that water?”
But CMA chairman Bun Mony said that politicians did “not really understand” the industry.
“Without microfinance, the poor will suffer more,” he said.
“The way [the CNRP] wants to delay collection is not appropriate . . . we know better than the politicians what happens in the field and which of our clients suffer.”
Mony said that his firm, Sathapana Limited, had only identified 45 people out of 76,000 clients that were impacted by floods and may require a renegotiation of repayment terms.
He added that the situation was “not serious”, given that only 30 per cent of loans are for agricultural production, and less are specifically for rice fields.
According to government figures, flooding this year has destroyed about 1 per cent of the country’s total 2.5 million hectares of rice fields.
Cheam Yeap, head of the banking and finance committee of the National Assembly, said the government had plans to make sure finance institutions “do whatever they can to help flood victims and not to hinder them”.
He said this could include changing repayment schedules, as was requested during 2011’s flood that destroyed 10 per cent of the country’s rice fields.
Cambodian Economic Association president Srey Chanty said many debtors were likely affected by this year’s floods, despite the CMA’s claims.
He added that those who borrow from unscrupulous informal lenders were more at risk than formal borrowers.
ADDITIONAL REPORTING BY CHHAY CHANNYDA