Logo of Phnom Penh Post newspaper Phnom Penh Post - Prices Fall Further



Prices Fall Further

Prices Fall Further

Cambodia's volatile economy continued to stabilize in the wake of U.N.-sponsored

elections in May but the departure of the U.S. $2 billion peacekeeping mission is

the next few months is expected to have a "considerable negative impact",

a U.N. survey released Aug. 4 said.

The riel, widely regarded as the most reliable barometer of business confidence in

the war-shattered economy, continued to appreciate in July after gaining 33 percent

in June, trading at around 2,700 to 2,800 against the dollar by the end of the month.

"Most prices continue to adjust broadly downwards in line with the strengthening

of the riel and with the easing of speculative pressures spawned by earlier political

uncertainties," the report said. Prices of most domestically produced meat and

poultry products declined by 10 to 30 percent over the previous month. The composite

index for imported clothing items fell an average of 27 per cent.

The report cautioned, however, that continued deterioration in the fiscal deficit

"will quickly lead to a reversal of this trend unless direct budgetary support

from external sources is readily forthcoming."

The government has failed to meet the deficit since it stopped printing extra riels

in Oct. 1992.

The United Nations announced on July 21 that it would provide an initial three million

dollars in budgetary support although most observers estimate $60 million will be

needed to help prop up the new government until official efforts to raise greater

domestic revenues can be put in place.

The survey said the fiscal situation would be boosted in the future as civil service

reforms were carried out along with anticipated inflows of longer term international

financial and project support.

Phnom Penh-based businesses and in particular the housing, hotel and service sectors

are expected to be hardest hit by the pullout of the relatively high paid, 22,000-man

U.N. mission.

The termination of the operation will also result in the retrenchment of more than

4,000 local staff and the loss of income estimated in the region of $17 million per

anum. With the exception of a small minority, most of these staff are unlikely to

find alternative employment given the present slow pace of investment activity in

the economy, it said.

In the short term it is unlikely that an influx of tourists and business visitors

will compensate for the departing UNTAC staff because of international uncertainty

about the security situation in the country. "Some hotels and restaurants which

have depended on UNTAC patronage may well face bankruptcy," the survey said.

The rental market was also forecast to weaken further and transportation services

will be hit, it said. The fall in income generated by these sectors is likely to

further hurt the government's revenue collecting efforts.

The fall in income generated by all the above sectors will impact begaityibvely

on government tax revenues primarily through lower siness receipts and sales turnover

tax and a dceline int the purchase of imp;orted inpuits.There will be a fall in another

sector the post and telecommunicationsw sector, which is one of the few state owned

enterprise that operaties wiht a suplus on its activites and contributes to the central

budget revenues.

MOST VIEWED

  • Kingdom's Covid cluster cases jump to 194

    The Ministry of Health on February 25 confirmed 65 new cases of Covid-19, with 58 linked to the February 20 community transmission. The latest cluster cases include nine Vietnamese nationals, five Cambodians, one each from Korea, Singapore and Japan, with the rest being Chinese. This brings the total number

  • Locations shut, dozens more Covid-19 positive

    The Ministry of Health has closed 23 locations in connection with the February 20 community transmission of Covid-19 and summoned for testing anyone who had direct contact with affected people and places. The number of discovered related infections has risen to 76, including 39 women. In a press release,

  • Cambodia's Covid cluster cases rise to 137

    The Ministry of Health on February 24 recorded 40 more cases of Covid-19, with 38 linked to the February 20 community transmission. Of the 40, two are imported cases involving Chinese passengers. The 38 include two Vietnamese nationals and one Cambodian, with the rest being Chinese. This brings the total cases

  • Covid cluster raises alarm, health bodies urge vigilance

    The Ministry of Health and the World Health Organisation (WHO) in Cambodia have expressed great concern over the February 20 cluster transmission of Covid-19 in the community. Both entities appealed for vigilance and cooperation in curbing further spread of the virus. Ministry spokeswoman Or Vandine said

  • PM confirms third Covid-19 community transmission

    Prime Minister Hun Sen on February 20 announced the Kingdom's third outbreak of Covid-19 community transmission after 32 people tested positive in just over 10 hours. Addressing the public from his residence after an emergency meeting, Hun Sen said: "I dub it February 20 Community Event, in which 32 cases

  • Cambodia's cluster cases jump to 259

    The Ministry of Health on February 27 recorded 26 more cases of Covid-19 linked to the February 20 community transmission, bringing the total to 259 in one week. The 26 include three Vietnamese nationals and one Cambodian, with the rest being Chinese. The ministry noted that five of the Chinese