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Subsidy debate

Subsidy debate

The Editor,

Firstly, I would like to thank you again for your coverage on

the work of the Association of Cambodian Local Economic Development Agencies

(ACLEDA) and other major organizations which are working in the field of credit

for the poor (Sept 22 - Oct 5, 1995).

We all have the tremendous

challenge ahead of us to continue developing and expanding sustainable financial

services for the poor to ensure that gradually all the poor in Cambodia will

have access to those services.

With reference to the ongoing discussion

on fixed interest rates I noticed that, unfortunately, you have wrongly quoted

my words.

I said on this matter that some people show a preference for

establishing fixed and highly subsidized interst rates on loans to the

poor.

On the other hand, it is recognized that highly subsidized credit

schemes are not sustainable in the long term as they require tremendous

resources from donors.

Highly subsidized interest rates, therefore, often

only reach a small amount of poor people, even in the long term.

It is

the task of the Credit Committee for Rural Development (CCRD) to guide all

ongoing discussions in the field of credit.

The CCRD has, among others,

the difficult task to prepare a policy framework for rural and decentralized

credit in which the outcome of those discussions will be reflected and which

will be optimally beneficial to all poor in Cambodia.

- In Channy, President of ACLEDA.

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