Government Pledges $2 Billion Fund for Economy

Government Pledges $2 Billion Fund for Economy

The government has announced they have prepared an emergency reserve fund of between $800million and $2billion to aid the Kingdom’s economic recovery in the wake of the COVID-19 outbreak.

The fund amount is set to be used in separate scenarios, depending on how long the virus continues to spread, said Prime Minister Hun Sen, speaking in Phnom Penh on Tuesday.

“In the first scenario, $800million has been budgeted if it [COVid-19] continues for six months. For the second scenario, if the outbreak persists for up to a year of longer, then the $2billion will be used,” he outlined.

He said his government is continuing in their efforts to turn the slowdown occurring in the country’s different sectors, as a result of the virus, into opportunities.

The news follows an earlier disbursement by the government of $30 million to the Health Ministry to aid the nationwide fight against the virus in the coming six months.

The substantial aid fund will be facilitated by reducing overall government expenditure by 50 percent, although the Ministries of Foreign Affairs, Commerce Ministry, and the Office of the Council of Ministers will only see their budgets slashed by 25 percent.

“It’s vital that these measures are taken to protect the country’s economy through the challenges of the ongoing outbreak,” Mr. Hun Sen concluded.

The move comes as international organizations, including the Asian Development Bank (ADB) and International Monetary Fund (IMF), have announced that they are also ready to offer financial assistance.

ADB has earmarked a total of $4 million; $2 million of which will enhance detection, prevention, and response in the People’s Republic of China and the Greater Mekong sub-region, with a further $2 million to support response in all of the 23 developing countries, including Cambodia, that the Bank has a foothold in.

In a moderate-case scenario, the ADB also estimates that Cambodia will see a 1.59% decline in its GDP, which is the highest rate among the 23 countries. ADB will use appropriate means to address the identified needs, including through existing and new financial assistance, emergency assistance lending, policy-based lending, private sector investment, and knowledge and technical assistance.

The ADB said COVID-19 will have a significant impact on Asia’s developing economies, which have seen sharp declines in domestic demand, tourism and business travel, and trade, plus serious disruption to production links and supply chains.

In a worst-case scenario for Cambodia, the ABD estimates that the Kingdom’s decline in tourism revenues could run to $856.5 million, which translates to about 3.5 percent of the county’s GDP.

In addition, the IMF also announced that it is making available about $50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging market countries that need to seek support.

Of this, the IMF said $10 billion is available at zero interest for the poorest members through
the Rapid Credit Facility, squarely aimed at those low-income countries (LICs) in urgent need of financial support.

Khmer Times