Country Report Cambodia February 2010

Outlook for 2010-11: Policy trends

After having initially underestimated Cambodia's exposure to the global economic downturn, the government has conceded that economic growth slowed in 2009. In early 2009 Hun Sen said that the government would attempt to ensure GDP growth of at least 6% in that year, but since then there have been no official statements on economic growth, which may amount to a tacit admission of the severity of the slowdown. Fiscal policy will remain expansionary as the government seeks to support domestic demand. According to the budget for 2010, which was approved by the National Assembly in early December, government expenditure will rise to CR8.3trn (US$2bn), representing an increase of 14.2% from the planned level of spending in 2009. In 2010-11 the government and the National Bank of Cambodia (NBC, the central bank) will seek to support domestic economic growth, but the scope for additional fiscal stimulus will be limited by the budget deficit, while the effectiveness of monetary policy will be hampered by the high degree of dollarisation of the economy.

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