Opposition renews calls for $500 million stimulus package

Written by Sam Rith and Sebastian Strangio

Thursday, 29 January 2009 Phnom Penh Post

SRP and HRP claim falling agricultural prices are hurting Cambodia's export economy, but govt officials say they have $3 billion in reserve. OPPOSITION lawmakers have made renewed calls for the government to prepare a US$500 million economic stimulus package, claiming the Kingdom's export-oriented economy is being hit hard by falling global prices for agricultural produce. In a letter sent Tuesday to Prime Minister Hun Sen, 18 parliamentarians from the Sam Rainsy Party (SRP) and Human Rights Party (HRP) restated a request that $500 million be set aside to protect the economy against further degradation. "Due to a dramatic drop in the price of agricultural produce ... the income as well as the livelihoods of millions of Cambodian farmers has worsened dramatically," stated the letter. "We hope that the government will prepare measures to help our farmers maintain their livelihoods." In particular, the letter called for government support of agricultural prices and the provision of low-interest loans to those in financial need, reiterating the contents of a letter SRP President Sam Rainsy sent to Hun Sen on January 16. ‘Lucky' economy But CPP lawmaker Cheam Yeap dismissed opposition claims, saying Cambodia had been "lucky" to avoid the worst impacts of the crisis and that it has large funds set aside that would cushion the country against financial instability. "We have prepared things in advance," he said. "Each year we have a reserve budget of between $200 and $300 million. Now we have almost $3 billion in the National Treasury that has not yet been used." In response, Sam Rainsy dismissed the government's claims it was ready to weather the storm. "What the government has actually set aside for the fiscal year 2009 as "unplanned expenditures" - $144 million compared with $132 million for 2008 - is not adequate to cope with the deteriorating situation," he wrote in a January 26 letter to the Post. Export woes Economist Sok Sina agreed with Sam Rainsy that falling prices would harm the Cambodian economy, saying that grass-roots benefits - such as cheap petrol and rice - were outweighed by the overall decline in prices of agricultural produce. "The price of petrol has declined, but not much else," he told the Post. "Low prices benefit many rice consumers, but not if you look at the economy as a whole. Cambodia is a rice-exporting country, and if the price of rice is low, the Cambodian economy will not benefit." He said that the opposition's call made economic sense, although it lacked details. "I think it's a good idea. If you look at the budget plan for 2009, you can see [it] has increased compared to 2008. Credit and aid has also increased," he said. SRP lawmaker Son Chhay called for the Minister of Economy and Finance Keat Chhon to answer concerns set out in the letter when the National Assembly next convenes. "It is necessary for the public to know about the government's program," he said.