People receive second does of Sinovac vaccines in Phnom Penh last week.
Cambodia is among the East Asian and Pacific (EAP) countries set to receive financial support from the World Bank to underpin a resilient post-Covid-19 economic recovery, fuelled by solid vaccination progress, the Washington-based development lender’s president told The Post.
David Malpass had told a media roundtable on July 15 that the World Bank had increased available financing for coronavirus jabs to $20 billion globally over the next year and a half, in response to a sharp rise in demand.
“We’ve already committed $1.1 billion to countries in East Asia and the Pacific – Cambodia, Indonesia, Laos, Mongolia, Papua New Guinea and the Philippines, and we’re eager to commit more,” he said.
Malpass told The Post that government revenues around the world slid substantially as the pandemic unfolded.
“What I wanted to dramatise is the huge impact that it has had on revenue collection, and that makes all the more important the early recovery.
“Our commitments over the last 15 months of the pandemic reached $157 billion. That’s an increase of 60 per cent over the previous 15 months. It’s been a major effort by the World Bank to provide support, including with Cambodia,” he said.
World Bank regional vice-president for EAP Victoria Kwakwa noted that the Kingdom is working hard to keep SARS-CoV-2 variants at bay, much like other countries in the region.
“It’s had to do significant lockdowns, even though, Cambodia, by now, has the highest share of the population vaccinated in much of the region, or maybe the second-highest, after Singapore.
“That is good but that’s still not quite where they need to go, and they’re trying to do more.
“Our estimates are that Cambodia could grow at about four per cent, assuming that they’re able to be successful in getting these new variants under control and right on the back of some improvements in exports and leverage the trade agreements that they’ve signed and some anticipated reforms in terms of foreign investments later in the year.
“Now, on the downside, it could be as low as just one per cent, particularly if they’re not able to get a good handle on the pandemic,” she said.
She explained that Cambodia “also has a bit more fiscal space and they can continue some of the spending that is needed, particularly on the investment side to continue to support growth, but they do have risks. There was a huge construction boom that was happening just before Covid, and that stalled a bit.
“We’re also seeing that, as firms are weakened by the pandemic, there are implications for the banking sector and there will be vulnerabilities there. Those areas need to be looked at very carefully to make sure that you don’t have a lot of macro instability drivers building up in the economy,” Kwakwa added.
On July 16, The UN Development Programme (UNDP) said in a study that domestic revenue is an increasingly vital source of financing for development in Cambodia, amounting to 19 per cent of gross domestic product (GDP) last year and expected to reach 22.5 per cent by end-2025.
“Official development assistance [ODA] flows remain significant – estimated around 7.9 per cent of GDP.
“Covid-19 has led to total financing flow losses estimated to be $3.6 billion, accounting for 19.8 per cent of the total flows, for 2020. The three most significantly affected are domestic revenue, foreign direct investment [FDI] and private domestic investment,” the UNDP said.
In the first half of 2021, the general departments of Taxation (GDT) and Customs and Excise of Cambodia (GDCE) collected $1.51590 billion and $1.1595 billion in revenue, respectively, down by 10.60 per cent and 8.9 per cent year-on-year.
