The National Bank of Cambodia will put in place 10 key policies to support sustainable economic growth and recovery in 2022. The 10-point policy will fully support the growth of the national economy, which continues to be threatened by the COVID-19 pandemic. 19 and its mutations. .
Chea Chanto, Governor of the National Bank of Cambodia, during his address at the closing ceremony of the National Bank of Cambodia’s 2021 and 2022 Annual Meeting work objectives that in 2022, the emergence of new variants coronavirus will continue to threaten the recovery of the global economy and regional economies and could slow growth to levels below expectations.
In the United States and Europe, infections are rising rapidly, and in Asean, daily infections are still high. This situation will continue to weigh on the recovery of the Cambodian economy, in particular the impact on tourism, the disruption of the export-import transport chain and the weak growth of foreign investment flows.
In addition, the risk of another outbreak in Cambodia could also lead to the implementation of more stringent preventive measures that could disrupt local production and economic activity.
The recovery of the global economy, Chea Chanto said, will continue to support the export of apparel and non-apparel, such as electrical and bicycle components. Controlling the Covid-19 pandemic and continuing economic measures will boost economic activity such as trade, investment, transport and telecommunications and domestic tourism.
The agricultural sector is expected to continue to develop well, supported by government policies and the implementation of regional and bilateral free trade agreements. According to these optimistic expectations, Cambodia’s economic growth in 2022 is projected at 5%.
To support the resumption of sustainable growth, the Royal Government will define a strategic framework and programs to rehabilitate and promote economic growth in line with Covid-19, along the new normal trajectory, which aims to revitalize and strengthen the economy.
In line with this direction, the National Bank of Cambodia as well as the Cambodian banking system will continue to introduce 10 main policies, including:
- Stabilization of the exchange rate: The stabilization of the exchange rate will continue to contribute significantly to the stabilization of prices and the protection of the purchasing power of the riel, as well as the income of the population. It should be noted that the exchange rate in 2022 will continue to be under pressure due to the implementation of support measures that release money into the market, combined with the bullish trend of the US dollar, in particular due to expectations of normalization of future monetary policy. of the US Federal Reserve.
In this situation, the National Bank will continue to intervene in the foreign exchange market to keep the exchange rate of the riel against the US dollar stable at a level appropriate to the economic situation.
- Promote the use of the riel: The Covid-19 crisis clearly demonstrates the incomplete role of monetary policy in supporting the economy, such as the possibility of lowering interest rates to stimulate investment or consumption due to the high level of dollarization. The promotion of the use of the riel remains a top priority to strengthen the efficiency, sovereignty and independence of monetary policy, in order to actively support the process of economic recovery and resilience.
In this regard, the National Bank of Cambodia has supported the issuance of government securities in riel, which is not only a source of long-term financing for public investment, but also an important driving force in promoting l use of the riel as well as the development of new monetary policy instruments based on market mechanisms.
- Implement targeted support measures: Due to the economic recovery of the various sectors, the implementation of support measures will be targeted to support their growth. In this sense, the banking system will contribute to the recovery of priority sectors by relaxing the appropriate regulations and according to the level of risk.
At the same time, the National Bank will implement a crisis exit strategy which will be carried out in a prudent manner and according to the evolution of the current economic situation, taking into account the psychological risks and the stability of the banking system.
4: Improve the financial environment and knowledge: Currently, access to affordable financial services is still limited, which constitutes an obstacle to the contribution to the development of small and medium-sized enterprises, which constitute the backbone of the economy.
In this context, the National Financial Environment Strategy will continue to be a guide for improving the financial environment of banking and financial institutions and stakeholders. At the same time, financial literacy will continue to be strengthened through the integration of programs and promotional campaigns on the use of money, culture, credit and savings.
- All branches of the National Bank of Cambodia, in provincial capitals, should continue to support the economic growth of the region through the provision of active and efficient cash management services and contribute to the promotion of financial literacy and the protection of clients through the helpline system and providing information and helping to solve problems related to the use of financial services to citizens.
At the same time, the agencies should continue to cooperate and support the implementation of the Royal Government’s public finance reform program to enhance transparency and accountability in cash management operations.
- Leverage new financial technologies: new financial technologies, particularly in payment systems, have the potential to improve the integrated financial environment, support growth and the digital economy by reducing fees and transaction costs , access to services anywhere with information technology on a regular basis.
At the same time, the adoption and use of financial technology must strictly adhere to the three main principles: maintaining the sustainability of services, improving the financial environment and supporting innovation (Sustainability, Inclusion and Innovation).
- Strengthening the Corporate Sustainability Plan and Implementation Plan for the End: Uncertainty surrounding Covid-19 underscores the need for both plans to maintain sustainable service delivery and risk management in the system banking. In order to contribute to the resilience of the entire banking system, all departments, units and institutions under the auspices of the National Bank of Cambodia are requested to continue to strengthen the sustainability of their activities and plans. of action by updating the situation.
- Strengthen the effectiveness of the fight against money laundering and the financing of terrorism: Improving the ranking of Cambodia in the fight against money laundering and the financing of terrorism requires the involvement of all stakeholders . At the same time, Cambodia’s Financial Intelligence Unit should continue to educate reporters and competent authorities, strengthen monitoring and analysis of financial reports, escalate suspicious transactions to competent authorities, and strengthen cooperation with ministries and institutions. concerned. and international partners to exchange timely and situational information.
- Contribution to climate change mitigation: In addition to assuming its main responsibilities, the banking system must also continue to contribute to the sustainable development of the financial sector, taking into account the environment and the impact on the climate. The International Monetary Fund (IMF) has recently adopted the National Bank of Cambodia as a model central bank in the region, as the National Bank of Cambodia (NBC) has invested in international reserves on green assets and has defined the principles of sustainable financing of the Cambodian banking system and encourage all banking and financial institutions to provide credit to sectors that help protect the environment and reduce climate change.
- As ASEAN Chairperson in Cambodia in 2022, the National Bank of Cambodia will contribute to the strengthening of regional financial integration and the financial safety net through the liberalization of banking services, the integration of payment systems, the promotion the use of regional currencies and financing mechanisms in the event of a crisis. prevention and resolution.
NBC Governor Chea Chanto added that achieving the above goals with consistency and efficiency requires all staff officers to continue their efforts to work responsibly, unitedly and with discipline. and assignment.
- Keywords: COVID-19 pandemic, National Bank
