Cambodian central bank to slash reserve requirement
PHNOM PENH, Jan. 26 (Xinhua) — The National Bank of Cambodia will cut the bank reserve requirement from 16 percent to 12 percent and eliminate restrictions on real estate lending effective on Feb. 1, national media said on Monday.
This constituted a reversal of the bank’s monetary tightening measures brought in last year to cut inflation and rein in soaring property values, said English-language daily newspaper the Phnom Penh Post.
Officials said that they hoped the looser rules would stimulate lending amid a worsening economic crisis.
“We increased the reserve rate (from 8 percent to 16 percent in May 2008) because we were vigilant over the crisis and wanted to prevent the inflation. Now inflation is falling, so we lowered it to give banks easy cash to provide more loans to their customers,” said Tal Nay Im, director general of the National Bank of Cambodia.
Inflation rocketed to 25.1 percent in the first half of 2008 in Cambodia and dropped to 13.46 percent in December, according to the National Institute of Statistics of the Planning Ministry.
Experts and bank industrialists have repeatedly called on the government to lower the reserve rate so that financial institutions could loan more money and fuel the economy in the grips of a financial slowdown.
The Cambodian economy enjoyed double-digit increase during the 2005-2007 period, but down to below 10 percent in 2008 and will further slide to around 5 percent in 2009, according to the forecasts by experts and international financial institutions.