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Country Must Be Ready for Downturn: Sam Rainsy

The government can implement three important plans to help stabilize the economy as the global downturn continues, opposition leader Sam Rainsy said Thursday.

The steps should be taken immediately, Sam Rainsy, a former finance minister, said, as a guest on “Hello VOA.”

First, the government should allot $500 million in a special package to increase expenditure on social programs that help the poor, bolster the health and education systems and prepare new investment sites to create jobs, he said.

Second, the National Bank should decrease interest rates, to avoid confiscation of land and homes of people who may be struggling under debt, while at the same time promoting more loans as people cope with the downturn.

And finally, the government should seek to decrease the prices of electricity and fuel, along with the price of tolls and other services.

The outlook for Cambodia’s economy has been downgraded by major financial institutions, with the economy now expected to shrink in 2009, at a rate of about half a percent, down from broad growth in previous years that reached as high as 10 percent.

Government officials have said they are preparing $2.5 billion as an emergency fund. The total budget is around $1.8 billion, most of it spent on defense.

The global downturn will continue and will have a serious impact on Cambodia, Sam Rainsy said, citing Asian Development Bank and World Food Program warnings that poverty and food insecurity will increase.

Farmers and workers are likely to see decreased incomes, as prices for agricultural products fall and demand for garments from factories decreases, forcing the closure or suspension of operations for factories, he said.

At the same time, small businesses are likely to see income lost through decreased revenue, he said.

All of this adds up to a need for action by the government, which must realize the troubles ahead and request aid from the international community, while preparing its own measures to mitigate the financial woes.

“If you don’t realize the severe impact, how can we get help?” he said.

International finance institutions stand ready to help, on request, he said, “but Cambodia has not recognized that.”