Inflation

Cash Scheme to Decrease Inflation Burden

The government will launch a social protection scheme to give cash to those impacted by rising inflation
A person buys food from a street vendor in Phnom Penh. Kiripost/Siv Channa
A person buys food from a street vendor in Phnom Penh. Kiripost/Siv Channa

Prime Minister Hun Sen has set up a social protection scheme to provide cash to people affected by rising inflation through social protection allowances, with the goal of decreasing their burden.

Hun Sen signed the decision on October 5 called "Cash Transfer Subsidies for Vulnerable Families During Inflationary Pressures." It intends to donate cash to disadvantaged and vulnerable households during the fight against Covid-19, the decision said.

Theng Pagnathun, Delegate of the Royal Government of Cambodia in charge of the Director General of Planning at the Ministry of Planning, said this initiative will begin this week and it will take about two weeks to identify the overall number of families affected by inflation.

However, he is unsure how much money people will receive as Hen Sen will make the decision through the National Council for Social Protection, he added. As the Prime Minister said, rising inflation impacts people's living conditions, particularly those near the poverty line.

“So, this helps to ease their living conditions, especially for those who are affected by rising commodity costs while their income stays constant,” he said. “It eases the burden and livelihood of all those individuals who live on the edge of poverty.”

Vorn Pov, President of the Independent and Democracy of Information Economic Association, praised the government for recognizing commodity inflation and aiming to give social protection to families affected by it.

“When the government has a policy of providing cash to the people, I believe it is a good thing,” he said. “However, the government could do more to prevent market inflation and better organize the economic process.”

The informal workers should have a decent place to earn money, he added.

“Providing money without an appropriate place for earning, it’s impossible,” he said.

He said the government should set up a social protection policy system by focusing more on providing citizens with equity cards or free ID cards. Therefore, they have access to healthcare and other services in accordance with social protection principles, which is preferable to supplying cash.

Meanwhile, Ky Sereyvath, Royal Academy of Cambodia economics researcher, said that cash provision will not assist for a long time as the Royal Government does not have enough budget to support.

“The government must stimulate local production, particularly the interest rate reduction in the financial sector to promote greater production in the future,” he said. “Otherwise, the government may suffer cash problems in the future if the situation worsens.”

He said that the government is making the correct move during the inflationary period, but suggested that economic growth be increased.

“The government is moving in the right direction by resolving a crisis,” he said. “However, the government could next adopt measures to boost economic growth, such as reduced interest rates and incentives for manufacturing, particularly the SME sector, which is the backbone of Cambodia's economy.”

Despite the worldwide rise in gasoline and fertilizer costs, Cambodia is anticipated to have one of the lowest rates of inflation among ASEAN nations this year, according to ADB on September 21.