Inflation Predicted to Fall Below Five Percent

Inflation remains under control and is predicted to drop below five percent as banking and financial institutes continue to aid post-pandemic economic recovery, says the National Bank of Cambodia
A woman buys vegetables in a market in Phnom Penh. Kiripost/Siv Channa
A woman buys vegetables in a market in Phnom Penh. Kiripost/Siv Channa

The National Bank of Cambodia (NBC) has announced inflation is under control and is expected to fall below five percent in the second half of the year.

The announcement came during a meeting on September 5 between NBC’s Governor Chea Chanto and the International Monetary Fund (IMF) team led by Alasdair Scott.

Cambodia's international reserves continue to be adequate, equivalent to about seven months of imports of goods and services. This is higher than the minimum level that developing countries should have at three months, the NBC said in a Facebook post.

The NBC added that with regard to the value of the riel, the exchange rate of the Cambodian currency against the US dollar has stabilized, with an average level similar to the same period in the first eight months of 2021, under the context of steady economic activity.

“Exchange rate stability has made a significant contribution to protecting the purchasing power of people's incomes as well as mitigating the effects of rising inflation,” the NBC said.

As for the banking system, banking and financial institutions remain healthy and resilient, as well as contributing to mitigating the effects of the Covid-19 crisis and supporting economic activity during the recovery phase, NBC said.

The banking system continued to lend to the private sector, with an increase of 23 percent, and also accumulated deposits by 16 percent, the NBC said.

“The banking system's credit has supported investment in all sectors of the economy, and the NBC has been closely monitoring risks on a regular basis,” the NBC said.

The NBC also announced this week its first government bond, in which eight institutions participated and won the auction.

Those institutions had bid 41,800 out of 100,000 units, in which one unit costs 1 million riel, the NBC said.