Region told to keep stimulus

(Posted by CAAI News Media)

Thursday, 03 December 2009 15:01 POST STAFF

THE Economic Research Institute for ASEAN and East Asia (ERIA) recommended Wednesday that Cambodia, Myanmar, Laos and Vietnam maintain stimulus spending “until economic recovery is clearly under way”.

However, Ricardo Varsano, a senior economist at the International Monetary Fund’s Fiscal Affairs Department, told seminar attendees at Raffles Hotel Le Royal that in the medium term the region needs to ensure fiscal sustainability and develop budget-consolidation plans as the global downturn subsides.

“Expenditure measures may have advantages over tax cuts or increases in transfers,” he said, adding that existing programmes should not be cut for lack of resources.

The London-based Economist Intelligence Unit said in its November outlook for Cambodia that the government’s scope for additional fiscal stimulus “will be limited by the budget deficit”.

In the long term, Varsano recommended, the four ASEAN neighbours should accelerate structural reforms to raise competitiveness.