ADB warns against rising budget deficit

via CAAI

Wednesday, 08 December 2010 15:00 Jeremy Mullins

CAMBODIA’S government may consider measures to reduce its growing deficit, though the domestic economy is experiencing “solid growth”, according to the Asian Development Bank yesterday.

The central government’s fiscal deficit is estimated to climb to 7.4 percent of GDP in 2010, up from 5.0 percent in 2009, the ADB’s December Asia Economic Monitor report said.

“As a consequence of fiscal stimulus, some economies have seen budget deficits rise,” the report said, adding that the Kingdom should consider measures to reduce government expenditures as economic conditions allow.

Cambodia, along with Indonesia, China, and Hong Kong, were cited as countries which have seen deficits rise this year over 2009 by the report, which added many of East Asia’s countries were seeing fiscal stimulus measures scaled back.

Iwan Azis, head of the ADB’s office of Regional Economic Integration, said a recovering global economy would lead to domestic growth this year.

“For 2010, we expect solid growth in the Cambodian economy, thanks to a recovery in world trade which helped Cambodian exports,” he wrote to The Post yesterday.

At a press briefing in Hong Kong, Azis recommended currency cooperation in the region, pointing out that, with the exception of Vietnam, East Asia’s currencies have been surging in 2010, a situation that “will not help” efforts to focus on intra-regional trade in response to sagging demand in the West.

Without cooperation “intraregional trade will not be as good as it could be,” he added.