Cambodia’s Banking System Remains Strong

Cambodia's banking system continued to grow robustly and contributed to sustainable and inclusive economic growth in tandem with the government policies, said the National Bank of Cambodia (NBC) in a recent report on Macroeconomic and Banking Sector Development in 2016 and Outlook for 2017.

The banking sector's assets increased to about US$27.8 billion, up 17.4 percent, while credit and deposit reached around US$17.6 billion and US$15.4 billion, respectively, it pointed out.

According to the same source, given highly competitive market of banking sector in Cambodia, lending rate has fallen consecutively benchmarked by banks' average lending rate in U.S. dollar dropping from 17 percent in 2005 to 11.8 percent in 2016 and by microfinance institutions' from around 40 to 28 percent for the same period. Nevertheless, these lending rates remain high, particularly amongst microfinance institutions.

Since Cambodia is a small and open economy, which highly integrated into the region and the world, its economy will benefit from the recovery of global economy and robustness of economic growth in the region amid the increasing exposure to external risks, affirmed the report.

Based on the projection by major international financial institutions such as the International Monetary Fund, World Bank and Asian Development Bank, as well as the Cambodian government, Cambodian economy continues to move forward on its long-term growth path at around 7 percent in 2017, supported by strong garment sector, the growth in construction and real estate sector, as well as the rebound in tourism and agriculture sectors, it said.

The report also expressed optimism over the expansion of Cambodian economic activities in 2017 thanks to continuous comprehensive structural reforms in all sectors, the country's economic potentials as a member of the ASEAN Economic Community, her strategic location which eases the connection by both land and maritime transportation along the One Belt-One Road initiative, continuous tax exemptions on exports from Cambodia to Europe and the U.S., and young workforce.

Source: Agency Kampuchea Press