Student Satisfaction Toward Library
CDRI - Cambodia’s Leading Independent
Development Policy Research Institute
Policy brief
Jayant Menon *, a)
2008 , N o . 01
De-Dollarising Cambodia: 10 Years On
“For a long time it seemed that the extent of… dollarization was impervious to improved economic performance. Now however we have several examples of countries that have dedollarized successfully… including Israel, Poland, Mexico, Egypt, and Turkey. And some signs of declining dollarization are evident in Latin American countries where it seemed that dollarization was impossible to reverse.” Stanley Fischer (2006) Governor, Bank of Israel 1. Introduction Ten years ago I wrote an article for the Cambodia Development Review (Menon 1998) on the pros and cons of dollarisation in Cambodia, and policy options on the way forward. A lot has happened since then. GDP growth has averaged close to 10 percent over the past decade, resulting in an almost doubling of income per capita (Table). Poverty incidence is estimated to have fallen by about 1 percent per annum (from 47 to 35 percent, for the decade up to 2004), even though inequality has worsened (World Bank 2007). Consumer price inflation has fallen sharply, from an average of 56 percent over 1990–98 to an average 3.5 percent over 1998–2007. Inflation has started rising again recently, with the spike in food and energy prices, but this is happening almost everywhere.1 Government revenue collections have recently consistently exceeded expectations, and the budget deficit has
1
fallen to manageable levels. The recent discovery of oil and gas could be a significant boon for the country, and should provide the resources necessary to address a range of socio-economic issues, provided of course that the resources are not mismanaged. In short, the economic and social achievements over the past decade have been the most spectacular in Cambodia’s history. It is against this backdrop that we find that Cambodia today is as dollarised, if not more so, as it
Development Policy Research Institute
Policy brief
Jayant Menon *, a)
2008 , N o . 01
De-Dollarising Cambodia: 10 Years On
“For a long time it seemed that the extent of… dollarization was impervious to improved economic performance. Now however we have several examples of countries that have dedollarized successfully… including Israel, Poland, Mexico, Egypt, and Turkey. And some signs of declining dollarization are evident in Latin American countries where it seemed that dollarization was impossible to reverse.” Stanley Fischer (2006) Governor, Bank of Israel 1. Introduction Ten years ago I wrote an article for the Cambodia Development Review (Menon 1998) on the pros and cons of dollarisation in Cambodia, and policy options on the way forward. A lot has happened since then. GDP growth has averaged close to 10 percent over the past decade, resulting in an almost doubling of income per capita (Table). Poverty incidence is estimated to have fallen by about 1 percent per annum (from 47 to 35 percent, for the decade up to 2004), even though inequality has worsened (World Bank 2007). Consumer price inflation has fallen sharply, from an average of 56 percent over 1990–98 to an average 3.5 percent over 1998–2007. Inflation has started rising again recently, with the spike in food and energy prices, but this is happening almost everywhere.1 Government revenue collections have recently consistently exceeded expectations, and the budget deficit has
1
fallen to manageable levels. The recent discovery of oil and gas could be a significant boon for the country, and should provide the resources necessary to address a range of socio-economic issues, provided of course that the resources are not mismanaged. In short, the economic and social achievements over the past decade have been the most spectacular in Cambodia’s history. It is against this backdrop that we find that Cambodia today is as dollarised, if not more so, as it