Phnom penh: Cambodia's reliance on imported fuel and fertilizer leaves its economy exposed to global energy disruptions, highlighting the need to protect vulnerable households while strengthening long-term resilience, according to a new report published by the Cambodia Development Resource Institute (CDRI).
According to Agence Kampuchea Presse, the report, "The Economic Impact of International Energy Market Disruptions on Cambodia," was released on August 24 and authored by James Giesecke and Robert Waschik from the Centre of Policy Studies at Victoria University, Milan Thomas from the Asian Development Bank (ADB), and Chhorn Dina from CDRI. The report provides an analysis to support the Government's response to the global fuel shock and ADB's assistance through its recently approved Rapid Intervention for Stabilisation of the Economy (RISE) program.
ADB Country Director for Cambodia, Ms. Yasmin Siddiqi, emphasized the report's relevance, stating that Cambodia's exposure to energy market disruptions poses both a short-term threat to the country's recent gains in poverty reduction and a structural development challenge. CDRI Executive Director Dr. Eng Netra highlighted the report as part of CDRI's mission to produce independent evidence aiding policymakers in navigating economic shocks.
The study details the effects of rising global fuel prices and limited fertilizer availability due to disruptions in Middle East supply chains. It employs data-based modeling to evaluate the impact on Cambodia, recommending accelerated energy diversification, development of green skills, and the establishment of strategic fuel and fertilizer reserves. The report also advises targeted, time-bound support for vulnerable households, while maintaining fiscal space for essential public spending.
Milan Thomas, ADB Country Economist, noted that the modeling indicates a potential 1 percent fall in economic production if fuel prices increase to 50 percent higher than before the shock. The impact could be more significant on rural households due to higher input costs affecting agricultural production.
The RISE program, approved on July 30, will provide a US$250 million concessional loan to support the Government's Comprehensive Intervention Programme. This includes temporary tax relief and targeted assistance through the IDPoor system, income support for poor households, energy transition assistance for tuk-tuk drivers, and agricultural training and assets for rural households.