World Bank Says Credit Growth Still a Risk

The World Bank has warned that the rapid growth of lending by Cambodia’s Banks is still a concern, despite a recent slow-down in credit disbursals. “Credit growth, which has been driven largely by wholesale and retail financing, and starting in 2011 agriculture financing, has eased to 29.2 percent (year on year) in January 2013,” the bank said in an economic update sent out on Friday. The annualized rate of lending growth was 34 percent in December and as high as 34.6 percent in January 2012, the bank said. The high rate of growth had raised concerns of overheating from international financial institutions, and led the National Bank of Cambodia to raise the reserve requirement imposed on Banks from 12 to 12.5 percent in September. … [The World Bank] also noted that Cambodia’s trade deficit in 2012 was 11.5 percent, up from 8.7 percent in 2001, due to rising fuel imports and construction materials being brought in for large hydropower projects. However, this was cancelled out by a jump in foreign direct investment, which reached $1.5 billion last year.