For the people of Cambodia, debt repayment appears to be a bigger threat than COVID-19. As the pandemic results in various businesses’ closure, Cambodians have to rely on debt to survive.
With the mass-absence of employment, people will soon meet a more difficult circumstance to pay off their loans. Moreover, it is highly possible that these household loans can push people to have a financial crisis.
Ever since its first case, Cambodia has only reported 122 cases with zero death so far. However, the socio-economic impact is even greater as garment factories and tourism sectors halt their operations. Accordingly, both employ the majority of Cambodian labors.
The debates pertaining to policies regarding debt repayment also rise. About 135 civil society organizations have been asking the government to, at the very least, issue suspensions of all loan repayments and interest accrual from microfinance institutions for at least three months.
The Cambodia Microfinance Association (CMA) and the Association of Banks in Cambodia (ABC) responded to the request by saying that it does not reflect the real situation. Instead, the banks said that it adversely affected banking and the financial sector.
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The People’s Struggle during COVID-19 Pandemic in Cambodia
Upon the announcement of the very first coronavirus case in Cambodia, industries began to collapse. With them, unemployment rises and people started to suffer financially.
Among the suffering industries is tourism, which spearheads the economic growth in the country. The sector, which managed to present 6.6 million visitors last year, is predicted to gain a significant loss this year.
The impact, in addition, will not solely affect the nation as a whole, but also the people individually. With the closure of various industries including tourism, people’s earnings have been greatly declining to the point that they even reaches negative numbers according to Voice of America.
What makes the situation worse is that the people have no clue of what they should do to address the situation. They need money to survive and their resort is only by borrowing money from banks.
However, now they are facing an even taxing problem as moratorium does not seem to exist for all borrowers. The CMA, additionally, said that it has been giving moratorium since March, but that luxury could not apply to all borrowers.
Also Read: Cambodia Confirms First Cases of Coronavirus, Industry Hurts
