Contractionary policies aim at reducing demand by cutting spending or raising taxes, while neutral policies involve taking no specific action to support or restrain the economy. Contractionary policies are typically implemented when the economy is facing high inflation and rapid growth.
The country’s key budget objectives in the fiscal included achieving resilient, flexible, inclusive and sustainable economic growth; supporting the sustainability of state institutions’ operations through efficient governance and reforms; and prioritising people’s living standards and infrastructure development, said the report.
Cambodia’s FY25 fiscal stance has been ‘contractionary to neutral’, the ASEAN+3 Macroeconomic Research Office said.
Its key FY25 budget objectives included achieving resilient, flexible, inclusive and sustainable growth; backing the sustainability of state institutions’ operations through efficient governance and reforms; and prioritising people’s living standards and infrastructure development.
The budget priorities included promoting small and medium enterprises (SMEs), improving the business environment, diversifying into new sectors, enhancing competitiveness, expanding financing mechanisms and promoting institutional reforms to improve fiscal efficiency, the report observed.
Cambodia’s fiscal balance improved by both revenue increase and spending cut. The external debt of Cambodia is primarily concessional, reducing immediate repayment pressures, noted the report.
The Philippines was another country within the Association of Southeast Asian Nations (ASEAN) that followed the ‘contractionary to neutral’ model.
Fibre2Fashion News Desk (DS)
