(Phnom Penh): Cambodia’s reliance on imported fuel and fertilizer leaves its economy exposed to global energy disruptions, underscoring the need to protect vulnerable households while building long-term resilience, according to a new report published by the Cambodia Development Resource Institute (CDRI).
The report, The Economic Impact of International Energy Market Disruptions on Cambodia, is authored by James Giesecke and Robert Waschik of the Centre of Policy Studies at Victoria University; Milan Thomas of the Asian Development Bank (ADB); and Chhorn Dina of CDRI. It showcases a strong partnership among Cambodian and international researchers, combining local insights and global cutting-edge modeling.
ADB Country Director for Cambodia Yasmin Siddiqi said, “The report provides timely analysis to support the Government’s ongoing response to the global fuel shock and ADB’s assistance to that response through its recently approved ADB’s Rapid Intervention for Stabilization of the Economy. Cambodia’s exposure to energy market disruption is not only a short-term threat to Cambodia’s recent gains in poverty reduction, but a structural development challenge. The findings provide practical, evidence-based policy options to strengthen energy security, secure critical fuel and fertilizer supply chains, and turn economic shifts into opportunities for sustainable growth.”
“This report reflects CDRI’s core mission: a collaborative approach to producing rigorous, independent evidence to help policymakers navigate periods of external economic shock,” said Eng Netra, CDRI Executive Director. “By combining local expertise with advanced global economic modelling, we hope to give leaders in government, private sector as well as development sector a clear, evidence-based basis for action, not just a diagnosis of the risks Cambodia faces.”
The study examines the impact of rising global fuel prices and limited availability of fertilizer, both caused by disruptions in Middle East supply chains. The report models the global shock using a data-based simulation of the Cambodian economy. It then shifts to policy recommendations, which include accelerating energy diversification, building green skills, and establishing strategic fuel and fertilizer reserves to reduce exposure to external shocks. It also calls for targeted and time-bound support for vulnerable households, while preserving fiscal space for priority public spending.
“The modeling shows that if fuel prices rise further, to 50 per cent higher than before the shock, economic production would fall by 1 per cent,” said ADB Country Economist, Milan Thomas. “The impact may be greater on rural households, as their agricultural production is strained by higher input costs. Several of the report’s recommendations are elements of the Government’s Comprehensive Intervention Program, which will be supported by ADB’s Rapid Intervention for Stabilization of the Economy (RISE) program starting next month. The USD 250 million concessional loan will enable income support for poor households, energy transition assistance for tuktuk drivers, and agricultural training and assets for rural households.”
The RISE program was approved on 30 July and will provide USD 250 million in budget support for the Royal Government of Cambodia’s Comprehensive Intervention Program, which will continue temporary tax relief and introduce targeted assistance using the IDPoor system.
=FRESH NEWS
