Introduction

Cambodia’s recent macroeconomic performance in terms of low inflation, high fiscal discipline and maintenance of a stable exchange rate has sparked the interest of researchers and policy analysts who are curious to know more about the techniques of macroeconomic management of Cambodia. It was felt that the time was appropriate that an insider should present an overview of the methods and techniques of macroeconomic management in Cambodia. This paper attempts such an overview.

The paper contains a set of three essays covering areas which are central to Cambodia’s macroeconomic management. The first essay is a discussion of Cambodia’s dollarization, its implications for monetary and fiscal policies. The second deals with monetary management which is primarily the function of the central bank, the National Bank of Cambodia (NBC). The third deals with budget and fiscal management, which is primarily the function of the Ministry of Economy and Finance (MEF). All the essays are closely linked. Dollarization of the economy has severely constrained the use of monetary policy in Cambodia. As a consequence fiscal policy is the only potent macroeconomic policy lever available to the government to influence economic outcomes in the country. It is hoped that the paper will provide useful information to the researchers and public at large on the systems of macroeconomic management in Cambodia and spark constructive debates on how to improve it.