KANDAL PROVINCE, CAMBODIA - Deep household debt might soon push Cambodia into a crisis as job losses caused by COVID-19 make it even harder for families repay loans, experts and debtors say.
While the country has officially only registered 122 coronavirus cases, thousands of garment workers lost their jobs when their factories closed. Thousands from the tourism or service sectors are also jobless or earning far less money than they were six months ago. For some, this crisis could have devastating consequences, including loss of family land, often a fast track to abject poverty.
Hy Sokhom, who drives a tuk-tuk, a three-wheeled motorized rickshaw, is one of millions of Cambodians who, on average, are the world’s most indebted borrowers. Usually his wife and adult daughter sell noodles at a school in Kandal province’s Kien Svay district, but the school closed mid-March as part of measures to contain the spread of the coronavirus.
The couple’s two sons lost their jobs in Bavet city when the casinos closed under similar measures to contain the COVID-19 outbreak. Covering the $400 monthly installments for their $18,000 loan - for a new tuk-tuk, home renovations and the cost of their sons’ move six months ago to Bavet, near the Vietnam border --- seems impossible.
They also must make monthly payments to two microfinance institutions (MFI) of about $50 each, bringing their monthly total to $500.
One of the sons started a low-paying job as a security guard a few weeks ago, but that did little to alleviate the pressure on Hy Sokhom.
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