Outstanding debt for microfinance loans dipped slightly in the first half of the year, with less people borrowing in a slow economy, according to a national group of microfinance lenders.

Outstanding loans were down at least $20 million for the first half of 2009, the first-ever decrease in nearly a decade, according to the Cambodian Microfinance Institutions Association.

That amounted to a decrease of about 4.4 percent, to about $426 million, according to the report, obtained by VOA Khmer. The number of borrowers also decreased by 400 people, the report found.

Huot Eang Tong, chairman of association, said micro-loans began to decline in early 2009, with less people borrowing as the global economic crisis took root in Cambodia.

“Less customers were looking for loans,” he said. “We could see that people were finding less income, their products couldn’t be sold and then they didn’t need capital to expand their businesses.”

Bun Mony, chairman of the Sathapana Microfinance Institution, said loans at his agency fell from $37.5 million in 2008 to $34.5 million in mid-2009.

“Since progress in the microfinance sector in 2000, this is the first time capital demand has fallen,” he said.

Microfinance lending plays a key role in the country’s economic development, providing small business owners with a means to improve or expand.

More than 1 million Cambodians use micro-credit schemes, borrowing less than $10,000, money that can make a big difference to the 30 percent of the population living below the poverty line.

The slowdown in lending forced the group Amret to implement restrictions in its lending procedures and limit the amount of loans to $40 million, about two-thirds of its previous $60-million cap, the institution’s general manager, Chea Phalarin, told VOA Khmer.

“With the realization that our economy is slowing down, money [lenders], such as families and banks, usually pay high caution with less confidence in providing loans,” said Chan Sophal, president of the Cambodian Economists Association.

Restrictions could hurt already low standards of living for the poor, but they also help financial institutions avoid risk.

While the number of loans has decreased, microfinance institutions did see a jump in deposits, which rose 16 percent in the second quarter of 2009 compared to the first three months of the year.

This could be because people would rather avoid risk in investment in businesses and would rather keep their money safely in accounts, Huot Eang Tong said.