Cambodia: Kingdom signs over $1.2 billion foreign debt pacts in 9 months

The Royal Government of Cambodia has signed $602.03 million in new concessional loans with Developing Partners (DPs) in the third quarter of 2022, according to the latest Cambodia Public Debt Statistical Bulletin published by the Ministry of Economy and Finance.

In the three quarters of this year, the government has signed $1,217.90 million in new concessional loans with DPs, accounting for 59 percent of the ceiling permitted by the law. Of this, 68 percent is signed with bilateral DPs and 32 percent with multilateral DPs.

The loan signed in three quarters of 2022 increased by around 294 percent compared with the same period last year.

Including the old debt, the government has a total public debt of $9.47 billion with 99.89 percent ($9.46 billion) being external debt and 0.11 percent ($10.15 million) domestic debt.

Overall, all the loans are highly concessional with an average grant element of around 42 percent. The purpose of new loan agreements is to finance public investment projects in the priority sectors that support long-term sustainable economic growth and increase economic productivity, according to the Ministry of Economy and Finance.

Public external debt stock by creditor as of end-Q2 2022. MoEF

In January-September 2022, the government withdrew $1 billion in cash from these loan accounts, and most of this money was spent on infrastructure development, which accounted for 54 percent of the priority area and 46 percent of non-infrastructure priorities.

Aun Pornmoniroth, Minister of Economy and Finance, said, “Despite Cambodia’s rising public debt level, the current state of public debt remains manageable, with ‘sustainability’ and ‘low risk’ despite the economy affected by the Covid-19 pandemic and other external factors.”

“Sustainable, efficient, and effective public debt management has contributed significantly to achieving high economic growth over the past decade, as well as enabling Cambodia to be able to mobilise more concessional credit to meet its financing needs in priority areas to contribute to the resolution of the Covid-19 crisis and to implement the strategic framework and programmes to restore and promote Cambodia’s economic growth ‘in living with Covid-19’ in the new normal for 2021-23,” the ministry said.

Hong Vannak, an economic researcher at the Royal Academy of Cambodia, told Khmer Times: “Cambodia is a developing country, and the government’s reserves and savings are not yet available for priority projects to meet regional competition and attract foreign investors. That’s why Cambodia receives concessional loans from abroad.

“The government decided to borrow more because of its ability to repay and the income-generating business. In addition, the loans focus on priority sectors, such as electricity and water… Cambodia has had a good credit record for loans, with donors being happy to provide loans as Cambodia has paid the principal and interests on time.”