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Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom borrows for budget

Kingdom borrows for budget

THE National Assembly has voted to allow the government to borrow more than 200 million Special Drawing Rights, or US$306 million, from foreign countries to meet budgetary demands, despite opposition concerns about repaying the debt.

Cheam Yeap, chairman of the National Assembly’s Commission on Economy, Finance, Banking and Audit, said the decision to borrow more money was two-pronged: the impact of the global economic crisis and the encroachment of Thai military.

“We decided to allow the government to borrow money from foreign countries because we think that the government needs to spend for national benefit,” he said at a plenary session of the National Assembly yesterday.

However, opposition Sam Rainsy Party senator Son Chhay expressed concern, claiming bilateral borrowing was often inappropriate and future repayment may be difficult.

“We want the government to maximise effectiveness in collecting domestic revenue, and if necessary should avoid borrowing, which we have to pay back in larger amounts,” he said.

He claimed the interest payments could reach as high as $300 million in ten years.

The government requested to borrow 30 million SDR for the 2009 budget and 170 million SDR in 2010, according to a government statement signed by Prime Minister Hun Sen.

The SDR is based on a basket of four international currencies, and can be exchanged for freely usable currencies.

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