After previous denials from the Russian govt, a Cambodian lawmaker says
most of the US$1.5 billion Cold War debt will be scratched
The Cambodian government has amassed US$2.37 billion in foreign debt since the 1970s. A whopping 63 percent of this is owed to Russia due to loans in the 1980s when the Soviet Union was a major benefactor to Cambodia.
A SENIOR Cambodian People's Party lawmaker insisted Monday that Russia will cancel 70 percent of debt it is owed by Cambodia, potentially reducing to a third what the country owes to foreign nations.
Lawmakers across party lines also pressed the government to reduce foreign debt and focus on obtaining aid with no strings attached.
According to Ministry of Economy and Finance figures, Cambodia owes more than US$2 billion to foreign countries, which is equivalent to 23 percent of the country's Gross Domestic Product.
Cambodia owes $1.5 billion to Russia, which loaned the money during the 1980s when Cambodia was under the Soviet sphere of influence.
Yim Sovann, a Sam Rainsy Party lawmaker, said Cambodia will soon be unable to obtain foreign loans from any country if Russia does not eliminate the debt.
The debt rate will increase ... and Cambodia will not be able to ask for any ... loans .
"The debt rate will increase to the maximum rate, and Cambodia will not be able to ask for any more loans," Yim Sovann said.
Cheam Yeap, chairman of the Committee of Finance, Banking and Audits, assured lawmakers on Monday that Russia will cut 70 percent of Cambodia's debt, but he said in the unlikely event that it did not, Cambodia would still be in good shape financially.
"If Russia does not eliminate our debt, Cambodia will continue to repay it and will still be able to ask for additional loans from other countries," he said.
In early December, the Russian Finance Ministry denied reports that it had decided to eliminate most of Cambodia's debt to the country.
On December 9, the head of Moscow's International Financial Relations Department told the Russian media: "The talks are under way. The debt exists and should be settled ... but we have not signed a bilateral agreement."
A real plan
You Hockry, a Norodom Ranariddh Party lawmaker, demanded at the National Assembly that the government develop a plan to reduce foreign debt that does not rely on Russia's whims. "We will have to confront the fact that no foreign nations will be willing to loan to us in the future," he warned.
"I appreciate that the government can still collect foreign loans, but the aid that the Khmer people really welcome is nonrefundable," You Hockry said.
Ouk Rabun, a secretary of state at the Finance Ministry, confirmed that Cambodia is shifting its attention to acquiring aid.
"Cambodia will stop asking for loans in the future," he said. "Since 2005, our tendency has been to focus more on foreign aid than on loans."
"Most countries are happy to provide aid if they know Cambodia is capable of implementing its projects," Ouk Rabun said.
Nonetheless, Ouk Rabun said that Cambodia will still ask for about $200 million in foreign loans this year to develop infrastructure in the provinces.