The most surprising revelation during a late August seminar discussing the Cambodia
Development Research Institute's (CDRI) economic review of 2001 was not that government
borrowing was getting out of hand, but rather that nobody knew what the government
Former CDRI senior economist Sok Hach showed Cambodia had borrowed more than $500
million from the World Bank and Asian Development Bank (ADB) over the past nine years.
Hach warned that the country's debt to these two multilaterals alone could climb
by another $1 billion over the next decade to reach 50 percent of Gross Domestic
Racking up vast loans, said Hach, was becoming a habit. When the World Bank's country
representative pointed out that it would "be helpful to clarify" what Cambodia
owes, the Post thought it was time to find out.
That involved looking at the country's pre-1992 debt, as well as money owed to other
countries over the past few decades. Sun Naly, the head of the debt management office
at the Ministry of Economy and Finance said she did not know the figures, and other
MEF officials were unable to help.
The Post decided to do its own investigation.
The only "recognized" debt incurred before 1992 is a French loan of $30
million that dates from the 1960s. However there are other more substantial sums:
an Asian Development Bank (ADB) publication currently being drawn up shows $2.1 billion
of foreign debt.
ADB country head Urooj Malik says the largest chunk, which is under negotiation,
is $1.6 billion owed to Russia. The remaining $500 million is debt to the US.
But Cambodia owes money to more than just the protagonists of the Cold War. For example
there is the help from China. Its loans are highly sensitive, but it appears at least
$210 million is owed to the regional giant. A $200 million interest-free pact was
signed in Beijing in February 1999, and last December the People's Daily reported
a five year $10 million interest free loan for economic and technical cooperation.
None of the multilaterals could say how much money Cambodia owes China, and the first
secretary at the Chinese embassy, Wang Tian, told the Post that the total sum of
loans from China may be "related to confidential and undisclosed material".
He suggested submitting a written request for the figures, but that did not earn
As for loans from the multi-laterals, a website run jointly by the World Bank and
International Monetary Fund (IMF) states that Cambodia owes them and the ADB around
$653 million as of June this year.
The ADB's Malik says the bank will likely approve another $120 million this year,
and recently signed an agreement to lend another $286 million from 2003-05.
Bonaventure Mbida-Essama from the World Bank could not give an estimate of his organ-ization's
upcoming loan pledges and suggested questions be emailed to headquarters in Washington.
That email was not answered by press time.
The Post dug around and found a few other sums the country owes: $30 million to Japan
in a deal inked last year to refurbish Sihanoukville port; South Korea's e-government
initiative which will add another $20 million; and finally the defunct national carrier
Royal Air Cambodge is being sued by its creditors for around $30 million in the UK.
Tallying the external debt in this way is clearly a less than exact science, but
it is evident that loans have climbed past Hach's warning level of 50 percent of
GDP. In fact they show that Cambodia owes at least $3,073 million on a GDP of $3.2
billion last year as calculated by CDRI. That's around 100 percent of GDP.
And that is without factoring in loans that will be taken out in the near future,
and without taking into account possible investment guarantees, other hidden debts,
and future borrowings.
Opposition MPs and many in civil society are adamant the process under which Cambodia
takes on its debts needs to be more transparent. It is not clear, say some observers,
that even the MEF knows how much is owed to China.
Chea Vannath of the Center for Social Development says the way debt is taken on is
"The process of [borrowing] money needs to be more transparent so the Cambodian
people can know how much they owe because they are the ones who have to pay,"
Paying off the country's loans is not a clear-cut solution though. The ADB's Malik
says Cambodia needs to improve its ratio of revenue collection relative to GDP. Last
year that figure increased to 11.7 percent, which makes it one of the lowest in the
region. More effort, he says, is needed so the government can bring in the money
to meet its debt repayments.
However Malik does feel the country's debt is still manageable, and notes that a
portion of the pre-1992 debt is in the process of being repaid through the Paris
Club, a group of creditors that helps debtor nations find solutions.
He says the government is also looking to establish a debt monitoring unit to keep
track of what it owes. He points out that the terms of the multilateral loans are
generally soft, with repayment periods of up to 40 years.
The other option to repaying debt is for it to be scrapped. One government insider
says Cambodia is fortunate in that it is "likely" to see 70 percent of
its debt to Russia "written off soon".
Clearly Cambodia would like as much debt as possible written off. One economist says
he has heard "some very powerful, strong ministers in the government" say
they would like to jockey for debt relief.
And a finance ministry official echoed that when the Post asked whether the total
debt was indeed 100 percent of the GDP. He said if that was the case the country
should be eligible for debt exemptions provided to other poor countries.
However in the likely event that most of the debt is not written off, Cambodia will
instead have to pay it back. Russell Peterson, who heads NGO Forum, says that provided
economic development continues on track, the debt should be manageable.
However he warns that a worsening world economy, natural disasters, or increased
rates of HIV could turn the debt into a burden. He says many in civil society are
concerned the government lacks the capacity or good governance ability to properly
manage the debt it is racking up.
"So often it's come up in NGO discussions that Cambodia is incurring debt that
in the end becomes a burden for Khmer children and grandchildren," he says.