The government expects to borrow nearly $1 billion from external creditors this year, primarily for infrastructure development, pushing the national debt over $6 billion, according to a report issued on Friday by the Ministry of Economy and Finance.
About a third of this amount, some $341 million, had been borrowed during the first half of 2016, pooling credit from traditional bilateral and multilateral lending sources, the report noted. However, only $235 million of the new debt had been disbursed during the period.
Bilateral lenders, including traditional partners Japan, France and South Korea, provided $208 million in loans during the first half of the year. Some $26.5 million of this was borrowed from Thailand – the first line of credit from the country during the last three years on record.
Meanwhile, China, which has been Cambodia’s dominant patron during recent years, recorded zero in repayable debt issued during the period. The report did not include grants.
The World Bank was the sole multilateral lender registered as providing loans during the period. The international lender, which lifted its lending freeze for the first time in five years after it pulled out of the country in 2011, provided $132 million.
The report did not indicate from which foreign lenders it would seek the remainder of the projected lending this year. It did say, however, that the government had made $99 million in debt service payments during the first half of the year, of which more than half went to China.
In Channy, CEO of Acleda Bank, emphasised that Cambodia’s projected national debt of $6 billion was no reason for concern, and that the Kingdom still had room to scale-up the borrowing.
“Our level of foreign debt is not a concern, especially if you look at developed economies like the US and Japan, and borrowing is needed for economic development as long as it is used for the right purposes,” he said.
Channy said regardless of the source of debt, the government should strive to ensure it gets the best possible terms and that the repayment is manageable.
“Borrowing from different sources is not a bad thing, we just need to make sure we have the ability to make repayments on the loans over the long-term and that the conditions associated with the loans have fair interest rates,” he said.