Logo of Phnom Penh Post newspaper Phnom Penh Post - Gov’t: Kingdom’s sovereign debt manageable

Gov’t: Kingdom’s sovereign debt manageable

Content image - Phnom Penh Post
Finance ministry spokesman Meas Soksensan. Meas Soksensan's Facebook

Gov’t: Kingdom’s sovereign debt manageable

A senior official at the Ministry of Economy and Finance described Cambodia’s level of public debt as manageable and allowing flexibility for further borrowing to meet the country’s development needs.

The assertion followed an outlook report by international ratings agency Moody’s Investors Service, which assessed nations’ external indebtedness. The January 12 report pointed out that the recent rise in Cambodia’s sovereign debt – as well as that of other countries like Bangladesh and Fiji – was driven by concessional lines of financing extended by the international community.

“Given comparatively low external debt and low annual debt servicing requirements, external vulnerability risks for these sovereign [states] will remain contained even as current account balances may continue to deteriorate given the fragile outlook for remittances and tourism,” said Moody’s.

Moody’s noted that many emerging and frontier market countries in the region have rebuilt reserves as market conditions have eased, surpassing pre-pandemic peaks in some cases.

However, reserve adequacy remains weak for Laos, Mongolia, Pakistan and Sri Lanka, whose cross-border debt repayments – including for non-concessional borrowings such as from Chinese Policy Banks – remain large relative to foreign reserves.

“In these cases, sustaining access to cross-border funding markets or external liquidity assistance will depend highly on commitment to, and demonstrated traction on, reform and greater macroeconomic and fiscal stability,” it added.

Finance ministry spokesman Meas Soksensan told The Post that Cambodia was not in a vulnerable position with regard to foreign debt. He said the government has proper laws restricting debt levels which currently allow it to borrow in accordance with prevailing principles of public debt management.

In particular, he said the quantity of borrowing must remain affordable to the budget and economy. Loans must include valuable concessions or favourable terms. Borrowing must be allowed only for priority sectors to sustain economic growth and increase capacity and productivity.

Furthermore, use of credit must be conducted with a high degree of transparency, accountability, efficiency and effectiveness.

Projects financed by credit, especially public infrastructure investments, must meet high standards for production quality while addressing current needs of national development and accommodating sustainable environmental impacts, Soksensan explained.

He added that international institutions including the International Monetary Fund (IMF) and the Asian Development Bank (ADB), among others, have assessed Cambodia’s debt to GDP ratio as posing a low risk of debt distress to the economy, enabling the country to safely take on additional loans as needed.

“If we look back to the 1990s, the government relied on foreign financing to cover nearly 80 per cent of its expenses. Now, however, that has been reversed, and government outlays require only 20 per cent financing by issuance of foreign debt to cover revenue shortfalls.

“The country has gone from financing only 20 per cent of its expenses from domestic revenues to financing 80 per cent domestically,” emphasised Soksensan.

According to the finance ministry, from 1993 through the first half of 2020, the government signed concessional loan agreements with development partners totalling $13.08 billion.

Spending for infrastructure development projects accounts for approximately 87 per cent of borrowed funds while other priority sectors receive the remaining 13 per cent.


  • Municipal hall releases map detailing colour coded Covid risks by commune

    Phnom Penh municipal governor Khuong Sreng released an official map detailing the red, yellow and dark yellow zones within the city under the new lockdown orders for Phnom Penh announced on April 26. The designation of red, dark yellow and yellow corresponds to areas with high,

  • Inter-provincial travel ban lifted; Phnom Penh and Takmao not exempted

    The government on April 25 decided to lift the inter-provincial travel ban and the closure of tourist attractions across the country, effectively immediately. The travel ban and closures of all resorts were imposed on April 6 and 17 respectively in a bid to curb the spread of Covid-19,

  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the

  • Phnom Penh, Takmao lockdown extended for another week

    The government late on April 26 announced an extension of lockdown in Phnom Penh and adjacent Takmao town in Kandal province for another seven days – or longer if residents do not comply with Covid-19 preventive measures and the community outbreak does not subside – until May 5. According

  • Gov't mulls extension of Phnom Penh, Takmao lockdown

    The Inter-ministerial National Commission for the Control and Enforcement of Lockdown held a video conference meeting on April 25 to review a draft document on the extension of lockdown in Phnom Penh and adjacent Kandal province’s Takmao town. The meeting was chaired by Minister of

  • SBI LY HOUR Bank Launches Cross Border Money Transfer Service between Cambodia and Vietnam on RippleNet, utilizing DLT

    SBI LY HOUR Bank Plc and Hanoi-based Tien Phong Commercial Joint Stock Bank (TPBank) on Friday launched the first Cambodia-Vietnam money transfer service in real currency via RippleNet, provided by SBI Ripple Asia Co Ltd to provide safe, fast and convenient services. SBI LY HOUR