The government sought to set the record straight yesterday after local media outlets erroneously reported that the Kingdom’s public debt had reached $10 billion at the end of 2015.
Without naming which media outlets had published the skewed figure, which was shared widely on Facebook, the Ministry of Economy and Finance (MEF) said the error resulted from a misunderstanding of how Cambodia’s national debt was calculated.
The media reports appear to have erroneously combined both public and private debt figures that were seemingly taken from an outdated World Bank report.
“The figure that said foreign debt in Cambodia reached $10 billion, that is not entirely the debt of the government,” the MEF’s announcement read. “Among the country’s total debt, nearly $4 billion of that belongs to the private sector.”
The MEF’s announcement said that the public should not be misled by false claims made by those media outlets because they damage the Kingdom’s economic gains.
In late September, the MEF presented findings to the National Assembly showing that Cambodia’s national debt had reached $5.7 billion as of the end of June, totalling about a third of GDP – a level that analysts at the time deemed fully manageable and allowed the government to continue to safely borrow.
The announcement stated that the government always carefully manages its public debt and is careful when deciding to take concessional loans from foreign countries.
It also highlighted that the government would continue to borrow loans transparently and efficiently for priority sectors to maintain sustainable economic growth.
David Van, local managing director of the Bower Group Asia, said that Cambodia’s $5.7-billion public debt bill is easily manageable.
However, he said that the government needs to remain vigilant when borrowing funds, ensuring that the interest rates are low and the government has negotiated realistic repayment terms.
“I believe the government has treaded carefully after all these decades in the quest to borrow funds from external sources,” he said.
Cambodia is currently principally indebted to China, while it still has decades-old debt to Russia, valued at $458 million, and the US at $162 million. The government has shown little sign of repaying its old debts and continues to try to negotiate with Russia and the US.