Cambodia's national debt stood at $5.7 billion as of the end of June, totalling about a third of GDP, according to a report on the national budget submitted to the National Assembly yesterday.
The report, prepared by the Ministry of Economy and Finance (MEF), revealed that the Cambodian government has signed agreements to receive more than $8 billion in new concessional loans since 1993. About two-thirds of these loans were disbursed by foreign governments, while the remaining third were issued by international lending institutions.
The newly released national debt figure puts Cambodia’s debt-to-GDP at about 31 percent, with the Kingdom’s 15.5 million people on the hook for about $367 each.Cambodia’s national debt has more than doubled over the past 10 years, climbing from $2.4 billion in 2006, but rapid economic growth has kept the debt-to-GDP ratio roughly the same.
The increase in debt is being driven largely by an increase in bilateral loans from China, which accounts for some 80 percent of outstanding debt.
However, Cambodia’s debt level continues to remain low compared to major economies. In Japan, for instance, the debt-to-GDP ratio was 238 percent in 2015. The United States reported nearly $19 trillion in gross national debt last year, or about 104 percent of GDP.
Economist Chan Sophal said the Cambodian government has not taken on a lot of external debt and still has room to borrow, if needed.
“If we think about the amount of debt now it is not a concern or risk yet,” he said. “In fact, the government of Cambodia has been very cautious about borrowing and we don’t borrow much. We still have the ability to borrow more.”
Sophal said more important than the amount of the debt bill, was how these funds were being spent.
“What we are most concerned with is how effectively we use this money,” he said. “We borrow billions of dollars, but do we use this aid for its target [purpose], and do we spend it the right way and get quality [as a result]?”
In November 2015, the International Monetary Fund (IMF) concluded after conducting stress tests and modelling that the Kingdom’s national debt was well within acceptable limits, though the economy remained vulnerable to financial shocks.
“Cambodia’s debt distress rating remains low with all debt burden indicators projected to remain below the respective thresholds,” the IMF said in a staff report for its 2015 Article IV consultation.
The IMF report noted Cambodia’s recent shift away from international lending institutions in favour of bilateral creditors, principally China. Apart from its obligations to China, the Kingdom remains in arrears to Russia and the United States, and shows no sign of servicing its debt with these two creditors, it said.
According to the MEF report, Cambodia currently owes $458 million to Russia and $162 million to the US.