Cambodia has taken out $307.6 million concessional loans, equivalent to $229.3 million in special drawing rights (SDR), with development partners in the second quarter of 2023, bringing its total public debt to $10.72 billion as of June 30, 2023.
According to the latest Public Debt Statistical Bulletin, the sum represented an increase of over four per cent from the first quarter of this year, with 99.6 per cent of that from foreign creditors.
“Overall, all the loans are highly concessional with an average grant element of 45 per cent. The purpose of these newly-signed loans is to finance public investment projects in priority sectors that support long-term sustainable economic growth and increase economic productivity and production,” it stated.
As of the second quarter of 2023, the debt stock, which includes old debt, was loaned by bilateral development partners (64 per cent) and multilateral partners (36 per cent) with 0.43 per cent or $46.5 million comprising domestic debt.
The currency composition of the debt stock is made up of USD (46 per cent), SDR (20 per cent), Chinese yuan (12 per cent), Japanese yen (11 per cent), euro (seven per cent), and local and other currencies (five per cent).
In the first half of this year, new concessional loans with development partners (DPs) stood at $787.5 million, which is equivalent to SDR 586.9 million, and rising 24 per cent from the corresponding period last year.
It accounted for 35 per cent of the ceiling permitted by the law or SDR 1.7 billion), the bulletin mentioned, adding that 51 per cent of the half-year loans were signed with bilateral DPs and 49 per cent with multilateral DPs.
The bulletin also noted that the government has settled over $247.4 million of debt in the first half, including $66.7 million in the second quarter.
The breakdown of the loan repayment consisted of $247.08 million (principal $191 million with interest and other fees amounting to $56.1 million), and $290,000, it said, while pointing out that repayments in the first half grew 16 per cent compared to the same period last year.
Meanwhile, Minister of Economy and Finance Aun Pornmoniroth said Cambodia’s current public debt situation is “still manageable”, and remains “sustainable” with “low risk”, even though the Cambodian economy was impacted by Covid-19 and other external factors.
“Maintaining the sustainability of public debt depends on Cambodia having a strong public debt management system, including a legal framework, policies, strategies and procedures to manage all aspects of operations, adequate institutional and human resource capacity, and IT systems for managing operations and data storage which would be the basis of debt risk analysis and monitoring,” he said.
Hong Vanak, an economics researcher at the Royal Academy of Cambodia, told The Post on September 17 that government loans play an important role in national development.
“A country’s credit can be small or large but as a developing country, Cambodia has always received low interest loans from international financial institutions and other partners. This series of loans is due to the fact that all lending countries or partners see the effectiveness of targeted loans and capabilities, as well as the accuracy of repayments,” he said.
A report by the International Monetary Fund (IMF) on April 12, 2023 forecast that Cambodia’s total public debt would increase to 37.5 percent of gross domestic product in 2023, climbing from 36.5 percent in 2022.
However, the IMF contended that the forecast rate is lower than many other ASEAN member countries, such as Laos (123 per cent), Myanmar (61.3 per cent), Singapore (134.5 per cent), Thailand (61 per cent), Malaysia (67 per cent), Indonesia (39.1 per cent) and the Philippines (56.7 per cent).
The forecast is slightly higher than Vietnam’s 36.3 per cent while Brunei stayed debt-free.