Logo of Phnom Penh Post newspaper Phnom Penh Post - Cambodia’s foreign debt rose to $6 billion in 2017 as economists ask state to be transparent

Cambodia’s foreign debt rose to $6 billion in 2017 as economists ask state to be transparent

Content image - Phnom Penh Post

Cambodia’s foreign debt rose to $6 billion in 2017 as economists ask state to be transparent

When it comes to economies in the developing world, it is often impossible for countries to avoid taking loans from foreign investors for development. What is most important, however, is that these loans be accurately allocated with as much transparency as possible. Cambodia’s foreign debt has risen to $6 billion this year, and experts have asked the government to take transparency more seriously.

According to the public debt newsletter released by the Ministry of Economy and Finance in September, Cambodia signed a concession loan with development partners of about $732.06 million, equivalent to 74.83 percent of the legal debt allowance, including a bipartisan loan worth $571.66 million and a multilateral loan amounting to $160.4 million.

The purpose of these loans is to finance public investment projects in sectors prioritised by the government. They hope that these loans will contribute to the country’s long-term sustainability and increase economic and manufacturing productivity. About 94 percent of the loan will be used for infrastructure and the rest will cover other priorities.

“The government seems to lack transparency and be hesitant when asked to show people the loan amounts from their development partners. Even things like how the loans are being allocated lacks transparency,” said Mean Ny, an independent economic analyst and social growth researcher.

Content image - Phnom Penh Post
Mean Ny, an independent economic analyst. Moeun Nhean

“An approximate amount of 75 percent of international legal debt allowance is considerably high. However, the government generally has their reasons for the uses of the loans on infrastructure development projects and others. They also have the capability to return back the loans to the creditors,” he added.

“I support the development of infrastructure development such as roads and bridges throughout the whole country as done by the government. We can see the new national roads are being paved. However, I think that the government should be more transparent to ensure efficiency for their projects and high quality production for their people.”

Dr Ny also said that the government had to think long term about how the country’s economy and development could function without these large loans. It is unsustainable to need these loans to cover basic developmental costs, and more effort needs to be put in to making sure the money is spent wisely.

“People used to criticize the roads built by the Chinese. By the time they move to build another road somewhere else, the road they just built is damaged. There are cases where these things were caused by a lack of transparency and proper inspection,” Dr Ny said. “Since His Excellency Sun Chanthol became the minister at the Ministry of Public Works & Transport, we have seen positivity from more people as the quality of the new roads is better than before.”

Um Vathdara, an economics professor at Panhasastra University of Cambodia, said the government plays an important role in all of these development projects, therefore they know how much should be spent to finish a project or development goal.

The Ministry of Economy and Finance. ch chea
The Ministry of Economy and Finance. Ch Chea

“For economics, borrowing isn’t the problem, but they need to be certain about what the loan has been allocated for and whether it is used according to its intended purpose,” he said. “As a citizen, we don’t know the government’s challenges. However, people request that the government disclose information and be more transparent about the uses of loans for the whole country’s growth.”

“Is the loan that the government acquired being invested in public projects that will earn back profits in return? How long do they need to pay back those loans?” he asked.

From 1993 to the first half of 2017, the government signed and acquired concession loans from development partners worth about $9 billion, with 87% of the loans going toward infrastructure and the rest going to other projects.

The newsletter said that the government has paid back about $1 billion of these loans, and $100 million in the first half of 2017.

As of June 2017, Cambodia’s public debt was $6.2 billion, up from $5.8 billion at the end of 2016.

MOST VIEWED

  • Five-year-old Hanuman dances his way into hearts of Cambodia

    A young talent from a new-established settlement has emerged, captivating the online world with his mesmerising performances of the traditional Cambodian monkey dance. Roeun Kakada is a five-year-old prodigy who has taken the social media sphere by storm with his exceptional dance skills and dedication

  • Fresh Covid warnings as Thai hospital fills

    A senior health official reminds the public to remain vigilant, as neighbouring countries experience an increase in Covid-19 cases, with the latest surge appearing to be a result of the Omicron XBB.1.5 sub-variant. Or Vandine, secretary of state and spokeswoman for the Ministry of Health,

  • Honda shutters Siem Reap football club

    Japanese football legend Keisuke Honda, the owner of Siem Reap football club Soltilo Angkor FC, has been forced to shut the club down, after it failed to attract sponsorship for the upcoming season. Honda, the former manager of the Cambodia men's national football team, said

  • Hun Sen warns of regional tensions

    ASIA is becoming a dangerous geopolitical hotspot, with several countries announcing that they intend to send naval vessels towards Southeast Asia and on to the South China Sea, warned Prime Minister Hun Sen. “Heated geopolitical issues can easily escalate, namely to war. I am not

  • PM declares ASEAN Para Games open

    The 12th ASEAN Para Games officially kicked off on the evening of June 3 at Morodok Techo National Stadium in Phnom Penh, with a spectacular opening ceremony featuring fireworks and performances by some of the Kingdom’s most accomplished talents. Tens of thousands of sports fans

  • Waterway job still pending for Kampot tourism port’s opening

    The search is still on for a contractor to expand and deepen the Kampot International Tourism Port’s waterway and deliver additional enhancements allowing safe access for larger vessels, nearly a year after the main construction work on the 4.25ha site was completed on June 30, 2022.