The Morodok Techo flyover under construction in Phnom Penh's Meanchey district. Construction of the project is being managed by the Overseas Cambodian Investment Corporation (OCIC), at a cost of more than $36 million.- Photo: The Phnom Penh Post/ANN
PHNOM PENH: The current state of Cambodia's public debt, which stands at US$11.09 billion, is "sustainable" and "low risk" as of the second quarter of 2024, according to Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth, as quoted in the Cambodia Public Dept Statistical Bulletin.
He noted that maintaining public debt sustainability depends on the country’s strong public debt management system that includes a legal framework, policies, strategies and comprehensive operating procedures, as well as institutional capacity and sufficient human resources.
In addition, Cambodia has an IT system for managing operations and storing data as a basis for debt risk analysis and monitoring, Pornmoniroth said.
According to the bulletin, 99.12 percent of the debt, or about $11 billion, is external public debt, while the remaining 0.88 percent, or $98 million, is domestic.
Countries and development partners (DPs) from which the country receives the most loans include China, which accounts for 36 per cent (about $3.99 billion), followed by the Asian Development Bank (ADB) with 21 per cent ($2.32 billion) and the World Bank with 12 per cent, or about $1.33 billion.
Additionally, Cambodia’s debt to Japan represents about 11 per cent of the total, amounting to more than $1.21 billion, alongside other countries such as France and South Korea.
In the first three months of 2024, the government paid a total of $181.55 million in debt service and entered into new concessional loan agreements with DPs totaling $140.14 million.
Compared to the same period last year, new loans in the first quarter of 2024 decreased by about 71 per cent, the bulletin stated.
Pornmoniroth noted that the government has strictly and carefully implemented the measures set out in the country’s Public Debt Management Strategy.
He stated that Cambodia follows several key principles to strengthen the effectiveness of public debt and investment management.
He said these include borrowing in reasonable amounts that the financial and economic situation can withstand, securing loans with favourable conditions and focusing on priority sectors that support sustained economic growth and increase productivity.
In addition, Pornmoniroth noted that the country uses credit with the highest transparency, accountability and efficiency, directing funds towards high-quality public infrastructure investment projects.
"Sustainable, efficient and effective public debt management has significantly contributed to achieving high economic growth and has been a source of pride for over two decades. It has enabled Cambodia to mobilise concessional credit to meet the financing needs of priority areas," he said.
Hong Vanak, an economic researcher at the Royal Academy of Cambodia, confirmed that the Cambodia’s debt is at a manageable level.
He explained that public debt is just over 30 per cent of its gross domestic product (GDP), which is completely safe.
According to the World Bank, Cambodia's GDP in 2023 was $31 billion.
"Indeed, high-risk debt is debt that accounts for more than 50 per cent of GDP," he said. "Some countries have high-risk debt that reaches 60 to 80 percent of their GDP, making it uncontrollable."
He added that Cambodia also has a good reputation for respecting loan principles, making it a quality debtor acknowledged by the World Bank and other creditor countries.
Vanak noted that the country’s ability to manage revenue and maintain growth ensures there is no risk for long-term debt repayment.
He views the steep decline in new loans in the first quarter of 2024 compared to last year as a positive sign.
"This indicates that the government has either developed the financial capability or has utilised previous loans effectively according to plan.
"As a result, the government has managed necessary and unnecessary expenses using its own budget, without increasing borrowing as it did in the past," Vanak said.
"If loans are reduced to zero from 2025, it means the government will have autonomy in public investment without relying on foreign loans,” he added. - The Phnom Penh Post/ANN
