In a significant financial move, the Royal Government of Cambodia successfully secured $58.26 million through the sale of government bonds in 2023. This initiative forms part of the country’s broader strategy to enhance its economic infrastructure and support public investment initiatives. With regulations allowing for a maximum bond issuance of up to $200 million, the current fundraising represents approximately 29 percent of this potential ceiling.
The bonds were introduced to the market via the National Bank of Cambodia Auction Platform (NBCP), marking a pivotal step in the country’s efforts to bolster its financial autonomy. A recent release from the Cambodia Public Debt Statistical Bulletin, curated by the Ministry of Economy and Finance, highlighted that the government issued securities totaling KHR 238 billion (equivalent to $58.26 million). This figure aligns with 29 percent of the legal maximum outlined by Cambodian law, set at KHR 813 billion.
The primary objective behind these bond issuances is to generate domestic funds dedicated to public investment projects, as articulated by the Ministry of Economy and Finance. Beyond meeting annual budgetary needs, this move also aims to stimulate growth within the securities sector of Cambodia.
This year marks the third consecutive year of government securities offerings, showcasing the government’s ongoing commitment to this financial mechanism. Looking ahead to 2024, plans are in place to issue bonds worth KHR 440 billion, which translates to approximately $108 million. These funds are earmarked for direct use in further enhancing the efficiency and sustainability of the nation’s debt management strategies.
The inception of government bond offerings in September 2022 represented a novel approach to increasing domestic revenue, thereby reducing reliance on foreign loans, particularly for infrastructure projects. Aun Pornmoniroth, the Deputy Prime Minister and Minister of Economy and Finance, has highlighted the potential for these bonds to invigorate the Cambodian economy by providing essential funds for development.
Anticipations are high for these government bonds to gain traction on the Cambodia Securities Exchange, offering a valuable benchmark for the trading and analysis of corporate securities. This approach mirrors the successful strategies employed in other nations with burgeoning securities markets. Bond investors are incentivized with a 50 percent tax reduction on interest income from these bonds, alongside a three-year tax holiday on capital gains from bond transactions, fostering a more attractive investment landscape.
