Cambodia’s public debt is still low as a percentage of GDP

The Debt to GDP ratio is important because it reflects a country’s ability to repay its debt. It is the debt-to-GDP ratio of a country. The lower the ratio, the stronger the economy of the country is.

Experts say Cambodia’s public debt is still low as a percentage of GDP, at roughly 25%, compared to the 40% benchmark, giving the government considerable fiscal space to borrow to develop the country.

“As of March 31, the Government had a total public debt stock of $9.81 billion, including the old debt,” the Ministry of Economy and Finance said in a bulletin. “Public external debt comprises 68 percent from Bilateral Developing Partners [DP] and 32 percent from Multilateral DPs.”

“In the first quarter of this year, the Government signed new concessional loans with DPs totaling $317.24 million, equivalent to SDR 228.21 million, accounting for 14% of the ceiling permitted by law – SDR 1.6 billion – of which 52% is signed with Bilateral DPs and 48% with Multilateral DPs.”

“Borrowing in January-March was better than [the first quarter of previous year], when no new loans were signed,” according to the Cambodia Public Debt Statistical Bulletin, which was released earlier this month.

“Overall, all of the loans are extremely low-interest, with an average grant element of roughly 50%. These new loan commitments will be used to fund public investment projects in priority sectors that will support long-term economic growth and boost economic productivity/production.

“Despite being impacted by the widespread of Covid-19 and other external causes, Cambodia’s public debt status remains ‘sustainable’ and ‘low risk’ of debt distress, according to the early results of the Debt Sustainability Analysis [DSA].”

“All the key debt indicators in 2022 are well below the thresholds, of which the main debt indicator, the Present Value of Public and Publicly Guaranteed Debt to GDP, is at 24.9 per cent compared to the 40 per cent threshold,” the bulletin added.

According to the bulletin, the government “disbursed $529.79 million from the existing concessional loan, of which 47 percent came from bilateral DPs and 53 percent came from multilateral DPs” in January-March.

“Infrastructure receives 32% of the awarded funds, while other prioritised sectors (non-infrastructure) receive 68%.” “When compared to the same period last year, disbursement increased by nearly 21% in the first quarter,” it noted.

From the perspective of public debt management, the Kingdom is in a “strong position.” Not only is it low in comparison to its neighbours, but it is also low on a global level.

Source: The Phnom Penh Post

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