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Cambodia’s Public Debt Remains Sustainable Amid Economic Growth

by Surya Narayan
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The Cambodian government’s public debt stock remains sustainable, according to the latest Cambodia Public Debt Statistical Bulletin. The total public debt stock is $10.23 billion as of March 2023, with 67% coming from bilateral Developing Partners (DPs), 33% from multilateral DPs, and 0.41% from public domestic debt. This debt is composed of various foreign currencies, including 43% in US dollars, 21% in Special Drawing Rights (SDRs), 12% in Chinese yuan, 11% in Japanese yen, 7% in euros, and the rest in local and other currencies.

During the January-September period, the Cambodian government signed new concessional loans with DPs worth $1.21 billion, accounting for 59% of the ceiling permitted by law. These loans are highly concessional, with an average grant element of around 42%. The newly signed loans aim to finance public investment projects in priority sectors that support long-term sustainable economic growth and increase economic productivity and production.

In the first quarter of 2023, the government issued government securities worth KHR100 billion (equivalent to $24.67 million), accounting for 12.30% of the ceiling permitted by law (KHR 813 billion). This was for financing support to public investments for economic growth and productivity.

“The Cambodian government’s prudent public debt management strategy and commitment to sustainable economic growth reflect the resilience of the Cambodian economy and the government’s dedication to ensuring long-term fiscal stability. This positive outlook is a strong foundation for Cambodia’s journey towards becoming a higher-middle income country by 2030.”

Despite being impacted by Covid-19 and other external factors, Cambodia’s public debt situation continues to remain “sustainable” and “low risk” of debt distress. All the key debt indicators in 2023 are well below the thresholds, with the main debt indicator, the Present Value of Public and Publicly Guaranteed External Debt to GDP, at 24.9% compared to the 40% threshold.

Prime Minister Hun Sen has stated that Cambodia is on track to graduate from the least developed country status in 2027 and to become a higher-middle income country by 2030. Once reached that goal, Cambodia will lose preferences in concessional loans from developing partners. However, the Prime Minister has been in talks with developing partners — China, South Korea, and Japan — about maintaining the country’s concessional loans once it graduates to a high-medium income nation by 2030.

The Cambodian government’s public debt management strategy demonstrates a strong commitment to maintaining sustainable debt levels and promoting economic growth. This positive outlook is a testament to the resilience of the Cambodian economy and the government’s efforts to ensure long-term fiscal stability.

Source: Khmer Times

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