In Cambodia, effectively managing public debt is vital for maintaining fiscal stability and fostering sustainable economic growth. To tackle this challenge, the Cambodian government has established five fundamental principles for public debt management. These principles serve as a guiding framework to ensure responsible borrowing and prudent utilization of borrowed funds.
It is worth noting that as of the end of 2023, Cambodia’s total public debt stood at USD 11.24 billion. However, despite this, Cambodia’s public debt situation remains “sustainable” and poses a “low risk” of debt distress. In fact, all key debt indicators in 2023 remain comfortably below the established thresholds. For instance, the Present Value of Public and Publicly Guaranteed External Debt to GDP ratio is 24.2%, well below the threshold of 40%. This demonstrates Cambodia’s commitment to maintaining a manageable level of debt and highlights the government’s efforts to ensure financial stability and responsible debt management.
Below are the 5 principles and their significance in Cambodia’s public debt management strategy:
- Borrowing within a manageable limit that the fiscal and economic situation can handle.
- Only borrow loans that have a high level of concessions or favorable conditions.
- Borrowing only for the essential sectors that shape the character of economic growth and productivity-enhancing sectors, economy or production.
- Use loans with the highest transparency, accountability, efficiency, and effectiveness.
- Use loans for financial investment projects on public infrastructure systems that must have standards and high quality, in accordance with the principles of public investment management, including responding to the requirements of national development in the new era, especially ensuring economic, social, environmental, and climate change resilience.
Similar to other developing countries, Cambodia faces the challenge of balancing its need for financial resources for ongoing operations with the potential burden of public debt. However, the Cambodian government has demonstrated a commitment to responsible borrowing practices. The 5 key principles for public debt management will act as a critical filter, ensuring that any loans taken on contribute to Cambodia’s long-term economic health.
Source:
Ministry of Economy and Finance. (Feb 2024). Cambodia Public Debt Statistical Bulletin Volume 21 Q4 2023.
Photo by: Koeut Chhe – កើត ឆែ អភិបាលរងរាជធានីភ្នំពេញ & Cambodia Rice Federation
