Despite a barrage of reports predicting economic decline this year, Cambodia remains in a good position to manage over one billion dollars in foreign debt, economists and government officials said Wednesday.
A report released Wednesday by the Asian Development Bank revealed Cambodia owes the bank a little more than $1 billion, which represents about two-thirds of the country’s foreign obligations. A recent World Bank report said the country’s debt was equivalent to about 15 percent of its GDP, meaning the country owes approximately $1.5 billion.
According to the ADB report, Cambodia owes about $1 billion to the bank, not including interest, on a total of 19 outstanding loans. But the bank is taking measures to prevent the debt from being an excessive burden, such as offering 1 to 1.5 percent interest rates on loans to developing countries, ADB spokesman Kim Chantha said.
“I don’t think it’s a problem,” Chan Sophal, president of the Cambodian Economics Association, said of the country’s debt.
Mr Chan Sophal said he thought the expected economic slowdown would not affect the government’s ability to pay off the debt, although it may lead to more borrowing as the country looks to combat a possible recession.
“It is my opinion that Cambodia needs more capital, and our debt position is not bad,” he said. “We can borrow more if we need to.”
CPP lawmaker Cheam Yeap, chairman of the National Assembly’s economy and finance commission, said more than $20 million has been designated for paying off debt this year. He defended the government’s approach to borrowing, saying it was an unfortunate but beneficial practice.
“It is not good to be in debt, but the government needs the money to develop the national economy,” he said.
Mr Cheam Yeap added that the decline in economic growth could present challenges in paying off debt, but said the government would handle those problems on a case-by-case basis.
“With the economic slowdown, it is difficult to pay the debt, but we have to negotiate with those individual debtors,” he said, adding that many countries either already have or are in negotiations to forgive Cambodia for millions of dollars in debt.
Officials in the Finance and Planning ministries declined to comment.
SRP lawmaker Yim Sovann predicted the government would be unable to pay its debt in a timely manner because of the economy’s decline, among other reasons.
“Because of the economic crisis, as well as corruption, it is very clear the government will have no money to pay the debt,” he said.
