Cambodia’s Debt Remains At Low Risk As Of Q3 2024 – Expert Suggests More Borrowing
A recent bulletin from the Cambodian government has reported that the country’s public debt remains sustainable and at low risk, standing at USD 11.78 billion or 19 per cent of the GDP as of the end of the third quarter of 2024. Ninety-nine per cent of the public debt is external, with China remaining as Cambodia's largest creditor.
From January to September 2024, no new loans were recorded from China, but total new loans increased by 7 per cent from the same period last year, with the World Bank and Asian Development Bank (ADB) taking the lead.
Overview Of Cambodia's Public Debt 2024
As of the end of Q3 2024, the Cambodian government has a total public debt stock of USD 11.78 billion, of which 99 per cent (USD 11.67 billion) is public external debt. The remaining 1 per cent (USD 115 million) is public domestic debt.
Amongst Cambodia’s external debts, 64 per cent (USD 7.4 billion) are from Bilateral Development Partners (DPs), and 36 per cent (USD 4.25 billion) from Multilateral DPs.
Cambodia’s largest creditors are:
- China – 34 per cent or USD 4 billion of total external debt
- ADB – 21 per cent or USD 2.48 billion of total external debt
- World Bank – 12 per cent or USD 1.41 billion of total external debt
- Japan – 12 per cent or USD 1.35 billion of total external debt.
The recent debt bulletin added that Cambodia’s debt by currency is composed:
- US Dollars – 45 per cent
- Special Drawing Rights – 19 per cent
- Japanese Yen – 12 per cent
- Chinese Yuan – 11 per cent
- Euros – 8 per cent
- Local or Other Currencies – 5 per cent
Cambodia New Foreign Debts 2024
From January to September 2024, new loans Cambodia signed with DPs amounted to USD 1.07 billion (or SDR 786.68 million), of which 38 per cent (USD 411 million) was signed with bilateral DPs and 62 per cent (USD 659 million) with multilateral DPs. The new loans signed also account for 46 per cent of the SDR ceiling permitted by the law (SDR 1.7 billion).
During this period, China did not sign any new loans with Cambodia, while in 2023, China provided the country loans amounting to USD 302.48 million.
Cambodia’s new bilateral loans from Paris Club countries were led by:
- Japan (USD 262.55 million)
- South Korea (USD 120 million)
- France (USD 27.99 million)
Cambodia’s loans from multilateral DPs:
- World Bank (USD 564 million)
- Asian Development Bank (USD 90 million)
- International Fund for Agricultural Development (USD 5 million).
The government’s bulletin stated that, “all the loans are highly concessional, with an average grant element of around 47 per cent,” adding that “the purpose of these newly signed loans is to finance public investment projects in priority sectors that support long-term sustainable economic growth and increase economic productivity.”
New Domestic Debts – Securities Issuances
From January to September 2024, the Cambodian government issued government securities worth KHR 285.3 billion (USD 70.25 million), which is an increase from the USD 44.64 million issued during the same period in 2023.
The bulletin added that this new domestic debt accounted for 65 per cent of the legally permitted ceiling of KHR 440 billion. The government states these new securities are intended to finance public investments in economic development and productivity.
Debt Service Payment
In Q3 2024, the Royal Government paid debt services amounting to USD 236.18 million, bringing the total from January to September 2024 to USD 466.79 million. This represents a 7 per cent increase in debt repayment compared to the same period in 2023.
From Q1 to Q3 2024, the government paid debts and interest as follows:
- USD 456.45 million for public external debt, of which USD 354.54 million was for debt principal, and USD 101.91 million was for interest and other fees.
- USD 10.33 million for public domestic debt, of which USD 7.79 million was for debt principal, and USD 2.54 million was for interest.
Should Cambodia Increase Its Government Borrowing?
The government bulletin emphasised that despite being impacted by the widespread effects of COVID-19 and other external factors, Cambodia's public debt situation continues to be sustainable and at low risk of debt distress.
The report stated,
All key debt indicators in 2024 are well below the thresholds, with the Present Value of Public and Publicly Guaranteed External Debt to GDP at 19 per cent, compared to the 40 per cent threshold.
Speaking with Stephen Higgins, Founder and Managing Partner of Mekong Strategic Capital, he stressed that since the Cambodian government’s debt is among the lowest globally, it can really afford to increase its borrowing.
“Given the opportunities to accelerate the country’s development, they should absolutely be borrowing more, particularly now while they can do it on a concessional basis,” Higgins told B2B Cambodia.
“One of the most pressing areas for government investment is in education. The only way Cambodia could hope to achieve high-income status by 2050 is through a massive investment in education, and that needs to start now,” he added.
Higgins also highlighted the need for the government to dedicate more investment to developing a commercial court with impartial judges trusted by international investors, and improving the tax audit process overall.
Cambodia’s Economic Status 2024
According to the latest customs report, Cambodia exported goods valued at USD 23.93 billion in the first 11 months of 2024, which is a 16.8 per cent increase from the USD 20.49 billion exported during the same period in 2023.
“Exports continued to boom in the first 11 months, with Garments up 26 per cent, and overall exports [ex solar] up 26 per cent as well,” noted Higgins.
He also commented on an apparent uptick in domestic demand, with vehicle imports in November up the highest since 2022, which “augurs well for 2024 GDP figures”.
The Cambodian Minister of Economy and Finance, DPM Aun Porn Moniroth, recently stated in December 2024 that the government projects Cambodia’s economic growth in 2024 to be around 6 per cent. Another government data point released in July projected Cambodia’s GDP growth to maintain around 6.5 per cent in the medium-term from 2025 to 2027.