Cambodia’s Increased Budget Expenditure for 2026 with Higher Borrowing and Bond Issuance

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Cambodia’s Increased Budget Expenditure for 2026 with Higher Borrowing and Bond Issuance
Cambodia’s Increased Budget Expenditure for 2026 with Higher Borrowing and Bond Issuance./B2B Cambodia

The Cambodian government has unveiled its national budget for 2026, set at KHR 38.4 trillion (USD 9.59 billion), marking an increase from the USD 9.32 billion allocated in 2025. However, with a deficit of over KHR 8 trillion, the government plans to increase borrowing and issue more bonds.

According to the draft budget law approved by the Council of Ministers (and yet to be approved by the Senate), approximately USD 26 million will be also allocated for the Funan Techo Canal project.

Increase in Borrowing and Bond Issuance

According to the Ministry of Economy and Finance’s 2026 draft law, the government plans to borrow 2.25 billion SDR (over USD 3 billion) in 2026, up from the 2 billion SDR (USD 2.6 billion) borrowed in 2025. It also intends to issue over KHR 2 trillion (USD 526.6 million) in government bonds, an increase from USD 125 million in 2025.

The draft law also states that the government plans to provide loans to two state-owned enterprises—Sihanoukville Autonomous Port and Phnom Penh Autonomous Port—totaling KHR 107.357 billion (around USD 26.7 million) under the government credit framework, to support investment in Funan Techo Coastal Inland Waterway Co., Ltd, the developer of the Funan Techo Canal project.

Sub-National Expenditure

At the sub-national level (capital, provincial, municipal, district, and commune authorities), spending is projected to reach over KHR 7 trillion (USD 1.76 billion) in 2026, slightly lower than the USD 1.78 billion budgeted for 2025.

The provinces receiving the highest funding include Phnom Penh and Kandal, while the smallest allocations go to Kep, followed by Pailin, Stung Treng, and Ratanakiri.

Government Workforce

The 2026 draft law also outlines staffing levels across the public sector. At the national level, civil servants and contract staff will total 157,583, while sub-national staffing will total 189,467. Compared to the 2025 budget, the total number of government personnel is slightly lower.

Does Cambodia Have Sustainable Debt?

As of the end of Q2 2025, the Cambodian government’s total public debt stock was USD 12.67 billion, in which 99 per cent (USD 12.54 billion) was public external debt (61 per cent from Bilateral Development Partners, and 39 per cent from Multilateral Development Partners) and 1 per cent (USD 128.50 million) was public domestic debt. The composition of the public debt stock is 46 per cent USD, 18 per cent SDR, 11 per cent JPY,  10 per cent CNY, 8 per cent EUR, and  7 per cent local and other currencies.

Commenting on the state of Cambodia’s debt in 2024, Stephen Higgins, Founder and Managing Partner of Mekong Strategic Capital, suggested that Cambodia could afford to increase borrowing, noting that the government’s debt level is among the lowest globally.

However, he emphasised the importance of directing investment toward key areas such as education, as well as improving commercial courts and strengthening the tax audit process, if Cambodia wishes to reach its goal of achieving high-income status by 2050.