In the third quarter of 2024, Cambodia signed new concessional loan agreements with development partners (DPs) amounting to $738 million, raising the public debt stock to $11.78 billion. Over 99% of this debt is external, with the government making debt service payments totalling more than $236 million during the same period.

The Ministry of Economy and Finance’s Cambodia Public Debt Statistical Bulletin, published on December 10, reported that 64% of loans were sourced from bilateral DPs and 36% from multilateral DPs. Domestic debt accounted for $115 million, representing just under 1% of the overall amount. The country’s total public debt represents approximately 37.1% of its 2023 GDP.

The currency composition of public debt was dominated by the US dollar, which accounted for 45%. Special Drawing Rights (SDR), an international reserve asset created by the IMF, represented 19%. Japanese yen (JPY) made up 12%, Chinese yuan (CNY) 11%, euros (EUR) 8% and local and other currencies collectively accounted for 5%.

From January to September (Q1-Q3), the total value of new loan agreements reached $1.07 billion, equivalent to 786.68 million SDR, which represents 46% of the borrowing ceiling permitted by law, set at 1,700 million SDR.

The bulletin noted that 38% of these new loans were secured with bilateral DPs, while 62% were from multilateral DPs. Compared to the same period in 2023, the total value signed during the first three quarters of 2024 increased by approximately 7%.

The ministry emphasised that all newly signed loans are highly concessional, with an average grant element of around 47%. The loans are intended to fund public investment projects in priority sectors that support long-term sustainable economic growth and enhance productivity.

During Q3 2024, the government made debt service payments amounting to $236.18 million. From January to September, total debt service payments reached $466.79 million. Of this, $456.45 million was for external public debt, with $354.54 million allocated to principal repayments and $101.91 million to interest and other fees. Payments for domestic public debt totalled $10.33 million, with $7.79 million covering principal and $2.54 million for interest.

The bulletin noted that debt service payments for the first three quarters of 2024 increased by approximately 7% compared to the same period in 2023, in line with the increase in newly contracted debt.

Finance minister Aun Pornmoniroth affirmed in the bulletin that the country’s public debt remains “manageable,” with its sustainability classified as “low risk”.

He attributed this to the country’s robust public debt management system, comprising a sound legal framework, comprehensive policies and strategies, operational management procedures, adequate institutional capacity and human resources and a reliable information technology system for data management and risk analysis.

The draft budget law, approved by the Senate at the end of November, authorises the government to borrow up to 2 billion SDR in 2025. As stipulated, any borrowing from foreign creditors must take the form of concessional loans with favourable repayment terms and interest rates.

Hong Vanak, an economist at the Royal Academy of Cambodia, told The Post last month that as a developing country, Cambodia requires substantial financing to support infrastructure development, including roads, railways, bridges, airports and maritime ports.

He said these investments are crucial for creating an attractive environment for foreign investment and driving rapid economic growth.

He noted that all government loans have been effectively utilised according to plan.

“In the past, the government identified opportunities to accelerate the country’s development by securing low-interest loans from international financial institutions and partner countries. Most of these loans were directed toward public investment projects to help Cambodia catch up with other countries in the region and globally after losing several decades to domestic crises,” Vanak said.