The Cambodian government made debt service payments to the tune of $180.68 million in the first quarter (Q1) of 2023, down 3.4 per cent from the $187.03 million posted in the year-ago period, according to the Ministry of Economy and Finance.

The equivalent of $180.58 million went toward the public external debt – $139.98 million for principal and $40.60 million for interest and other fees – while the remaining $0.10 million comprised solely of interest payments on public domestic debt, the finance ministry said in its latest Cambodia Public Debt Statistical Bulletin.

For comparison, the government made debt service payments amounting to $464.22 million last year – up 21.3 per cent on $382.78 million in 2021 – all of which went toward the public external debt, according to an earlier bulletin.

Of that, $345.53 million went to bilateral development partners (DP) – $263.81 million for principal and $81.72 million for interest and other fees – and $118.70 million went to multilateral DPs – $91.60 million for principal and $27.10 million for interest and other fees.

Royal Academy of Cambodia economist Hong Vanak commented to The Post on June 18 that prompt repayment of its debts promotes the image of the Kingdom and indicates its economic soundness, stressing that the government of a sputtering economy may be unable to repay its dues on time.

It also demonstrates the capacity of the government, particularly the finance ministry, to raise funds and preserve state revenues in light of the past three years of global crises, he argued, adding that by tightening the legal framework and streamlining various processes through IT systems, the level of state budget leakage has been greatly reduced.

“Cambodia remains committed to paying back its creditors despite the current state of [worldwide] economic instability, rising inflation and declining investment. The likelihood of future loans is likewise high when our nation upholds its commitments and the economy is performing well,” he said.

Lim Heng, vice-president of the Cambodia Chamber of Commerce, the Kingdom’s apex trade body, underscored that, despite the global economic downturn, Cambodia is well-positioned to employ its loans in a focused and effective way that helps the economy run smoothly. The government is then able to use the money made from accompanying projects to pay back its debts, he said.

He remarked that proper payback management ensures that the Kingdom has easy access to loans, with other countries and national and international partners keener to offer funding.

According to Heng, the government is primarily using its current loans for the development of human resources, infrastructure, distribution systems, power, water and agriculture.

“The government’s prior use of loans for development is gradually starting to pay off, with an increase in investment as well as in goods exports,” he claimed.

Meanwhile, according to the Cambodia Public Debt Statistical Bulletins, the government recorded a total public debt stock of $10.27 billion as of end-March, up nearly three per cent from $9.99 billion three months earlier.

Just $42.45 million or 0.41 per cent of the public debt stock was domestic, while $10.23 billion or 99.59 per cent was external, of which 67 per cent and 33 per cent was held by bilateral and multilateral DPs, respectively.

The finance ministry broke down the composition of the public debt stock by currency: 43 per cent USD (US dollars), 21 per cent SDR (special drawing rights), 12 per cent CNY (Chinese Yuan), 11 per cent JPY (Japanese Yen), seven per cent EUR (Euros) and six per cent KHR (Cambodian riel) and others.

In the January-March quarter, the government also penned new concessional loans with DPs to the tune of $488.31 million – equivalent to SDR 361.15 million or 21.24 per cent of the SDR 1.700 billion cap – with bilateral and multilateral partners respectively making up 34 per cent and 66 per cent of that amount.

The total loan value marked a 54 per cent year-on-year increase in terms of US dollars from the $317.24 million or SDR 228.21 million logged in first-quarter 2022.

In the same period, the government issued a total of 100 billion riel or $24.67 million in sovereign bonds – equivalent to about 12.30 per cent of the 813 billion riel cap – to finance public investment projects in a bid to promote economic growth and productivity, according to the latest Cambodia Public Debt Statistical Bulletin.