Prime Minister Hun Sen on May 27 refuted accusations regarding China’s intent to entrap Cambodia in sovereign debt commitments, underscoring that the Kingdom borrows money from other countries and “cannot fall into anyone’s debt trap”.
The premier was responding to a question raised at the 27th International Conference on the Future of Asia organised by Nikkei in Tokyo, Japan.
“We are careful for our own sake with what we borrow, we have laws governing loans and the debt ceiling is currently mandated at 40 per cent of GDP [gross domestic product],” he said, noting that Cambodia’s borrowing rate stands at 23 per cent of GDP.
Cambodia does not just borrow money without consideration for the implications of the debt, he said, adding that the Kingdom has a list of creditors including Japan and South Korea, as well as European banks and other international institutions such as the Asian Development Bank and World Bank.
Echoing his previous statement, Hun Sen stressed that neither China nor Japan would lay a “trap” for Cambodia through loans provided for infrastructure projects.
“If I don’t depend on China, who can I depend on?
“These are my genuine views, and I stress plainly now that we will not be the sole debtor of, or [fall] in any ‘debt trap’ of China’s – China is not keen to ensnare Cambodia in any ‘debt trap’,” he said.
Cambodian Institute for Democracy president Pa Chanroeun said on May 29 that the Kingdom, which is still a developing country, has much recourse for development, including financial resources in the form of loans. However, the country must always be cautious when borrowing.
“This caution is to ensure that debt from loans does not become a trap for the country. In some cases it turns out not that the loans do not end up developing society but bring pressure and financial disaster,” he said.
Chanroeun said Cambodia must do whatever it can to avoid falling into a debt trap with any country, including China. He said some countries had already become congested with debt from China due to excessive loans.