Cambodia signs $905 million concessional loan pacts in 2021

Cambodia signs $905 million concessional loan pacts in 2021

The Cambodian government signed concessional loan agreements with development partners totalling $905.6 million, mainly to finance public investment projects in the priority sectors that support long-term sustainable economic growth.

The agreements signed last year accounted for 43 percent of debt ceiling SDR 1,500 million. Out of which 43 percent or $390.1 million is signed with bilateral development partners and 57 percent or $515.5 million with multilateral development partners, according to the Cambodia Public Debt Statistical Bulletin of the Ministry of Economy and Finance.

“The purpose of the borrowing is to finance public investment projects in the priority sectors that support long-term sustainable economic growth and increase economic productivity/production,” read the bulletin.

The ministry stated that 72 percent of the fund went to the infrastructure sector. In comparison, 28 percent is attributed to other priority sectors, citing that the loans are highly concessional with an average grant element of 50 percent.

As of year-end 2021, the Cambodian government has a total public debt outstanding of $9.49 billion, which is public external debt, the ministry said, citing that the public domestic debt was fully repaid in February 2020.

Accumulatively, from 1993 to the end of 2021, Cambodia signed concessional loan agreements with development partners for $15.55 billion. The government disbursed a total of $10.55 billion from development partners, accounting for 68 percent of borrowing to finance infrastructure development and priority sector at 82 percent and 18 percent, respectively.

The ministry said that the preliminary result of the Debt Sustainable Analysis shows that despite the Cambodian economy being impacted by the spread of Covid-19, Cambodia’s public debt situation continues to remain ‘sustainable’ and ‘low risk’ of debt distress.

All the key debt indicators in 2021 are well below the thresholds, of which the main debt indicator, the Present Value of Public and Publicly Guaranteed Debt to GDP, is at 24.4 percent compared to the 40 percent threshold.

The country’s management of public debt with sustainable efficiency and effectiveness has contributed to the development of physical infrastructure, energy, portable clean water, water irrigation, health improvement, and education, Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, said in the bulletin.

With the uncertain economic growth in 2022 due to the prolonged Covid-19 crisis, the government puts into use the Strategic Framework and Programs for Economic Recovery in the Context of Living with the COVID-19 in a New Normal 2021-2023 and framework for government securities with aims to recover the economy from Covid-19 crisis for sustainable growth, he said.

The government has planned to issue the first $300 million worth sovereign bond to raise funds to finance public investment projects, aiming at boosting the country’s economic growth and productivity.

The sovereign bond issuance is part of a reduction in foreign loans, with the government’s focus on mobilising financial sources domestically. Khmer Times