How Cambodia’s Public Debt Has Contributed to Economic Development through Infrastructure Growth

During a gathering with garment workers in Takmao city, Kandal province, Prime Minister Hun Manet emphasized that Cambodia’s public debt has played a vital role in advancing the country’s economic development. He stated that public debt in Cambodia has been a driving force behind economic growth, primarily through the construction of essential physical infrastructure, which has subsequently contributed to the nation’s overall economic progress.

The Prime Minister stressed the responsible and deliberate manner in which the country borrows funds for the common good, ensuring that they are invested in public assets for the benefit of the nation. He reiterated that this statement was made in response to unfounded criticisms regarding Cambodia’s level of public debt.

As of the end of the first half of the year, Cambodia’s public debt amounted to $10.72 billion, as reported by the Ministry of Economy and Finance. Notably, the country’s public debt remained at a low-risk level.

The report revealed that the majority of the public debt, 64 percent, was acquired through borrowings from bilateral development partners, with the remaining 36 percent coming from multilateral development partners. A minimal portion, 0.43 percent, constituted public domestic debt.

China emerged as Cambodia’s principal concessional loan provider among bilateral partners, contributing $4.08 billion, which represented 38.2 percent of the total public external debt. Japan and Korea followed with $1.13 billion and $528 million, respectively. For multilateral loans, Cambodia’s borrowings from the Asian Development Bank reached $2.22 billion, while the World Bank provided $1.26 billion. Notably, these loans were highly concessional, with an average grant element of approximately 42 percent.

Despite challenges like the Covid-19 pandemic and other external factors, Cambodia’s public debt situation continued to be sustainable and low-risk, as affirmed by the Ministry of Economy and Finance.

Looking ahead to 2023, the government planned to raise $200 million through bond issuance, a move intended to generate direct revenue and ensure the efficiency and sustainability of debt management. In 2024, the Government of Cambodia is also preparing to raise $108 million through government bond issuance, with these funds earmarked for financing infrastructure expenses and servicing the principal and interest of previously issued bonds, as outlined in the Ministry of Economy and Finance’s draft national budget law for 2024.