Prime Minister Hun Manet met with workers Kandal province on November 2. STPM
Prime Minister Hun Manet has addressed public concerns regarding public debt, assuring that it will not escalate to an unmanageable level or lead to a ‘debt trap’. He explained that Cambodia’s foreign loans are utilised for the country’s development.
While speaking to nearly 20,000 factory workers in Takhmao town on November 2, Manet noted that critics have been questioning the government’s approach to foreign borrowing, a trend that dates back to the tenure of his father, former Prime Minister Hun Sen.
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“Cambodia will not borrow beyond [its] means. We borrow to bolster our economy, not for purchasing luxury cars and airplanes. These loans serve our collective interests and will not result in the loss of our sovereignty to any country,” he stated.
He emphasised that incurring foreign debt is commonplace worldwide, citing Japan, the US and France as examples where debt is a necessary means for investment.
He pointed out that the government’s approach to borrowing foreign funds for important infrastructure projects aimed at stimulating economic growth is no different, as evidenced by the construction of bridges and roads.
He criticised those who overlook these developments and continue to lambast the government for its foreign loans, especially those from China, accusing it of risking national sovereignty.
The International Monetary Fund (IMF), in an October 31 statement following a visit to the country from October 18-31, reported that Cambodia’s public debt remains moderate and the risk of debt distress is low. Nonetheless, it suggested that the government should pay more attention to private debt.
As of the first half of 2023, Cambodia’s public debt stood at $10.27 billion, with 99.59 per cent from foreign borrowing; the remaining 0.41 per cent constituted domestic debt.
Minister of Economy and Finance Aun Pornmoniroth recently asserted that the country’s public debt is under control and sustains a low risk level.
Yang Peou, secretary-general of the Royal Academy of Cambodia, cited the IMF report to substantiate the low risk posed by public debt.
“If we were to borrow and squander, that would indeed present a high risk. However, to my knowledge, the government has been diligently repaying both the principal and the interest of the loans,” he stated.
He suggested that public apprehension regarding a ‘debt trap’ might stem from inadequate information about the debt and perhaps misplaced trust in the rhetoric of politicians seeking to capitalise on the matter politically. He underscored the necessity for the government to better inform the public about the issue.
Yong Kim Eng, president of the People Center for Development and Peace, acknowledged that public concern about public debt is normal. While he does not oppose borrowing for the public good, he highlighted the importance of enhancing good governance to prevent misappropriation of the borrowed funds. Appropriate allocation and expenditure of these funds are critical to avoid dire consequences, he warned.
He called on the government to secure loans from countries or institutions offering low-interest rates to prevent future generations from being burdened with heavy repayments.
