Cambodia government to reduce foreign debt
Cambodia government to reduce foreign debt
https://www.bangkokpost.com/news/asean/1396866/
The Cambodian government plans to reduce its foreign debt and raise capital through the issuance of bonds, a representative of the Ministry of Economy and Finance has unveiled.
“Increasing local borrowing instead of foreign borrowing will improve the country’s trade balance and current account,” the Khmer Times on Tuesday quoted Vong Seyvisoth, Secretary of State at the Ministry of Economy and Finance as saying.
It will also help the riel’s exchange rate remain stable, he said.
The official was speaking during a forum on the national budget for the year 2018 held on Monday.
Decreasing foreign debt will help balance the expenditure budget, improving the country’s current account. Meanwhile, issuing bonds will complement the rise in revenue from tax collection, which has increased significantly in the last few years, he said.
“Cambodia’s is preparing to adopt a new policy. We will reduce foreign borrowing while strengthening local borrowing,” Seyvisoth said.
“We are also developing the local bond market which will be online by 2019,” he said, adding that the government plans to issue bonds in the near future, and is now preparing the legal groundwork and infrastructures that would allow that to happen.
“Borrowing locally entails lower levels of risk than borrowing from abroad.
“When we borrow from abroad, we need to pay it back, which affects the current account and the balance of payments. When we borrow domestically, the money stays in the country.”
He noted, however, that Cambodia’s current debt-to-gross domestic product ratio is 32 or 33%, which is a healthy level of indebtedness, and should not preclude the country from continued borrowing.
According to the Ministry of Economy and Finance, Cambodia’s foreign debt stood at US$7.1 billion in 2017. In 2018, it will be $7.8 billion.
Public expenditure this year will amount to $6.4 billion, 18.75% of GDP, as indicated in the national budget for 2018. Government income is projected to reach $4.6 billion.
Chan Sophal, director of the Centre for Policy Studies, said the government’s new strategy was sound and will help increase public revenue, but added that the country can continue to borrow from abroad without putting the economy at risk.
“To ensure the efficiency of loans, we need to keep a closer eye on the projects that are being financed and make sure they are built according to plan and with the necessary quality standards.”
He also said that Cambodia is in a good position to increase its foreign debt without this posing a risk to the economy, adding that the country should continue to borrow from abroad to finance the construction of public infrastructure.
“We have been quite cautious with our borrowing,” he said. “Why don’t we just borrow a lot to help enrich the nation quickly? We don’t do this because we need space in case a crisis happens,” he said.
According to Ministry of Economy and Finance, the GDP will grow by 6.9% in 2018 due to robust performances of the agriculture, manufacturing, and service sectors. GDP per capita will be $1,569, according to official projections.
Due to robust economic growth, Cambodia is becoming less dependent on other countries in terms of raising capital, Seyvisoth said, noting that the country can now “survive and fully control its economy.”
In December, the Securities and Exchange Commission of Cambodia, the stock market regulator, approved the rules that will regulate the local bond market, together with three new financial tools that aim to boost trading on the local bourse.
The Cambodian government plans to reduce its foreign debt and raise capital through the issuance of bonds, a representative of the Ministry of Economy and Finance has unveiled.
“Increasing local borrowing instead of foreign borrowing will improve the country’s trade balance and current account,” the Khmer Times on Tuesday quoted Vong Seyvisoth, Secretary of State at the Ministry of Economy and Finance as saying.
It will also help the riel’s exchange rate remain stable, he said.
The official was speaking during a forum on the national budget for the year 2018 held on Monday.
Decreasing foreign debt will help balance the expenditure budget, improving the country’s current account. Meanwhile, issuing bonds will complement the rise in revenue from tax collection, which has increased significantly in the last few years, he said.
“Cambodia’s is preparing to adopt a new policy. We will reduce foreign borrowing while strengthening local borrowing,” Seyvisoth said.
“We are also developing the local bond market which will be online by 2019,” he said, adding that the government plans to issue bonds in the near future, and is now preparing the legal groundwork and infrastructures that would allow that to happen.
“Borrowing locally entails lower levels of risk than borrowing from abroad.
“When we borrow from abroad, we need to pay it back, which affects the current account and the balance of payments. When we borrow domestically, the money stays in the country.”
He noted, however, that Cambodia’s current debt-to-gross domestic product ratio is 32 or 33%, which is a healthy level of indebtedness, and should not preclude the country from continued borrowing.
According to the Ministry of Economy and Finance, Cambodia’s foreign debt stood at US$7.1 billion in 2017. In 2018, it will be $7.8 billion.
Public expenditure this year will amount to $6.4 billion, 18.75% of GDP, as indicated in the national budget for 2018. Government income is projected to reach $4.6 billion.
Chan Sophal, director of the Centre for Policy Studies, said the government’s new strategy was sound and will help increase public revenue, but added that the country can continue to borrow from abroad without putting the economy at risk.
“To ensure the efficiency of loans, we need to keep a closer eye on the projects that are being financed and make sure they are built according to plan and with the necessary quality standards.”
He also said that Cambodia is in a good position to increase its foreign debt without this posing a risk to the economy, adding that the country should continue to borrow from abroad to finance the construction of public infrastructure.
“We have been quite cautious with our borrowing,” he said. “Why don’t we just borrow a lot to help enrich the nation quickly? We don’t do this because we need space in case a crisis happens,” he said.
According to Ministry of Economy and Finance, the GDP will grow by 6.9% in 2018 due to robust performances of the agriculture, manufacturing, and service sectors. GDP per capita will be $1,569, according to official projections.
Due to robust economic growth, Cambodia is becoming less dependent on other countries in terms of raising capital, Seyvisoth said, noting that the country can now “survive and fully control its economy.”
In December, the Securities and Exchange Commission of Cambodia, the stock market regulator, approved the rules that will regulate the local bond market, together with three new financial tools that aim to boost trading on the local bourse.
Re: Cambodia government to reduce foreign debt
yes, well if a government bond is as safe as a lease on siem reap airport I am sure there will be plenty of takers
- Arget
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Re: Cambodia government to reduce foreign debt
China will buy up all the bonds and then own Cambodia legally.
I wonder who suggest the bonds idea????????????
a bloodless invasion
I wonder who suggest the bonds idea????????????
a bloodless invasion
Re: Cambodia government to reduce foreign debt
Well, they overspend only 39%.... Quite cautious indeed....Public expenditure this year will amount to $6.4 billion, 18.75% of GDP, as indicated in the national budget for 2018. Government income is projected to reach $4.6 billion.
And I just wonder how you can overspend 1.8 billion while the debt will only rise 0.7 billion. Magic in the Ministry....According to the Ministry of Economy and Finance, Cambodia’s foreign debt stood at US$7.1 billion in 2017. In 2018, it will be $7.8 billion.
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Re: Cambodia government to reduce foreign debt
creative accounting Khmer style.................
Re: Cambodia government to reduce foreign debt
Its not creative accounting. Cambodians do not have a clue about economics, look a the way they run their business. Accounts? books? profit and loss? cash flow? business plan = borrow money from family, open shop , make money, tell family no make money, no pay loan
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Re: Cambodia government to reduce foreign debt
reducing aids from US, issuing own bonds, done.
next steps
1 - uncoupling riel from USD
2 - allowing trading in RMB
3 - allow easy listing of chinese companies on cambodia stock exchange
the world has realised that political coercion tied in with economic aids does not work anymore, cause there are 2 big brothers now
next steps
1 - uncoupling riel from USD
2 - allowing trading in RMB
3 - allow easy listing of chinese companies on cambodia stock exchange
the world has realised that political coercion tied in with economic aids does not work anymore, cause there are 2 big brothers now
Money is not the problem, the problem is no money
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Re: Cambodia government to reduce foreign debt
20 December 2019
Sixth-largest debtor globally
Research has found that Cambodia is one of the largest recipients of Chinese loans globally and among a group of poor countries that are quickly building up debts at relatively high interest rates or opaque loan conditions, in order to pay for Chinese-built projects.
The report released by the Kiel Institute in Germany in July estimates that Cambodia was the sixth most-indebted country as share of GDP among 50 recipients of Chinese government loans and private debt. Phnom Penh owes Beijing some 30 percent of Cambodia’s 2018 GDP, valued at $24.4 billion.
Cambodia and other Asian countries like Laos and Kyrgyz Republic, researchers said, were “highly exposed, small economies that are in geographic proximity to China.”
Sophal Ear, associate professor of diplomacy and world affairs at Occidental College in Los Angeles, who was not connected to the research, said, “It is too much money to borrow from one country. China has too much influence.
“You don't want to borrow from one country this much, it is like putting all your eggs in one basket or as the African proverb goes, if you have your hand in another man's pocket, you must walk where he walks,” he said.
‘We can continue to borrow’
Pen Thirong, a director general of the General Department of International Cooperation and Debt Management of the Ministry of Economy and Finance, played down such concerns.
He said Cambodian debt to China, based on official state loans and excluding private lending and investments, stood at only 14 percent of GDP. “I don’t know where they get the data from and how they can calculate whether to include the debt in the private sector,” he added.
In June, total foreign debt stood at $7.27 billion (or some 30 percent of GDP), about 49 percent of which is owed to China, according to the ministry, which said that Cambodia can safely increase its debts up to around $12.62 billion by 2023.
“The space [we have left] is big, so that we can continue to borrow and are able to borrow more than what we have,” Pen Thirong said. “We borrow in accordance with our laws and ability to borrow and pay back.”
Researchers did not respond to VOA Khmer’s request for comments on their findings.
According to Sophal Ear, Cambodian government estimates downplayed indebtedness, while “Beijing has a pattern of writing off debt the more it likes a regime, so when debts come due, they write off a chunk to make the debt sustainability reasonable.”
Taken from this long read article: https://www.voacambodia.com/a/ordinary- ... 12914.html
Sixth-largest debtor globally
Research has found that Cambodia is one of the largest recipients of Chinese loans globally and among a group of poor countries that are quickly building up debts at relatively high interest rates or opaque loan conditions, in order to pay for Chinese-built projects.
The report released by the Kiel Institute in Germany in July estimates that Cambodia was the sixth most-indebted country as share of GDP among 50 recipients of Chinese government loans and private debt. Phnom Penh owes Beijing some 30 percent of Cambodia’s 2018 GDP, valued at $24.4 billion.
Cambodia and other Asian countries like Laos and Kyrgyz Republic, researchers said, were “highly exposed, small economies that are in geographic proximity to China.”
Sophal Ear, associate professor of diplomacy and world affairs at Occidental College in Los Angeles, who was not connected to the research, said, “It is too much money to borrow from one country. China has too much influence.
“You don't want to borrow from one country this much, it is like putting all your eggs in one basket or as the African proverb goes, if you have your hand in another man's pocket, you must walk where he walks,” he said.
‘We can continue to borrow’
Pen Thirong, a director general of the General Department of International Cooperation and Debt Management of the Ministry of Economy and Finance, played down such concerns.
He said Cambodian debt to China, based on official state loans and excluding private lending and investments, stood at only 14 percent of GDP. “I don’t know where they get the data from and how they can calculate whether to include the debt in the private sector,” he added.
In June, total foreign debt stood at $7.27 billion (or some 30 percent of GDP), about 49 percent of which is owed to China, according to the ministry, which said that Cambodia can safely increase its debts up to around $12.62 billion by 2023.
“The space [we have left] is big, so that we can continue to borrow and are able to borrow more than what we have,” Pen Thirong said. “We borrow in accordance with our laws and ability to borrow and pay back.”
Researchers did not respond to VOA Khmer’s request for comments on their findings.
According to Sophal Ear, Cambodian government estimates downplayed indebtedness, while “Beijing has a pattern of writing off debt the more it likes a regime, so when debts come due, they write off a chunk to make the debt sustainability reasonable.”
Taken from this long read article: https://www.voacambodia.com/a/ordinary- ... 12914.html
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