Stimulating local financing soon
Stimulating local financing soon
Cambodian authorities are preparing government securities that would give the country a new debt instrument and raise local financing, an official from the finance ministry said last week.
The government has already established a corporate bond, and micro-finance institution Hattha Kaksekar Limited (HKL) is about to become the first bond issuer in the country this year.
Speaking at the seminar on Government Securities Development in Cambodia last Friday, Ministry of Economy and Finance, under secretary of state Ros Seilva, said the debt instrument has been discussed since 2000, but until now the government is still able to get concessional loans from other countries.
However, Seilva said it will be necessary for future development, especially if the government wants to carry out the rectangular strategy phase 4 – the government strategy for the next five years.
“We have inserted the regulation [on government securities] in the strategy on governing public debt 2019-2023 to open a way for a clear direction to get local borrowing."
“I think we will activate this mechanism [government securities] to collect resources [locally] in order to implement the rectangular strategy phase 4, because the demand for financing is increasing very fast,” he said.
Since there were no government securities, Cambodia has been relying entirely on foreign loans so far.
According to a draft of this year’s national budget prepared by the ministry, Cambodia’s national debt was $6.82 billion in September this year – nearly half of which is borrowed from China.
The government unveiled plans to borrow $1.4 billion through Special Drawing Rights (SDR) to meet next year’s budget plan.
Acknowledging that Cambodia’s public debt-to-GDP ratio remains at low risk, the Supreme National Economic Council (SNEC) senior advisor Mey Kalyan said it is a challenge that the country relies so much on foreign money.
“We should find a way to [stimulate] local borrowing, and I think issuing government bonds in Khmer riel [is] a good option,” he said.
