Govt Debt-to-GDP ratio to surpass 27 percent in current year

Govt Debt-to-GDP ratio to surpass 27 percent in current year

The government has a total public debt stock of $12.67 billion by the end of the second quarter of 2025, the MEF says.

The Government Debt-to-Gross Domestic Product (GDP) ratio will be hitting a five-year all-time high in the current year at 27.3 percent, according to a forecast published along with the report titled ‘Beyond Collection: Reforming Tax Systems for Inclusive Growth in ASEAN+3’ released by Asean+3 Macroeconomic Research Office (AMRO), on Monday.

Except for Brunei (0) and Singapore (26.2 percent), all countries in the region are forecasted to have a higher ratio than Cambodia.

The Government Debt-to-GDP ratio for Cambodia in the year 2020 was 20.8 percent and rose to 25 percent the next year. In 2021, it stood at 25.6 percent and would remain stable – 25 percent in 2022, 26.6 percent in 2023 and 26.1 percent in 2024 – in the next three years.

The report said that the external debt of Cambodia is primarily concessional, reducing immediate repayment pressures. “Cambodia had experienced a steady growth in its tax-to-GDP ratio until 2019, followed by a decline. The country also recorded notable growth in tax revenue across most tax categories, driven by strong revenue-enhancing measures in the past decade.”

The report noted that the drivers of declining revenue performance in Asean+3 economies are both cyclical and structural. “These forces interact in complex ways and are often highly country-specific, shaped by differences in institutional capacity, tax system design, and economic structure.”

The Government Debt-to-GDP ratio compares a country’s total government debt to its GDP, which is the total value of goods and services produced in the country over a year.

The ratio, expressed as a percentage, indicates a nation’s fiscal health and its ability to manage its debt, with a lower ratio generally signalling a stronger economy and greater debt sustainability.

Since the government debt is directly linked to the national budget, total revenue and expenditure, AMRO has emphasised the highlights of Cambodia’s Budget 2025.

“The key objectives of the budget included achieving resilient, flexible, inclusive, and sustainable economic growth, supporting the sustainability of state institutions’ operations through efficient governance and reforms alongside prioritising people’s living standards and infrastructure development.

“Meanwhile, the budget priorities focused on promoting SMEs, improving the business environment, diversifying into new sectors and enhancing competitiveness, expanding financing mechanisms, promoting institutional reforms to improve fiscal efficiency, ensuring inclusive social welfare by strengthening education and health system with the improvement of public service, developing hard and soft infrastructure, strengthening global cooperation and autonomy, increasing agricultural output for food and income security and driving the digital and green revolution through investments.”

According to the Ministry of Economy and Finance (MEF), the Cambodian government has a total public debt stock of $12.67 billion by the end of the second quarter of 2025.

The ministry observed, as it released the data, that the country’s public debt remains sustainable and low risk of debt distress.

“Up to 99 percent or $12.54 billion was public external debt, and one percent or $128 million was public domestic debt.”

The composition of the public debt stock comprised 46 percent in US dollar (USD), 18 percent in Special Drawing Rights (SDR), 11 percent in Japanese yen (JPY), 10 percent in Chinese yuan (CNY), 8 percent in euro (EUR), and 7 percent in local and other currencies. All the loans are highly concessional with an average grant element of around 36 percent, the ministry said.

khmertimeskh