Govt to issue 2.1 trillion riels in bonds next year

Govt to issue 2.1 trillion riels in bonds next year

The move to issue bonds reflects a prudent and forward-looking fiscal strategy, designed to balance immediate financing needs with long-term development objectives.

The Royal Government of Cambodia plans to issue government bonds worth 2.1 trillion riels (approximately $524 million) in 2026 to finance investment spending and maintain national budget stability, according to the Draft Law on Finance for Management 2026 released by the Ministry of Economy and Finance (MEF), on Monday.

Deputy Prime Minister and Minister of Economy and Finance, Aun Pornmoniroth, also made the announcement while presiding over a workshop on understanding the development of the macroeconomic and public financial policy framework for the preparation of the Draft Law on Finance for Management 2026, held at the National Assembly Palace on the same day.

Pornmoniroth outlined the government’s fiscal strategy, highlighting both domestic and international borrowing plans designed to sustain Cambodia’s economic momentum amid a shifting global environment.

“The government plans to borrow domestically by issuing government bonds of 2.1 trillion riels, equivalent to approximately $524 million, to finance investment spending and maintain the national budget balance,” he said.

“At the same time, the Royal Government has also set the size of borrowing from international financial institutions and development partners at 2.25 billion Special Drawing Rights (SDR), equivalent to approximately $3.1 billion — an increase of 225 million SDR from 2025,” he added.

He explained that the increase in borrowing is based on several key considerations, including Cambodia’s growing public investment needs to stimulate economic growth, the implementation of priority programmes and projects in physical infrastructure and productivity enhancement, and the need to secure loans under concessional or preferential terms.

Pornmoniroth noted that Cambodia’s current and medium-term public debt situation remains “sustainable” and “low risk”, with the government committed to maintaining fiscal stability while enhancing the efficiency of project management and implementation.

The Draft Law on Finance for Management 2026 reflects the government’s continued commitment to maintaining macroeconomic stability, supporting sustainable growth, and strengthening fiscal resilience through prudent debt management and strategic investment in productive sectors.

Economist Darin Duch told Khmer Times that the government’s plan to issue bonds reflects a prudent and forward-looking fiscal strategy, designed to balance immediate financing needs with long-term development objectives.

He explained that the proposed issuance of 2.1 trillion riels in government bonds for 2026 could play a crucial role in developing Cambodia’s domestic capital market, providing fresh avenues for investment by both banks and private investors.

“By tapping into the bond market, the government can create new financial instruments that attract local and regional investors, while also deepening the country’s financial infrastructure,” Darin said.

He stressed that the proceeds should be directed towards priority sectors such as infrastructure, healthcare, education, and workforce development, which in turn could enhance the productivity and competitiveness of Cambodia’s private sector.

Duch also highlighted that Cambodia’s public debt remains at a manageable level and is well below international risk thresholds.

“A significant portion of the borrowing is concessional, with low interest rates and long-term maturities, which reduces fiscal pressure and allows the government to focus on long-term growth initiatives,” he said. He warned that borrowing should be strategically allocated to projects that generate sustainable economic returns, rather than short-term consumption, to safeguard fiscal health.

Emphasising the importance of fiscal discipline, Darin said: “For Cambodia, effective investment spending is key. Strengthening revenue collection and ensuring responsible management of public expenditures will enable the country to maintain macroeconomic stability while sustaining robust economic growth.”

He noted that the bond issuance is part of the government’s broader strategy to diversify financing sources, promote domestic savings, and strengthen the capital market, supporting inclusive and sustainable development across the country.

Seun Sam, a policy analyst at the Royal Academy of Cambodia, told Khmer Times that the government’s push to harness domestic financial resources marks an important move towards long-term economic stability.

He highlighted that the issuance of government bonds is a common practice internationally, providing governments with the means to channel local funds into infrastructure and other public investment initiatives.

“Cambodia has experience with government bonds. Across the globe, from Europe to Asia, countries regularly use bonds to meet their financing requirements,” Sam explained, stressing that such instruments are vital for raising capital efficiently while limiting dependence on foreign borrowing.

In the second quarter of 2025, the Royal Government of Cambodia issued government securities (bonds) amounting to 46 billion riels, equivalent to approximately $11.47 million, according to the Cambodian Public Debt Statistical Bulletin released by the MEF.

Overall, in the first half of 2025, the RGC issued a total of 160 billion riels ($39.9 million) in government securities, accounting for 46 percent of the annual ceiling of 350 billion riels permitted by law. These issuances aim to support public investment and stimulate economic productivity through the development of key infrastructure and priority projects.

According to the Public Debt Management Strategy 2024-2028, the issuance of government bonds is projected to range between 500 billion and 1 trillion riels annually. Under specific circumstances, this amount may increase to 1.2 trillion riels per year; however, the strategy sets a strict limit to ensure that total issuance over a five-year period does not exceed 4 trillion riels ($1 billion). This ceiling is intended to maintain fiscal discipline, safeguard debt sustainability.

By expanding the use of domestic government securities, Cambodia is not only diversifying its financing sources but also strengthening the domestic capital market. This approach enhances investor confidence, reduces reliance on external borrowing, and supports the government’s long-term objective of fostering sustainable economic growth.

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