Stimulating local financing
CAMBODIAN authorities are preparing government secur it ies that would give the countr y a new debt instrument and raise loca l financing, an officia l from the finance ministr y 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 countr y this year.
Speaking at the seminar on Government Securities Development in Cambodia last Friday, Ministr y of Economy and Finance, under secretar y 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 necessar y for f uture development, especia lly if t he government wants to carr y out t he rectangular strateg y phase 4 – the government strateg y for t he 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 strateg y phase 4, because the demand for financing is increasing ver y 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 ministr y, 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 Cam- bodia’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 countr y 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.