How comes that there is a lack of clarity about Cambodia’s foreign debt?

While the debt crisis of some European countries is debated day by day, with figures of funds needed to fix the situation increasing over the last weeks and months, there was also some debate related to Cambodia’s obligations to pay back its international loans.

International loans related discussions, and negotiations related to Cambodian debts incurred by former governments from the USA – during the Lon Nol government – and from the Soviet Union – during the State of Cambodia era – had been in the press in the past from time to time.

Recently, higher debts to be paid back to China started to be widely discussed. But there was disagreement in public news reports about the amount of money owed by Cambodia.

On 26 October 2011, The Cambodia Daily had reported, referring to Mr. Cheam Yeap, the chairman of the National Assembly’s Commission on Economics, Finance, Banking and Auditing:

Cambodian debt to China now stands at $4 billion, 35 % of last year’s gross domestic product and more than half of the country’s total outstanding debt to foreign donors…

He added that Cambodia’s total amount of outstanding debt has reached $7 billion, a figure that includes $1.8 billion in debt to Russia [when both countries were socialist allies] and the USA [US$444 million, by now, with interest – contracted during the Lon Nol government] that was accumulated in the 1970s and 1980s.

Mr. Yeap said he was unaware of the terms and conditions on the debt to China, but analysts say that the terms on Chinese loans are some of the least affordable among all of Cambodia’s donors…

China also provides the least favorable terms on concessionary loans, offering an interest rate of 2% on most loans, five times higher than that of countries like South Korea and Japan, according to a recent study released this months by the NGO Forum.

On 3 November 2011, The Cambodian Daily reported a correction of some of the figures which had been reported one day before:

… Mr. Hun Sen announced that Cambodia’s national debt stands at only $2 billion, contradicting information provided last week by Mr. Yeap, the chairman of that National Assembly’s Commission on Finance, who had pegged the debt level at $7 billion, including $4 billion owed to China alone…

“Some have put forth that Cambodia is in debt to China for about $9 billion, but I would like to make it clear here that up until now, grants, non-interest loans and low-[rate] concessional loans altogether have reached $2 billion,” the Prime Minister said.

“If the lender is not scared, we should not be scared. It should be lenders like China, Japan, and Korea that must be scared that we won’t have enough to pay them back.”

Mr. Yeap said he did not understand exactly what the prime minister meant regarding national debt but said the Prime Minister must be a right “because he has the documents about that.”

“Normally, [Mr. Hun Sen] manages all this, so I’m not clear on what he means.”

On the following day, 4 November 2011, The Cambodian Daily wrote that “Government Officials [are] At Odds Over Debt Levels”

On Wednesday, Prime Minister Hun Sen said Cambodia’s debt stands at just $2 billion, contradicting information provided by CPP lawmaker Cheam Yeap last week that the number is actually $7 billion, or 63% of last year’s gross domestic product.

Mr. Yeap, chairman of the National Assembly’s Commission on Finance, retracted that figure yesterday, claiming he no longer knew what it was.

“We don’t know how much we owe in total,” Mr. Yeap said, adding that he was uncertain about whether Mr. Hun Sen’s claim was accurate or not, since he did not follow the speech.

The Cambodia Daily adds that the “mystery behind Cambodia’s debt levels comes as governments worldwide are paying close attention to their budget deficits…”

Last week, the National Bank of Cambodia said Cambodia’s debt at the end of 2010 stood at $5.4 billion, of which $2.5 billion was loans from other governments. The Ministry of Finance in March said the total for the same period stood at just $3.1 billion.

“I do not know about this issue, so I dare not to answer,” said Ut Chhorn, an Undersecretary of State at the Ministry of Finance, referring all questions to Finance Minister Keat Chhon.

Secretary of State at the Ministry Ouk Rabun also declined to comment.

Clarifications are necessary. That not everybody has all figures present all the time is not surprising. What is surprising, however, is that the persons involved, or the newspapers reporting, did not point to the place where all information about such loans is stored and available – or is it not? The Constitution of the Kingdom of Cambodia says in Article 90:

The National Assembly is an organ which has legislative power, and performs its duties as provided for in the constitution and laws.

The National Assembly shall approve the national budget, state planning, loans, financial contracts, and the creation, modification and annulment of tax.

The National Assembly shall approve administration accounts.

Would it not be easiest just to pick up the figures from the administration of the National Assembly? The approval of all loans and financial contracts that affect the national budget and state planning are recorded at the National Assembly. That is what the Constitution says. If a list with all approved loans and their conditions would be accessible to the public, there would be no public concern and controversy, confusion, and mystery about the level of international debt.

An Internet web site of the National Assembly or of the Ministry of Finance, with a list of all loans approved by the National Assembly, according to the Constitution of the Kingdom of Cambodia, would clarify the situation about necessary future paybacks.

At the same time some public clarification might be achieved related to the government’s Social Development Fund – an administrative account? – into which huge payments by foreign oil and other natural resources exploring companies were made, and often with widely disparaging reports emanating from different government institutions about the amounts and their designation.

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1 Comment

  1. Sabbah says:

    Cambodia’s in big trouble because of the unclear financial & budget plan. Especially, when foreign load was partially ( maybe largely) was consumed for personal purpose, not for the use of building a better Cambodia.

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