1. CAMBODIA’S DEBT MANAGEMENT DARITH PHAT AND LIKANAN LUCH SENIOR RESEARCHER (PIC) DEVELOPMENT ECONOMIST JUNE 9 TH, 2016 WORLD BANK WASHINGTON, D.C. GNPBO WORLD BANK

2. CONTENTS Background Management and Monitoring Debt Challenges Summary

3. BACKGROUND Cambodia has achieved robust economic growth averaging 7% in the last 5 years. Debt ratio to GDP dropped from around 70% in 1994 to around 19% in 1995 and well around 20% between 1996 and 2015. Low risk as external debt to GDP ratio is still low Debt index by ADB (4 between 2007 and 2010; 4.5 in 2011; 5 between 2012-2014), WB and IMF (3.5 between 2005 and 2011; 4 between 2012 and 2014)

4. BACKGROUND (CONT.) Policy 4 principles before getting loans prior to 2012: Proportion of credit to the scale of economy and budget Credit with low interest rate and highly concessional For priority sectors which have high growth and productivity Use: transparency, accountability, efficiency, and effectiveness

5. BACKGROUND (CONT.) Deb management strategies 2011-2018 was enacted in Feb. 2012 Increase the threshold from 400 SDR to 700 SDR And stressed out 8 action plans 1.Continue to use the loans in infrastructure development projects 2.Strengthen the effectiveness of monitoring and implementation mechanisms of public investment 3.Continue to increase the threshold of the loans base on the real situation of the economic growth 4.Continue reform policies and programs to maintain the growth at 6-7% and national budget 5.Continue debt management through decentralization 6.Continue to raise fund to pay debts and other financial sources to fund public projects 7.Strengthen monitoring credit risk and the management of public debts 8.Strengthen public institution and individual in public debt management

6. BACKGROUND (CONT.) Perspectives Short and long term: enhance the nationwide debt management--private and public sectors Gov’t will not guarantee the private debts in the short and long run. Objective: to brief the conference on the current Cambodian debt management

7. MANAGEMENT AND MONITORING DEBTS INFLATION; 1995-2015 Source: WB

8. MANAGEMENT AND MONITORING DEBTS DEBT TO GDP RATIO Source: MEF

9. MANAGEMENT AND MONITORING DEBTS DEBT TO EXPORT Source: MEF

10. MANAGEMENT AND MONITORING DEBTS DEBT TO NATIONAL BUDGE Source: MEF

11. MANAGEMENT AND MONITORING DEBTS CONCESSIONAL LOAN AND IMPLEMENTATION Source: MEF

12. MANAGEMENT AND MONITORING DEBTS CURRENT EXTERNAL DEBT AND SERVICES TO DEBTS; 2011-2014 Source: MEF

13. MANAGEMENT AND MONITORING DEBTS TERMS OF LOANS Annual interest rate: 0-2% Due period: 20-40 years Concession period: 7-15 years Share of grants up to 35%

14. CHALLENGES Dry up grants and concessional loans Potential fall in the current account surplus for direct investment Ability in public investment management Risks from the [partner state] guarantee on investment projects (PPP) and banking and finance (e.g. MFI and Banks as a result of low interest rate in OECD)

15. SUMMARY Loans based on 4 principles Debts to GDP, export, and national budget is still bellow Low risk Loans with low interest, long due period and with grants up to 35%

16. Thank for the Attention!