Chapter 23 - External Debt

Summary

Definitions

23.1.1. Central Government Debt

The central government debt includes:

1. ⇒ In the strict sense:

2. • Domestic and foreign loans taken out by the government.

3. • Domestic and foreign loans guaranteed by the government.

4. • Treasury bonds (and other public securities).

5. • Treasury debt towards the Central Bank.

6. ⇒ In the broad sense, the following items are also included:

7. • Deposits of Treasury correspondents (private persons, companies and agencies authorized to deposit funds on Treasury accounts).

8. • Any budget arrears.

Given the current organization of the Ministry of Economy and Finance in Cambodia, government debt management is shared among three agencies:

1. • Treasury Directorate: for the domestic debt, except for domestic loans in foreign currency that are managed by the Directorate for Investments and Cooperation (DIC).

2. • Debt Management Unit of the DIC: for the foreign debt, as well as for domestic loans in foreign currency.

3. • National Bank of Cambodia (NBC): for the balance of payment support loans granted by the International Monetary Fund.

23.1.2. Foreign Debt

The foreign debt of a country is the total of long-term debts owed by residents of this country to non-residents. This definition and the following ones are provided by the World Bank. They are of high importance for at least two reasons:

1. • Debt data make it possible to measure the country's debt-servicing capacity and are necessary to draw up the balance of payments.

2. • Long-term debt means a loan or an obligation with a maturity of more than one year from the date it was issued.

The length to be considered is that which separates the date of loan agreement signature (loan commitment date) from the last payment due date.

(It is noteworthy that debts with an initial maturity of less than 2 years rather than 1 year are considered as short-term debts by certain countries. However, the World Bank definition is the one we will use, as it serves as the basis for the compilation of international statistics.)