Cambodia: Borrowing 3 Billion Dollars to Finance 2026 Expenses, Debt Remains Manageable

The Royal Government of Cambodia has announced its intention to borrow more than 3 billion US dollars during the year 2026 to finance its key public investment projects, aiming to support sustainable economic growth and strengthen national productivity.

Minister Delegate for Economy and Finance, Aun Pornmoniroth

Despite this additional level of debt, financial authorities reassure that public debt sustainability is deemed "manageable" and "low risk" to date. This decision comes in a context where the Cambodian economy shows solid growth prospects, with a Gross Domestic Product (GDP) expected to rise by +6.2% in 2026 according to the Asian Development Bank.

Unprecedented but Strategically Targeted Borrowing

According to the 2026 financial management bill published by the Ministry of Economy and Finance, Cambodia plans to borrow the equivalent of 2.25 billion Special Drawing Rights (SDRs), or about 3.1 billion dollars. These funds will be mainly invested in priority infrastructure and development projects aiming to boost the country's productive capacities.

The borrowing framework focuses on concessional loans, with an average grant element of 36%, thus limiting the actual debt cost for the public treasury.

The country pursues a prudent financing policy, favoring bilateral and multilateral partners, including the Asian Development Bank, the World Bank, as well as countries such as China, Japan, France, and South Korea. At the end of 2025, Cambodia's external public debt amounted to approximately 12.54 billion dollars, representing 18.4% of GDP, a ratio well below the internationally recognized threshold of 40% for classifying debt as high risk.

Public Debt Deemed "Absorbable" by Experts

In a recent interview, the Minister Delegate for Economy and Finance, Aun Pornmoniroth, confirmed that the government is committed to rigorous debt management based on a prudent strategy and concessional borrowing. The goal is to maintain debt below critical thresholds that could threaten economic stability.

Economist Hong Vanak from the Royal Academy of Cambodia highlights that public debt is considered manageable as long as it remains around 30% of GDP. For comparison, some countries facing debt levels exceeding 50% of GDP experience severe public finance management difficulties. Cambodia is therefore comfortably positioned, with a historically stable debt-to-GDP ratio oscillating around 25%, compared to a record peak of 39.8% in 2003.

Robust Economic Prospects Support Debt Management

The Cambodian macroeconomic context remains favorable for this measured debt strategy. According to recent estimates from the Asian Development Bank, Cambodia's real GDP is expected to grow by 6.1% in 2025 and then 6.2% in 2026, driven by sustained industrial momentum, notably in the textile, electronics, and agri-food sectors.

Public investment, coupled with transparent budget management, aims to further catalyze foreign direct investment and improve infrastructure, contributing to sustained economic growth.

However, this trajectory will need to contend with certain challenges, including moderate inflation expected at 3.7% in 2025 before slowing down the following year, as well as uncertainties linked to global trade exchanges that could slow external demand. Economic diversification and strengthening local capacities in manufacturing remain core government priorities.

A Growing 2026 Budget Reflecting Economic Ambition

The Cambodian government has also unveiled a national budget proposal for 2026 of approximately 32.7 trillion riels, equivalent to about 8.1 billion dollars, representing a significant increase compared to previous years. Total expenditures are estimated at 40.9 trillion riels (about 10.1 billion dollars), an increase of nearly 8%. In this scenario, public borrowing covers a significant portion of the anticipated budget deficit, which fits within a long-term investment vision and strategic planning to support growth.

Maintaining a share of current expenditures at around 12.6% of the authorized borrowing ceiling illustrates the commitment to strict financial discipline, even when faced with the need to increase financing capacity for large-scale projects, notably in road, energy, and social infrastructure.

Balancing Risk Control and Development Momentum

Cambodia manages to combine a measured debt policy with sustained growth ambitions, supported by a clear financial strategy and transparent public fund management. The use of concessional loans and focusing borrowing on productive projects help sustain the budgetary situation while allowing the country to pursue its economic development.

This balanced approach is crucial in a global context marked by economic uncertainty and market fluctuations. As long as public debt remains at a sustainable level, close to 25% of GDP, Cambodia retains sufficient leeway to finance its national priorities without compromising financial stability.

Thus, 2026 should be a pivotal year, marked by a careful balance between ambitious investment and rigorous management, to support Cambodia's positioning as a fast-growing emerging economy in the Southeast Asia region.