Hopes Fade for Cambodia Winning US Debt Relief, Analysts Say
Cambodian Prime Minister Hun Sen's recent plea for relief from decades-old debt to the United States appears to have little chance of success, regional analysts say.
Cambodians, they say, would be better off seeking to restructure the debt, easing the repayment burden. But Hun Sen is sticking with his mantra and has repeatedly noted the debt issue in public since Donald Trump was elected U.S. president in November.
Cambodia racked up $278 million in U.S. loans under the Lon Nol government in the 1970s, whose efforts to defeat the Khmer Rouge were undermined by gross corruption within his own administration. U.S. records say the loans were for food and other agricultural goods.
But the amount has gone up sharply over the years due to interest.
Cambodia now owes the U.S. about $505 million, all in arrears with a three percent interest rate, which is below market rates.
“We believe resolving the issue would be in both countries’ interest,” said Jay Raman, public affairs officer with the U.S. embassy in Phnom Penh. “The United States has encouraged Cambodia to work with us on finding a solution to the debt since shortly after the 1995 Paris Club negotiations.”
Cambodia does not suffer from the same poverty levels as it once did. It was recently promoted to the ranks of the lower-middle income countries and despite this, the U.S. allocates an average of about $70 million a year in direct foreign aid. It has committed $78 million for 2017.
Sambo Manara, a history lecturer with Pannasastra University said it remains unclear whether the U.S. money was debt or humanitarian aid because it arrived during a difficult period in Cambodia's history, during a civil war, and as the Khmer Rouge militants were threatening the government.