China has approved no new loans to Cambodia in 2024, marking a significant shift for the largest creditor, which holds over one-third of the nation’s debt. This change could impact critical infrastructure projects. Despite this, Cambodian officials remain optimistic regarding future projects and investments, with discussions underway for new agreements.

In a notable shift, China, Cambodia’s primary creditor, approved no new loans to Cambodia in 2024, according to the latest data from the Cambodian finance ministry. This trend could significantly impact ongoing infrastructure projects within the Southeast Asian nation, where China currently has about $4 billion in outstanding loans, constituting more than a third of Cambodia’s total debt, equivalent to roughly one-tenth of the nation’s GDP.

The absence of new loan agreements in 2024 is striking, particularly when compared to prior years, with new credit deals amounting to $302 million in 2023 and $567 million in 2022. The loans primarily funded essential infrastructure developments, including roads, airports, and power transmission lines.

As a country classified by the United Nations as Least Developed, Cambodia is notably dependent on foreign financing, as highlighted by the International Monetary Fund in its January report. In response, China’s foreign ministry reaffirmed its commitment to supporting Cambodia’s development, stating that it would continue to assist in the country’s economic and social growth as much as possible.

Despite the downturn in loan approvals, Cambodian finance ministry spokesperson Meas Soksensan expressed that the government remains unperturbed by the decline, attributing loan agreements to the outcomes of feasibility studies. He indicated that new projects are under discussion and anticipated to be signed shortly.

Additionally, Cambodia has initiated discussions regarding a new canal project with an estimated cost of $1.7 billion. This venture could mark the country’s costliest infrastructure initiative; however, no financial contributions from Beijing have yet been confirmed. Although Chinese disbursements for existing loans persisted last year, they have been made at a slower pace, with Cambodia receiving approximately $241 million, a decrease from $366 million in 2023 and $301 million in 2022.

In summary, the cessation of new loans from China to Cambodia in 2024 signifies a concerning development for the latter’s infrastructure projects and overall economic stability. With China currently comprising a substantial portion of Cambodia’s debt, the continued reliance on foreign financing remains critical. Despite reassurances from both governments, the future of key projects and investment remains uncertain, underscoring the importance of feasibility assessments and potential new agreements in the near future.

Original Source: ddnews.gov.in

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