Financial analysts at a leading credit rating agency have reported that last month’s election has increased the risk of economic decline in Cambodia.
The analysis by Moody’s, included in a report by the Financial Times on Monday, suggests that the allegations of fraud surrounding the July 29 general election, which saw Prime Minister Hun Sen’s Cambodian People’s Party claim all 125 seats in parliament, had increased the risk of a drawback in international financing.
The Moody’s analysts were quoted as saying that if international donors withdrew aid assistance or imposed economic sanctions, they “would hinder financing for the [Cambodian] government and balance of payments and would weigh on real [gross domestic product] growth.”
They added that such moves could have a significant negative impact on Cambodia’s sovereign debt.
“Aid and foreign direct investment inflows have helped finance the large current-account deficit ... and have bolstered foreign exchange reserves, which were at a record high of $12.25 billion in June 2018 (around 55 percent of 2017 GDP),” the analysts told the Financial Times.
“Strong growth in garments and footwear exports, which accounted for about 73 percent of all goods exports and 36 percent of GDP in 2016, is largely underpinned by Cambodia’s preferential tariff access with the US and EU,” they added.
But government spokesman Phay Siphan dismissed the analysis, saying Cambodians had fairly exercised their democratic rights.
“The election is the decision of Cambodians. This decision has been made for the interest of Cambodians, who have sovereignty to ensure their destiny. It’s not an election to serve the European Union, the United States, Vietnam, or China,” he said.
“We are ready to [serve] for everything in the name of the government that was borne by the people. We will not make our nation to be servants of others. We have been well prepared,” he said.
However, about three-quarters of Cambodia’s export market, U.S., Australian and E.U. Institutions account for about 43 percent of the net official development assistance to Cambodia, amounting to about 8 percent of total