Cambodia

• Total external debt: $4.2 billion
• Total external debt payments: Cambodia gave $42 million to the rich world in debt payments in 2008.
• Population: 14.6 million
• Percentage of adults who can read and write: 73.6%
• Average life expectancy: 58 years
• HIV prevalence: 1.6%
• Total health spending: 2.4% of GDP (2003)
• Total spending on debt service payments: 0.46% of GDP
• GNI: $9.2 billion

(Statistics from World Bank, 2008, and UN Human Development Report, 2005)

Background
15 April is the anniversary of the death of Pol Pot, Cambodia’s brutal dictator, in 1998. Cambodia is in South East Asia, and borders Thailand, Vietnam and Laos, and the Gulf of Thailand. The country is mostly low, flat plains, with some mountains in the South West and North of the country. Cambodia has many natural resources including, oil, gas, gemstones and iron ore.

Political History
Most Cambodians consider themselves to be Khmers, who are descendants of the Angkor Empire that extended over much of South East Asia from the 10th – 13th centuries. Cambodia was placed under French protection in 1863 and gained its independence in 1953. In April 1975, Communist Khmer Rouge forces captured Phnom Penh and evacuated all cities and towns. At least 1.5 million Cambodians died from execution, forced hardships, or starvation during the Khmer Rouge regime under Pol Pot. In 1978 a Vietnamese invasion drove the Khmer Rouge into the countryside, and began a 10-year Vietnamese occupation. The 1991 Paris Peace Accords mandated democratic elections and a ceasefire, which was not respected by the Khmer Rouge. UN-sponsored elections in 1993 helped restore the country to some sort of peace under a coalition government. Fighting began again in 1997 and ended this governments rule but a second round of national elections in 1998 led to the formation of another coalition government and renewed political stability. The remaining elements of the Khmer Rouge surrendered in early 1999.

Where has the debt come from?
Roughly two-thirds of Cambodia’s debt is owed to the United States and Russia. Loans from the USA date from the regime of General Lon Nol in the early 1970s, and were meant to be used for agricultural goods. The United States was the main financial and military supporter of Lon Nol's regime until it was toppled by the genocidal Khmer Rouge movement in April 1975. The Khmer Rouge ceased servicing this debt, and arrears and late interest accumulated over the next three decades. Cambodia has been pressing the US to cancel this debt, but so far the US has continued to demand repayment on terms agreed at the Paris Club in 1995.

Debt cancellation status
Cambodia is officially classed as a low-income country by the World Bank. It is considered to have a 'sustainable' debt: this is measured by the size of external debt in comparison to the value of exports, without taking into account domestic debt or what Cambodia needs to spend on tackling poverty. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. It has, however, received debt cancellation from the IMF. It is also theoretically eligible for additional debt assistance from the UK, but has not met the conditions required to qualify.

The New Economics Foundation calculates that Cambodia requires 100% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day

Further information and sources:
- World Bank country info and Debt Sustainability Analysis, US State Department

Last updated: April 2008