Cambodia election threatens international financial support: Moody’s
The Financial Times | 6 August 2018
The latest Cambodian election, which has already been slammed by governments and democracy advocates around the world, has raised the risk that sources of international financing and aid could withdraw their support for the country, Moody’s has warned.
Cambodia’s July 29 election saw the ruling Cambodian People’s party under strongman prime minister Hun Sen claim victory in all 125 seats up for grabs.
The election came after a prolonged crackdown on opposition groups, media and political dissent, including the banning last year of the main opposition Cambodian National Rescue party. The election outcome increased risks to continued foreign financial support with a number of Cambodia's major donors, including Australia, Canada, US and the EU voicing concerns about the credibility of the polls, Moody’s analysts Amelia Tan and Matthew Circosta said in a research note on Monday.
If those international donors withdrew aid assistance or imposed economic sanctions, that “would hinder financing for the [Cambodian] government and balance of payments and would weigh on real [gross domestic product] growth”, the analysts said, adding that such moves would have “significant credit-negative effects” on Cambodian sovereign debt.
Cash from the US, EU members and institutions and Australia accounted for about 43 per cent of Cambodia’s net official development assistance funding or about around 8 per cent of total government revenue in 2016, the rating agency’s analysts noted.
“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 per cent of 2017 GDP),” the analysts said, adding that “strong growth in garments and footwear exports, which accounted for about 73 per cent of all goods exports and 36 per cent of GDP in 2016, is largely underpinned by Cambodia’s preferential tariff access with the US and EU”.