Moody's keeps 'stable' rating for Cambodia

Moody's keeps 'stable' rating for Cambodia

Real GDP growth likely at 7% in 2018-19

A garment shop is displayed along a street in Phnom Penh, Cambodia July 5, 2017. (Reuters photo)
A garment shop is displayed along a street in Phnom Penh, Cambodia July 5, 2017. (Reuters photo)

PHNOM PENH: Ratings agency Moody's on Friday kept Cambodia's credit rating at B2 with a stable outlook, saying its robust GDP growth prospects, macroeconomic stability and efforts to strengthen government revenue helped bolster its "continuing high-debt affordability".

Cambodia's economic growth should stay around 7% this year and in 2019, supported by solid consumption, foreign direct investment (FDI) inflows and exports, the ratings agency said, but warned that the country was vulnerable to negative shocks because of the high dollarisation of loans and deposits.

It added that political developments could hit foreign investment.

"Cambodia's high dollarisation of loans and deposits leaves the sovereign credit profile vulnerable to negative shocks, which could stem from a potential sharp appreciation of the US dollar and spikes in US and domestic interest rates in 2018 and 2019," the ratings agency said on Friday.

Moody's said strong revenue generation gives the government room to raise spending on infrastructure, education and wages and slightly widen fiscal deficits.

However, the agency warned that Cambodia's credit strengths were overshadowed by other risks such as low incomes and a contentious political environment.

"The narrow economic base and low incomes weigh on the shock absorption capacity of the economy. And, political developments have the potential to slow impetus for institutional reform and weigh on FDI inflows... in the lead-up to and after the 2018 general election."

Cambodia is preparing for a July general election that veteran Prime Minister Hun Sen is widely expected to win, with the main opposition party being banned and its leaders lumbered with legal cases that have blocked them from politics.

Some Western nations say the vote will not be free after last year's dissolution of the opposition Cambodia National Rescue Party (CNRP).

Rights groups have accused the government of intimidating its opponents. Earlier this year, the United States said it would curb military support and other aid programmes due to "recent setbacks" in the country's democracy.

Do you like the content of this article?

Workers race to keep oil from Rayong shores

RAYONG: Hundreds of workers set up oil barriers along beachfronts in this eastern province on Friday as authorities raced to limit the environmental damage from oil that leaked from an underwater pipeline earlier this week.

28 Jan 2022

Taxman to go easy on crypto traders

The Finance Ministry plans to ease tax rules for investments in digital assets, a senior official said on Friday, following a surge in crytocurrency trading.

28 Jan 2022

Hong Kong's best-known travel agency folds after 50 years

HONG KONG: One of Hong Kong's best-known tour operators has decided to wind up after 50 years of business and amid the worsening Omicron outbreak, with an industry leader expecting the travel sector's woes to continue for the rest of 2022 at least.

28 Jan 2022