The funds mobilized from issuing government securities accounted for 65 percent of the ceiling permitted by the law (KHR 440 billion), read the report, issued on Dec. 10.

The funds raised from the bond sales are allocated to crucial public investment projects aimed at bolstering infrastructure and other essential sectors and promoting economic growth and productivity.

Issued initiatively in 2022, the government bond is a new financial instrument, enabling the Royal Government of Cambodia to augment domestic revenue, thereby reducing the need to borrow from foreign sources for infrastructure development.

The issuance of government bonds is also to finance projects that can provide direct revenue to the government and ensure investment efficiency and sustainability of public debt management.

Government bonds are currently auctioned through the National Bank of Cambodia Auction Platform (NBCP) with investors from institutional investors such as banks and insurance companies.

Investors in government bonds enjoy a 50-percent deduction of withholding tax on the interest earned from holding and trading the bonds, and tax exemption on capital gains from purchasing and trading the bonds for three years, according to the Ministry of Economy and Finance. AKP

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Through six auctions held in the first six months, the government garnered approximately $63 million or 255.3 billion riels. Investors snapped up one-year, two-year, and three-year securities with varying interest rates.

One-year securities totaled 32 billion riels with a 3.50% coupon rate and 3.75-3.95% yield, two-year securities reached 40 billion riels with a 4.00% coupon rate and 4.70-4.75% yield, while three-year securities amounted to 183.3 billion riels with a 4.50% coupon rate and 4.00-5.25% yield.

The government has set an ambitious target of issuing 440 billion riels worth of securities throughout 2024. To broaden investor participation, the NBC is facilitating entry for non-bank financial institutions into both the primary and secondary securities markets.

The Ministry of Economy and Finance emphasized the crucial role of government securities in financing public expenditure. Beyond raising capital, these instruments contribute to strengthening the government’s financial position, establishing a sustainable financial framework, and deepening the domestic financial market.

As of June 2024, approximately $115 million (457.3 billion riels) worth of securities remained outstanding. Coupon payments totaled $1.15 million (4.6 billion riels) and principal repayments reached $6.98 million (28 billion riels) during the first half of the year.

The successful securities issuance reflects the growing confidence in Cambodia’s economy and its commitment to sustainable development.

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The government issues its bonds in the first primary market through the issuance agent named the National Bank of Cambodia Auction Platform (NBCP).

“In 2023, the RGC has issued government securities in a total amount of KHR 238 billion, equivalent to US$58.26 million accounting for 29 percent of the ceiling permitted by Law (KHR 813 billion),” read a report of Cambodia Public Debt Statistical Bulletin released by the Ministry of Economy and Finance last week.

The RGC raises funds from domestic source as direct fund for using into public investment, according to the Ministry of Economy and Finance.

The government bond is not only to complete the annual expenditure but also to contribute to promoting the securities sector in the country, it said

This year is the third year of government securities issuance.

In 2024, the RGC sets to issue government bonds totaling KHR 440 billion, equating to about US$108 million, which is used to provide direct revenue and ensure investment efficiency and sustainability of debt management.

Ministry of Economy and Finance started issuing government bonds in September 2022 as a new financial instrument, enabling the government to augment domestic revenue, thereby reducing the need to borrow from foreign sources for infrastructure development.

H.E. Dr. Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance, has previously said that government bonds would enable the state to raise funds for economic development.

“Government bonds are expected to be popular on the Cambodia Securities Exchange, and provide benchmark data for corporate securities trading and financial analysis, as in countries with a growing securities sector,” he said.

Investors in government bonds will enjoy a 50 percent deduction of withholding tax on the interest earned from holding and trading the bonds, and tax exemption on capital gains from purchasing and trading the bonds for three years.

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The funds raised from the government bonds will be used for financing infrastructure expenses and paying principal and interest on the bonds issued in the previous year, according to the Ministry of Economy and Finance’s draft national budget law 2024.

This is the second year of government securities issuance. In 2023, the Royal Government plans to raise $200 million from bonds, which can bring it direct revenues, and ensure investment efficiency and sustainability of debt management and the national budget.

The Royal Government issued bonds worth $300 million for the first time in 2022.

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The government issues its bonds in the first primary market through the National Bank of Cambodia Auction Platform (NBCP).

“In the first semester of 2023, the bidding for government bonds on the NBCP was made six times with a total capital of 112 billion Riel (approximately $27 million),” the central bank report showed.

In 2023, the government plans to raise $200 million from bonds, which can bring it direct revenues, and ensure investment efficiency and sustainability of debt management and the national budget, according to the Ministry of Economy and Finance.

The government bond is not only to complete the annual expenditure but also to contribute to promoting the securities sector in the country. This is the second year of government securities issuance.

Investors in government bonds will enjoy a 50 percent deduction of withholding tax on the interest earned from holding and trading the bonds, and tax exemption on capital gains from purchasing and trading the bonds for three years.

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