Moody’s Investors Service said Tuesday that Cambodia’s risk of external debt vulnerability was still contained.
In its latest assessment of the impact of Covid-19 on Asian and the Pacific, the U.S. rating agency said “liquidity pressures will continue to haunt some frontier market sovereigns.
Moody’s estimated that most frontier markets — which include Cambodia, Laos and Myanmar — saw a rise in external debt last year with different implications.
“The rise in external indebtedness in Bangladesh, Cambodia … and Fiji was driven by concessional lines of financing extended by the international community.
“Given comparatively low external debt and low annual debt servicing requirements, external vulnerability risks for these sovereigns will remain contained even as current account balances may continue to deteriorate given the fragile outlook for remittances and tourism,” it said.
But the report, released in Hong Kong, said foreign reserve adequacy remained “weak” in some of the other emerging and frontier markets in the region.
In these countries, cross-border debt repayments “remain large relative to foreign reserves.
“In these cases, sustaining access to cross-border funding markets or external liquidity assistance will depend highly on commitment to and demonstrated traction on reform, and greater macroeconomic and fiscal stability,” the rating agency said.
Moody’s said the overall outlook for creditworthiness in the region in 2021 was “weak” and that recoveries would be “asymmetric” — driven by strength of governance.
As of Tuesday, the outlook for Cambodia and most other ASEAN economies was stable.
Source: Agency Kampuchea Press