Cambodia's constitutional crisis endangers government's foreign creditors

 CAMBODIA'S CONSTITUTIONAL CRISIS ENDANGERS GOVERNMENT’S FOREIGN CREDITORS

Current and future lenders risk their loans being cancelled

November 20, 2001

Plans by the Cambodian opposition to withdraw deputies from the country's national assembly are set to trigger a constitutional crisis that will create risks for current and future lenders to the corrupt Hun Sen government.

The opposition Sam Rainsy Party (SRP) will reduce membership of the national assembly below the necessary quorum of 120 by resigning some of its deputies. The move will leave the government unable to legally validate the country's budget or to ratify loans.

Cambodia's constitution demands that international government borrowings must be subject to the scrutiny of the national assembly. The government has already overridden this principle by pushing authorizations to borrowing through the assembly en bloc rather than on a loan-by-loan basis, so effectively writing itself a blank cheque amounting to US$1.1 billion, or 10% of GDP, for 2011 alone. Details of the actual loans contracted are kept secret from the assembly, undermining its prudential role and making international lenders complicit in violating the country's constitution.

External borrowings allow continuous fiscal and monetary irresponsibility by the Cambodian People's Party (CPP)-led government, rampant government corruption, an undemocratic patronage system and the practice of buying votes. State misuse of funds greatly diminishes
the beneficial impact of loans on the country’s population, but not the costs of repayment.

Article 76 of the country’s constitution states that the National Assembly consists of at least 120 members. Article 90 states that the Assembly shall approve the national budget, state planning, loans, financial contracts, and the creation, modification and annulment of tax.

The SRP solemnly warns current and future international lenders to the Hun Sen government that borrowings contracted without the necessary ratification are illegal. A future legitimately elected government would reserve the right to cancel such loans.

Sam Rainsy

SRP President