SINGAPORE (Standard & Poor's) April 4, 2008 -- Standard & Poor's Ratings Services said today it affirmed its 'B+' long-term foreign and local currency and 'B' short-term foreign and local currency sovereign credit ratings on the Kingdom of Cambodia.

The outlook remains stable.

"Supporting the ratings on Cambodia is the country's record of strong growth in a framework of prudent macroeconomic policies and the continued engagement of international donors," said Standard & Poor's credit analyst Agost Benard.

"This, together with the concessional nature and favorable terms of Cambodia's debt should ensure continued external liquidity improvement, in turn underpinning debt service capacity."

"The ratings on Cambodia are constrained by vulnerability of growth and external liquidity due to the country's underdeveloped and narrow economic profile," added Mr. Benard.

The ratings are also constrained by the country's high, albeit declining, public sector debt and its exceedingly low revenue mobilization capacity.

Political stability and a liberal economic and trade regime generated an average real GDP growth of 9% between 2000 and 2007, resulting in an estimated 70% rise in per capita GDP.

Nevertheless, agriculture, which contributes 30% of GDP, suffers from output volatility and lacks an associated downstream processing light industry, while the industrial sector revolves around low value-added garments and textiles.

And, while Cambodia has a favorable tax structure, some sectors, such as agriculture, remain outside the tax net.

The narrow revenue base, combined with pressing capital expenditure needs, requires ongoing budget support by foreign donors.

"The outlook on the ratings could improve if the government implements measures to boost the chronically low revenue collection. The outlook could also be revised upward if there is an increased effort to materially raise investments by addressing the existing multitude of deterrents.

However, the outlook on the ratings could be revised downward if there is fiscal slippage or reduced donor support due to deviation from prudent macroeconomic policies or an adverse change in debt management strategy," noted Mr. Benard.

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