February 9, 2010 / 12:28 PM / 9 years ago

US allows Cambodia to reschedule $317 mln debt

PHNOM PENH, Feb 9 (Reuters) - The United States has refused a request by Cambodia to write off $317 million in debt, but has instead agreed to reschedule the impoverished country’s loan repayments, a top U.S. official said on Tuesday.

The United States also declined to convert the debt into development aid but would work out a plan for Cambodia to pay back the loans, which date back to the 1970s, U.S. Deputy Assistant Secretary of State Scot Marciel said.

"The U.S. position is that Cambodia has recognised its debt," Marciel told reporters during a visit to Phnom Penh. "We think Cambodia should begin the payment, which the Cambodian government has not been willing to do."

The loans were given to the government of Lon Nol after it came to power in a 1970 coup backed by the United States. The loans were intended to develop the country’s agriculture sector and boost commodities exports.

Lon Nol was toppled five years later when the ultra Maoist Khmer Rouge staged its "killing fields" 1975-1979 revolution, which left an estimated 1.7 million people dead and plunged Cambodia into decades of dire poverty and political instability.

The two countries have long disagreed about repayment of the debt and Cambodia has argued the money was spent on arms which were ultimately used on its own people.

China in 2002 cancelled Cambodia’s debt from the 1970s, which was estimated by embassy officials to be worth between $60 million and $1 billion.

Marciel, Washington’s top official in charge of Southeast Asian affairs, plans to plans to visit Laos and Thailand in the next week. (Reporting by Prak Chan Thul; Writing by Martin Petty; Editing by Sugita Katyal)

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