Government spending, foreign aid up in 2013

[geovalin]

Eddie Morton

Government spending increased 32 per cent last year, while increases in both domestic revenue and foreign aid helped stabilise Cambodia’s budget deficit, according to budget statements from the Ministry of Economy and Finance (MEF).

The consolidated financial records, which were released on May 8, show Cambodia’s deficit as standing at $272 million.

“In 2013 [the budget] was achieved according to plan in terms of increasing revenue, attaining budget balance, macro-economic stability and economic growth,” a ministry statement reads.

Government expenses in 2013 totalled $3.1 billion, up from $2.95 billion in 2012.

Domestic revenue, meanwhile, reached $2.06 billion last year, an increase from $2.01 billion in 2012.

“In 2013 the MEF has tried to manage and continue working on reforms to improve public financial management and to increase proficiencies in using resources from the revenue collection to answer the budgetary demands on expenses, public salaries and investment,” the MEF statement said.

An additional $1.06 billion of financing from foreign funding increased 9 per cent in 2013 from $972 million in 2012.

The government spent more than $743 million on public sector wages, up from $644 million in 2012.

Of the country’s key outgoing expenses, national defence and security totalled $298 million, up from $263 million the year prior.

“The annual budget has been increased steadily, but combined health, education and agriculture are equal to the budget of national defence and security,” political analyst Kem Ley said yesterday regarding the level of spending on social services.

Contractors, advertising, transportation and telecom bills cost the government almost $93 million.

“The budget is not credible and not transparent. Even though there is an increase [in revenue] this money has been going into the party’s pockets and individuals’ pockets,” Ley added.

Of the government’s 2013 takings, tax revenue alone pulled in $1.7 billion, up from $1.5 billion in 2012.

Cambodia’s value-added tax – a 10 per cent levy applied to almost all products and services – continues to fund the lion’s share of government coffers, generating more than $623 million in 2013.

Taxes on international trade, including customs fees and taxes, which were the subject of a government crackdown to generate more income late last year, also increased year-on-year to $364 million, up from $330 million.

Mey Kalyan, senior adviser at the Supreme National Economic Council, said an increase in tax revenues was a positive sign and, with reforms under way, he said he expects further improvements this year.

But rises in foreign aid were worrying, Kalyan said.

“One concern is the degree on dependency on external assistance, which stood respectively at 68 per cent of capital expenditure and 27 per cent of total expenditure in both years,” he said.

Son Chhay, chief whip of the opposition Cambodia National Rescue Party, dismissed the figures, saying they did not represent a democratically designed budget in the national interest.

“We would like to see a decentralised budget where it starts with the needs of the people in the districts, the provinces, the separate ministries, then presented to the parliament,” Chhay said.

“Right now, it does not reflect the country’s development needs, instead only the salary increase for the public employees and also the military.”

http://www.phnompenhpost.com/business/government-spending-foreign-aid-2013