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2001 budget calculated for controversy

While most economic analysts praise the government's 2001 budget for its increases

in social spending, serious concerns remain about perceived 'gaps' between projected

and real government spending.

The 2001 budget was adopted by the National Assembly on December 28 and has been

touted as proof of the government's commitment to a "peace dividend" reduction

in defense spending in favor of more funds to a financially starved social sector.

However one Cambodian-based economic analyst was dismissive of the apparent change

in the government's priorities, saying that such promises are an annual ritual that

are never followed through on in terms of actual disbursements of funds.

Also coming under criticism is the budget's lack of concrete revenue raising measures.

Although the budget will extend VAT collection to the provinces and to medium-sized

companies, the analyst said the government is unduly optimistic to rely on projected

increases in domestic VAT revenue from the import sector which remains the main source

of government revenue.

Suspicions about the government's commitment to reducing military spending were raised

by Dr. Lao Mong Hay, Executive Director of the Khmer Institute of Democracy.

"This is a good thing, but it depends on the actual spending and disbursement

[of budget funds]. Projections can be misleading," he said.

"We need to ensure that the government sticks to the proper figures when actually

spending [budget funds] because some powerful ministries such as Interior and the

military can get their way [and receive additional funds.]"

He called for parliament to establish administrative accounts to control the government's

real spending.

"I' d like to see more [funds] directed to the Ministry of Justice for judicial

reform because it's the key for all the government's four or five major reform programs."

In the 2001 budget the Ministry of Justice will receive R7,295 million, just 0.3%

of total spending and exactly half of the total budget for funds directed to the

Cambodian Senate.

Despite these criticisms, International Monetary Fund (IMF) Representative Mario

de Zamaroczy said the budget fitted into its 5-year monetary plan for the country.

He said to calculate VAT projections he had worked closely with government officials

to ensure they were realistic figures. He denied claims the government has not followed

its past budgets.

Zamaroczy admitted that comments made by Co-Minister of Defense Tea Banh during the

budget debate about inadequate international donor contributions to military demobilization

had not been unfair. He said donors planned to make up for the lost time and still

hoped to meet the demobilization target of 30,000 soldiers by 2003.

Opposition leader Sam Rainsy attacked what he described as the IMF's "complicity"

with a budget that allocated just $3 a year per capita to health care and average

state sector salaries of $30/month.

Admitting that his tenure as Finance Minister in the 1990s had made him wary of how

there was "a lot of room for window-dressing" in budget formation, Rainsy

called on donors and the international community to look at absolute figures rather

than trusting government statistics.

Tarek Bazley is in Cambodia with the help of Asia 2000 (NZ)

Macro to Micro: The budget individualized

So how much does the Cambodian government plan to spend for each of it's citizens

in 2001? With a population around 12 million it breaks down the following way:

Total per capita spending $52.90, a lion's share of which ($9.22) is on Defense and

Security. This is followed by Education ($4.77), Health ($3.03), Woman's and Veteran's

Affairs ($1.36), Council of Ministers ($1.21), Foreign Affairs ($1.10), Agriculture

($0.75), Social Affairs ($0.64), National Assembly ($0.62), Economics and Finance

($0.50), Royal Palace ($0.43), Senate ($0.30), Tourism ($0.20), Culture and Fine

Arts ($0.18), Justice ($0.15), Constitutional Council ($0.06) with a multitude of

other Ministries and 'consolidated funds' soaking up the rest, including ($25.36)

dedicated to provincial and town government, debt servicing, local and foreign investment

and unallocated expenditure.

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