The price tag for the January riots climbed to $47 million as insurance adjusters,

Thai delegates and officials sifted through the wreckage in Phnom Penh.

Thailand's initial assessment of $23 million more than doubled as the scale of damage

to businesses and the embassy became clear.

But it is still not clear just where the money will come from.

On February 10 Prime Minister Hun Sen reiterated his offer of "unconditional

compensation" for losses demanded by Bangkok, but there are still doubts about

the government's ability to pay.

"Cambodia gave a non-specific but blanket assurance [it would pay for anything],"

said one Western diplomat. "Since donors pay for about 50 percent of the national

budget, my question is what account is this going to come from? They don't have the

money."

But Ministry of Interior (MoI) spokesman Khieu Sopheak said the government had no

choice but to find the funds and uphold its commitment to Thailand.

Sopheak said the government would have to raid development funds slated to upgrade

the country's dilapidated infrastructure.

"There is the budget for the state government that has been allocated to the

development of the country, to build bridges, roads and other infrastructure,"

he said. "Some of the projects will be affected."

Forty-seven million dollars represents a significant chunk of government spending,

around 7 percent of the $707 million national budget for 2003.

And given that the damage estimate could go up again - around 70 small Thai firms

operate here and could file further claims - Sopheak said that could mean a drastic

cut in some government services. He could not specify what programs would be cut.

Government spokesman Khieu Kanharith confirmed the government would shoulder the

cost, but in light of the upcoming national election, he said, any compensation package

could not be allowed to threaten the country's economic situation or already shaky

standing in the international community.

"We cannot touch the money we get from the World Bank and other such sources.

[We will] find some surplus funds," he said, without elaborating further.

Kanharith said the first place the government will spend cash is the Thai Embassy,

which was sacked and burned.

"The top priority is renovating the embassy," Kanharith said. "That

needs to start right away. We want to restore the confidence of the international

community."

Some skeptics suggested the government might lean on the private sector, from government

linked-business to insurance companies, to pay some costs.

"If I was Sokimex, I would be a little bit worried that I'd be the main candidate

that's going to get squeezed," the diplomat said of the well-connected company's

lucrative Angkor Wat concession.

The insurance companies are working to clarify their liability and are currently

negotiating possible costs with the government.

Four insurance companies operate in Cambodia, but the Ministry of Economy and Finance

(MEF) said only Indochine Insurance and Asia Insurance have significant exposure.

Darith Kem, deputy head of the insurance division at MEF, said insurance companies

would likely share the costs with government. Negotiations are under way to determine

the amount.

"We don't know the exact value," said Kem. "but the government has

set up a commission to evaluate the cost ... The private industry and government

sector have to cooperate."

MEF said Asia Insurance suffered more than Indochine. Statistics published in the

Bangkok Post state that Asia Insurance insured the Thai Embassy for $6.3 million

and five large businesses for a further $4.6 million. However the company refused

to comment.