The government says it is moving towards financial self sufficiency thanks to its reformed efforts to increase state revenue from taxes and customs income, which Finance Minister Aun Porn Moniroth said had doubled between 2013 and 2018.
The Ministry of Economy and Finance held a five-year review meeting, attended by Prime Minister Hun Sen, for its management of public finances in Phnom Penh on Friday morning. A plan for the next five years was announced but details have not been publically provided.
Minister Moniroth said implementation of the reforms had helped double Cambodia’s revenue from $2.2 billion in 2013 to an anticipated $4.5 billion in 2018, enabling the government to increase its spending.
He also said that reliance on external sources of income had decreased from 70 percent in the 1995 budget to around 21.4 percent in 2017, with the number expected to drop to under 20 percent this year.
“This is a clear indication that Cambodia has become more financially sound and more self-sufficient than before,” he said.
In January, the Tax Department announced that almost $2 billion in taxes had been collected last year, above the expected $1.71 billion. All forms of tax collection – income tax, value added tax, salary and real estate tax – had shown double-digit growth.
Customs tax collection also increased last year, up 10.4 percent to $1.9 billion, according to a document dated January 23 from the General Department of Customs and Taxation.
In a speech at the meeting, Hun Sen congratulated the Finance Ministry on the progress made over the last five years, saying it boded well for Cambodia’s ambition to become a middle-income country by 2030 and a high-income nation by 2050.
“I appreciate the progress that the reforms program has achieved over the past 13 years, especially the recent progress in the last five years,” he said, referring to the 2004 commencement of public finances reform.
However, economist Chan Sophal said that while progress had been made on increasing government revenues, the state was still reliant on outside funding for major infrastructure development projects.
Foreign investment saw a significant increase to $6.3 billion last year, up from $3.6 billion in 2016, according to the Council for the Development of Cambodia.
This investment influx surpasses the Cambodian government’s 2018 budget of around $6 billion, with chief patron China investing more than $1 billion in capital annually since 2013, totalling $5.3 billion from 2013 to 2017.
Sophal said that with the decrease in donor aid, the country will still need foreign investment or low-interest loans to effectively fund its infrastructure and education needs.
“From now on, even though they may not give loans or grants, we still can survive and develop," he said. "But it is just the fact that if they give loans, we will get bigger growth."