Strong economy and better tax collection practices are behind rising government revenues, but officials warn that emergency budgets could increase if border tensions escalate

THE government has announced a US$1.77 billion budget for 2009, not including foreign aid, marking a 28-percent increase over last year due in part to the better collection of tax revenue, government officials said Monday.

The draft spending plan, which was approved Friday by the Council of Ministers and must now be passed by the National Assembly, budgets $71.2 million to provincial governments and municipalities.

It represents nearly 15 percent of Gross Domestic Product (GDP), and also signals Cambodia's strong economic growth over the past several years.

The Kingdom's economy is expected to expand by 6.5 percent this year, according to the Asian Development Bank.

Tax reforms have been key to this year's budget planning, said Hang Chuon Naron, secretary of state for the Ministry of Economy and Finance, adding that tax collection was up 40 percent over the past three years.

"If we don't have income, how can we plan for spending? Over the past two to three years, taxation reform has allowed for higher revenue," said Hang Chuon Naron.

Better collection has increased the state treasury to some $856 million, according to the 2007 budget law, which was approved by the Council of Ministers on Friday.

However, endemic corruption continues to eat into state revenues, opposition lawmakers say, underscoring the need for better anti-graft measures.

"I think government must fight corruption and speed up tax reform," said Sam Rainsy Party lawmaker Son Chhay.

Son Chhay urged parliament to pass the country's long-stalled anti-corruption law, which is awaiting approval, and to make tax collection more fair.

Emergency spending

Officials warned that ongoing tensions on the border with Thailand, where a dispute over territory turned violent last week, could force the government to approve emergency spending plans that could skew budget figures.

Son Chhay said that while the opposition did not oppose emergency budgets, they should not be made at the expense of spending for education and healthcare, two areas where international donors have criticised the government for failing to provide enough funding.

The Council of Ministers on Friday also approved 2007 government expenditures of $833.4 million, or 9.38 percent of GDP, compared to a total budget that year of $1.1 billion.

Government income in 2007 stood at just over $1 billion, while 2008 figures have yet to be compiled, according to a statement by the Council of Ministers.

ADDITIONAL REPORTING BY CHUN SOPHAL