The Council of Ministers approved a 2021 draft budget that calls for spending of more than $8 billion and SDR 1.5 billion ($2.1 billion) in borrowing from development partners to cover the estimated deficit.
Special drawing rights (SDR) are supplementary foreign exchange reserve assets issued by the Washington DC-based International Monetary Fund.
The national budget was approved at a plenary meeting of the Council of Ministers chaired by Prime Minister Hun Sen and will be submitted to the National Assembly for review and approval before it can be officially disbursed in 2021.
According to an October 23 press release, the government plans to spend about $7.5 billion of the $8 billion allocated, a decrease of 1.9 per cent compared to 2020. Sub-national budget expenditures are expected to be about $634 million, a decrease of 22.5 per cent compared to 2020.
According to the press release, the government collected 4.9 billion in 2021 for the national budget, a decrease of 17.3 per cent. Revenue collected at the sub-national level was 373 million dollars. Revenue was from taxes and other sources.
“The government has set the size of borrowing from development partners for 2021 at SDR 1.5 billion, an increase of 1 billion SDR compared to 2020,” it said.
Hun Sen said while visiting residents in Banteay Meanchey province on October 24 that the Council of Ministers seriously considered the 2021 budget.
He said the new budget examines the problems Cambodia will face in the wake of floods and Covid-19.
“The 2021 budget will be used as a combat budget to protect people’s lives, maintain socio-economic and livelihood stability and focus on post-Covid-19 recovery,” he said.
In addition, the prime minister emphasised that the 2021 budget law is not just a normal budget, but meant to address the needs of people for employment and incomes, especially rural farmers.
“At the meeting, I pointed out the direction . . . we focus on dropping the cash to the affected provinces. We estimate that $160 million could protect one million jobs,” he said.
Transparency International Cambodia executive director Pech Pisey told The Post on October 25 that Cambodia was facing a series of challenges that required the approval of the budget to be based on the realities of the economy.
He said revenue and expenditures must be balanced or else the government will increase its foreign borrowing. On the other hand, he said if income is less than the expenses, it will also have an impact on the economy, especially the development of the country.
“More than $8 billion is a good amount to boost and sustain some of the country’s economy, though not completely. But in 2021, if we do not have the budget, we cannot do anything according to plan. Like in 2020, we planned to spend more than $9 billion, but we also deducted spending by 50 per cent because we collect less money than planned,” he said.
Pisey said the government should keep the budget as large as possible to protect the national economy from future risks and maintain current expenditures and capital.
The government has claimed that the $8 billion budget will ensure the payment for salary, severance pay and other bonuses to civil servants at national and sub-national levels as in 2020, while capital expenditures will be only slightly lower compared to 2020.