Cambodia’s Prime Minister Hun Sen’s move, on the budgetary plan for next year by prioritising the social sector, shows that the government’s commitment remains unchanged with regard to its economic development that best suits the interest of the people. This sector alone gets more than 8 percent of Gross Domestic Product (GDP), focusing on the action plan, logistics, transportation facilities 2021-2030, e-commerce, e-trading and Cambodia’s digital society 2021-2035, strategic agricultural plan 2019- 2023 to open of markets for Cambodia’s exports.
Currently, Cambodia’s GDP value is nearly US$28 billion. Based on the 2021 projection of GDP she will grow at around 5.7 percent with a GDP value of US$30.8 billion for 2022 thanks to recovery of the domestic and external economic and trade activities.
While this GDP is small for a developed country, it is big for Cambodia with its 16 million population.
A coming budgetary allocation will also benefit the livelihood of the people, poor and jobless, promoting domestic economic activities, as well as maintaining public security and social stability.
This Southeast Asian nation, like other countries, faced hardship with dealing with public health as the COVID-19 pandemic forced some countries to lockdown, along with other measures, and stifled economic growth, lowering global growth to -3.5 percent, and Cambodia’s to -3.1 percent for 2020. These negative impacts took Cambodia’s budget deficit to about -8.40 percent of its GDP.
While COVID-19 continues to spread in the country, especially since the event of 20th February 2021, may make it difficult to reach 4 percent growth this year due to the slowdown of foreign direct investment [FDI], impacts from trade and technology war prompted Cambodia to adjust to a new normalcy.
Also, the slowdown sub-sectors such as hotels, restaurants, construction and assets, garments and textiles, as well as transportation, among others, interrupted the government from reaching its revenue collection targets. So, with a certain amount of revenue from different sources the government will spend wisely.
The government will not overlook issues of defence, security, and public order which will get 4 percent of GDP. This budget proportion will also go to support legal and judicial system reforms, improving the well-being of the armed forces personnel who protect peace and defend national interest of political stability for the former war-torn nation.
General Administration is budgeted at1.79 percent of GDP to support the reform of administration, expand international cooperation, diplomatic relations – especially in the area of economic diplomacy 2021-2023, the implementing of Cambodia’s investment law, local elections in the commune election in 2022 and the general election in 2023.
Other expenditures of more than 5 percent of GDP will be reserved for implementing other government political platform, such as organizing international events and forums, natural calamities, food emergencies, and other unexpected occurrences.
In sum, the budgetary plan for 2022 is around 29.23 percent of GDP, an increase of 16 percent, from 2021 budget. The national budget totals 27.2 percent of GDP and the sub-national level budget is 2.91 percent of GDP.
Current expenditures will be limited to 16.81 percent of GDP, an increase of 13.9 percent, from the 2021 budget. While capital expenditures for next year are planned to be 12.41 percent of GDP, an increase of 18.9 percent, from the 2021 budget. This will enable the government to restore its economy after the impact of COVID-19.
It may not be easy to achieve such plans given the fact that money does not fall from the sky, requiring the government to set a lot of strategies for greater focusing on the implementing and promoting the government mechanisms, political platforms, and other related mechanisms to improve its effectiveness in generating revenues; while the government continues to encourage local and foreign investments and to keep investing in the country.
PM Hun Sen leads the national committee to fight COVID-19 with 31 members including the deputy PMs as vice-chairmen. Other members are ministers and chairmen of the units, secretary of states, and top military and police with the major task of tackling, preventing, and controlling the spread of the disease.
That is not enough, Cambodia has to find new approaches to deal with new global trade patterns, along with improving its institutional function of reforms, improving transparency, and speeding up its domestic economic development, while improving its competition in the fields of trade and investment.
The government plans to collect 21.47 percent of GDP, an increase of 27.1 percent, from the 2021 budget. Customs and duty are targeted to get as much as 9.3 percent of GDP, an increase 20.8 per cent, from 2021 budget.
Tax collections are targeted to achieve 8.35 percent of GDP, an increase of 32.3 percent, from the 2021 budget. Other taxes aim to achieve 2.17 percent of GDP, an increase of 3.6 percent, from the 2021 budget. Domestic capital revenue should be achieved 0.19 percent of GDP an increase of 9.8 percent compared with 2021 budget, among others.
For external financial capital revenue, the target is 4.48 percent, an increase of 6.4 percent, from the 2021 budget. At the same time, the government also targets the budget financial injection of around 1 percent of GDP.
After all these years, PM Hun Sen’s political culture, diplomatic values for peace and development continues to fly high and protect the interest of the country and the people.
For instance, with the recent discovery of gold by Australian Renaissance Minerals (Cambodia) Limited, PM Hun Sen made it clear that sustainable development will benefit the country with an average income and revenue of US$185 million per year in which the national revenue from taxes is estimated at US$40 million a year.
“The revenue that will be netted from this commercial gold processing plant will be invested in national budget operations for the country’s social and economic development,” says the Premier.
Source: Agency Kampuchea Press