The Cambodian economic minister told the United Nations’ human rights envoy earlier this week that the kingdom now enjoys greater levels of financial freedom as a result of the expansion of its gross domestic product (GDP) and enhanced revenue collection.
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During a meeting in the Ministry of Economy and Finance on Tuesday, Minister Aun Pornmoniroth told UN’s special rapporteur on Cambodia Rhona Smith that the government’s recent economic reforms have increased security, stability and economic growth, while improving living standards for Cambodians.
Ms Smith is on a 10-day visit to evaluate the situation on the ground following the dissolution of the Cambodia National Rescue Party and the arrest of its leader Kem Sokha last year.
The minister brought to the envoy’s attention that GDP rose by nearly $7 billion from 2013 to 2017, reaching $22.1 billion last year. He projected it will reach $24.5 billion by the end of 2018.
Meanwhile, according to Mr Pornmoniroth, income per capita expanded by $393 during the same five-year period. In 2017 it equalled $1,435, and is expected to rise to $1,568 by the end of the present year.
“These factors point towards a more independent nation with greater ownership of its economy. It is the result of the government’s unwavering commitment to implement its public financial management reform program,” the minister said.
In the 2018 national budget, social spending continues to be the biggest priority, and will equal 7 percent of GDP, 22 percent more than last year, the minister said.
He also told Ms Smith that compared to the year 2013, the budget allocated to the Ministry of Education, Youth and Sports and the Ministry of the Environment has tripled, while for the Ministry of Labor and Vocational Training and the Ministry of Health it has nearly doubled.
At over $6 billion, the national budget for 2018 is 15 percent higher than last year’s.
However, Cambodia is still hampered by a budget deficit of nearly $1 billion, which makes the country dependent on loans from foreign partners.
The minister also told the UN’s envoy that tax collection in 2017 was 18.5 percent higher than the previous year, amounting to $3.83 billion. This year, it is expected to surpass the $4-billion mark, he noted.
David Van, executive director of Deewee Consultants, told Khmer Times that Cambodia is implementing the right policies to continue its current economic expansion, but lamented the fact that the country still has to borrow money from other nations due to its budget deficit.
Vong Seyvisoth, Secretary of State at the Ministry of Economy and Finance, said in January that the government plans to reduce its foreign debt and raise capital through the issuance of bonds.
“Cambodia is preparing to adopt a new policy. We will reduce foreign borrowing while strengthening local borrowing,” he said.
“Borrowing locally entails lower levels of risk than borrowing from abroad. When we borrow from abroad, we need to pay it back, which affects the current account and the balance of payments. When we borrow domestically, the money stays in the country,” he said.
Cambodia’s current debt-to-GDP ratio is 32 or 33 percent, which is a healthy level of indebtedness, and should not preclude the country from continued borrowing, according to Mr Seyvisoth.