Opposition lawmakers boycotted the National Assembly vote on the 2016 budget yesterday, as the government defended its plans to borrow almost $1 billion as it moves away from foreign aid to direct sovereign borrowing.
The Cambodia National Rescue Party (CNRP) has said its lawmakers will boycott Assembly votes until the government guarantees their safety after two CNRP assemblymen were beaten during a protest outside parliament in October.
The budget will raise salaries for civil servants, the military and other government officials and cut taxes on some vehicles, especially three-wheeled ‘go yung’ used in rural areas. It also sees the government raise more money by borrowing as foreign aid falls because of the country’s increasing development.
Speaking in the Assembly yesterday, Economy Minister Aun Ponmonirath said the borrowing would help development without imposing an unreasonable debt burden. Cambodia’s total debt as a percentage of Gross Domestic Product (GDP) has dropped significantly, according to official data. It has fallen from more than 36 percent of GDP in 2006 to slightly more than 28 percent last year.
“Cambodia has the ability to borrow more money for 2016 to 2018 of about SDR 700 to 800 million per year,” he said, referring to Special Drawing Rights, measured by a basket of currencies.
“Even though this new borrowing could increase our debt, the level of public debt is still sustainable and low-risk,” Mr. Ponmonirath said.
“Cambodia will not face a debt crisis,” he said, adding the move comes at a time of increasing government revenue and strong economic growth – about 7 percent.
Mr. Ponmonirath said foreign borrowing would be directed to vital infrastructure needed to underpin economic growth, including irrigation, transportation and electricity.
CNRP spokesman Yem Ponhearith said opposition lawmakers would continue their boycott because of political tensions. He added that while the budget contained some sound measures, the opposition was concerned about the increase in borrowings and that revenues were not keeping pace with spending.
“Loans are increasing. We are concerned the national debt could badly affect the economy,” he said. “Revenue and borrowing must be balanced, that is the most important thing – collecting taxes and reducing unnecessary the expenditure,” he said.