The National Assembly yesterday unanimously approved the draft Budget Law for 2020.
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The law was approved by 108 of the 123 lawmakers that attended the plenary session of the National Assembly.
According to the draft law, the government plans to spend $8.2 billion in 2020, a 22 percent increase compared with 2019.
As per the law, $4.8 billion will be allocated to current expenditures and $3.3 billion will go to capital expenditures, which includes public investment and debt repayment.
Moreover, $2.1 billion will be used for paying the salaries of government officials.
The economic sector will receive $1.8 billion, the social sector $1.9 billion and national defense (including security and public order) $1.18 billion. About $620 million will go to the general administration.
To afford that level of expenditure, the government aims to collect $6.5 billion in revenue, a 24 percent hike compared with last year. The remaining money will be borrowed from development partners.
Aun Pornmoniroth, the Minister of Economy and Finance, said the budget for 2020 is crucial to continue to strengthen peace, political stability, security, social order, and sustainable economic growth.
“The draft 2020 Budget Law was compiled to follow the stimulus policy that supports economic growth and the government’s reforms. The goal is to keep the budget balanced and strengthen interior capacity so that we are ready to face internal and external challenges and risks,” Mr Pornmoniroth said.
“The budget will support ongoing reforms to ensure peace, stability, and sustainable economic growth while promoting people’s wellbeing,” he said.
According to the law, the government will not borrow more than 1.4 billion SDR (approximately $1.9 billion) next year.
“We will borrow, but not too much. We have high economic growth and this strengthens our debt repayment capacity,” Mr Pornmoniroth said, adding that results on debt sustainability analysis indicate that all four key debt indicators are well below their respective indicative thresholds.
As of June, Cambodia’s public debt stood at $7.2 billion, according to the draft law.
In Channy, president and group managing director of Acleda Bank, said Cambodia needs to borrow from foreign partners to invest in public infrastructure that promotes economic growth.
“Private enterprises can borrow money when they are experiencing strong growth. It is the same for governments. If we didn’t have strong economic growth, nobody would lend us money because we might not be able to repay. However, if we are experiencing strong growth, they will lend,” Mr Channy said.
The Cambodian economy is forecast to grow at 7.1 percent this year. However, growth is projected to slow down in 2020 to 6.5 percent, bringing the Kingdom’s GDP to $29.4 billion.
GDP per capita is expected to hit $1,816 in 2020, according to the draft law.
The economic slowdown is partially the result of uncertainty regarding Cambodia’s trade status with the European Union, the largest market for Cambodian exports. The EU is currently reviewing the Everything-but-arms (EBA) deal with Cambodia over perceived democratic setbacks in the Kingdom.
The draft Budget Law for 2020 now will be submitted to the Senate for approval.