CNRP will not recognize 2014 National Budget

Spending on Defense and Security up 17% in 2014

By Kuch Naren and Zsombor Peter - November 8, 2013

The country’s draft $3.4 billion national budget for 2014 proposes yet another $920 million in new debt to make ends meet, the same amount taken on this year, according to a copy of the spending bill obtained Thursday.

The draft budget calls for nearly $400 million—or about 13 percent—more than what the government is spending this year, with large increases on education, defense and security.

The official draft budget is, however, less than the $3.54 billion that Prime Minister Hun Sen’s Cabinet said it had ap­proved last month, but neither the Coun­cil of Ministers nor the National Assembly’s finance committee could explain why there was a discrepancy in the figures.

Among the lion’s share of recipients, the ministries of Defense and Interior together are in line for a total of $489 million in the draft, a combined 17 percent more than this year, and 14 percent of the country’s entire budget.

A statement accompanying the draft states the increase will go mostly to paying for unspecified “social affairs” at the Defense Ministry and was “not an increase in spending for military equipment.”

The budget could be approved by the National Assembly as soon as Tuesday, and will likely be passed by the CPP’s 68 lawmakers without input from the opposition CNRP’s 55 lawmakers-elect, who are refusing to take their seats in parliament to protest irregularities in July’s national elections.

CPP lawmaker Cheam Yeap, who chairs the National Assembly’s finance committee, which approved the draft on Wednesday, said the Defense and Interior ministries needed more money not just for new equipment, but to beef up the fight against international terrorists.

Cambodia, however, does not face any obvious threats from international or domestic terrorism.

“The government will be spending more on training for the military and police, especially to train for anti-international terrorist acts and to maintain security in the country. Second, it’s needed to buy military and police equipment and uniforms,” Mr. Yeap said.

The government regularly claims to be fending off myriad terrorist groups.

Human rights groups, however, say many of those the government brands terrorists are only exercising their legal rights to dissent.

The substantial increase in security spending also comes amid a political standoff over July’s disputed national election between the government and CNRP, whose protests in Phnom Penh have been met with large police and military police deployments on the city’s streets.

In the draft, other sectors are in line for substantially bigger budgets as well.

It calls for a 37 percent increase for the Social Affairs Ministry to $141 million and a 20 percent increase for the Education Ministry to $335 million.

Though the Education Ministry gets the largest share of any single ministry, it still comes in under 2 percent of the country’s $17.2 billion gross domestic product (GDP) for 2014 as projected by the World Bank. That’s well below what teachers’ unions, aid donors and even some ministry officials say it should be.

Critics of past budgets have also faulted the government for spending relatively too little on health. The 2014 draft budget calls for only an 8.4 percent increase for the Health Ministry to $244 million. The Ministry of Agriculture will see a 13 percent boost to its budget to almost $40 million.

“In the past, education is still small compared to security and the Ministry of Defense,” said independent economist Neou Seiha, a form­er senior researcher at the Economic Institute of Cambodia.

But for the government to make significant reductions to its poverty rate, Mr. Seiha said it should boost spending on education, health and agriculture faster.

“It’s not enough; it should increase faster,” he said.

The government has also come under fire for continuing to take on substantial foreign debt, most of it as relatively high interest rate loans from China.

The draft budget for 2014 calls for $920 million in new debt, the same as this year.

Council of Ministers spokes­man Phay Siphan said the loans were being wisely spent to boost economic growth and fell well within the government’s means.

“What we borrow reflects our GDP and reflects our ability to pay back the loans and it respects the debt ceiling,” he said. “All loans go to infrastructure, to increasing productivity, to improving agriculture…. We don’t want a bankrupt state.”

In a joint report released earlier this year, the World Bank and International Monetary Fund said Cambodia’s current debt level was sustainable but warned that an increase could hurt its ability to weather any future economic crisis.

The draft budget also forecasts an increase in government revenue of about 16 percent.

CNRP spokesman Yim Sovann said the government should, and could, do more to increase revenues, which would reduce borrowing and boost spending on priorities like health and education, which are being held back by rampant corruption.

“If you want the country to get more healthy, the spending for health should be more,” he said. “Now the [revenue] collected for priority sectors is not enough.”

Mr. Yeap, the Assembly’s finance committee chairman, said the draft would reach the floor of the Assembly on Tuesday.

(Additional reporting by Hul Reaksmey)