National Budget Risks High Deficits: World Bank

By Chun Sakada, VOA Khmer
Original report from Phnom Penh
04 November 2009

The economy fell from a nearly 7 percent growth rate in 2008 to a 2 percent contraction so far in 2009

Cambodia’s recently drafted 2010 budget could put pressure on the economy by running high deficits that exceed external financing, the World Bank said Wednesday.

The Council of Ministers this week green-lighted a $2 billion budget for next year, increasing money allotted for health services and decreasing that for security, in an overall increase of more than $100 million.

The government “is facing difficult choices in drafting the 2010 budget,” the World Bank said in a regional update. “Sustaining high deficits that exceed available external financing would put pressure on macroeconomic stability.”

“The government is trying to bring the fiscal deficit to a level that supports growth—which remains below potential—without compromising macroeconomic stability,” the World Bank said.

Cheam Yeap, a ruling party lawmaker and head of the National Assembly’s finance committee, said the budget suffered from the world economic crisis.

Next year’s budget “cannot avoid difficulty,” he said. “However, the government is prepared to strengthen its macroeconomics with clarity, fairness and goodness.”

Kem Sokha, president of the opposition Human Rights Party, said the government should avoid high deficits, which would require loans from foreign countries and increased taxes.

“The government can increase its expenditure,” he said. “But the government must prevent corruption and collect taxes to avoid the loss of income.”

In the proposed 2010 budget, which must be approved by the National Assembly, expenditure decreased in the ministries of Defense, Education and Interior, but slightly increased for the Ministry of Health.

Cambodia wants to see an annual economic growth rate of 7 percent, while reducing poverty by 1 percent, Council of Ministers spokesman Phay Siphan said.

The economy fell from a nearly 7 percent growth rate in 2008 to a 2 percent contraction so far in 2009, but the Bank said signs of recovery could see a 4 percent growth next year.

Cambodia: decrease of the GDP, inflation and deficit

05-09-2008
By Ky Soklim
Cambodge Soir Hebdo (now in English)

The growth predictions for 2008 amount to 7.2%, compared to 10.1% in 2007, according to the National Bank of Cambodia.

These difficulties lie in the textile and construction sectors and are the cause of the decrease in 2008, bringing it back to 7.2%, two points below the rate of 2007, specifies the National Bank of Cambodia in a 50 page report.

The report also mentions the inflation which continues to affect the Cambodian economy, despite the government measures to control it. In one year, the prices allegedly increased with 37.2%, according to the calculations done at the end of the first semester of 2008 by the National Bank of Cambodia.

The inflation affects mainly the food, fuel and textile products.

According to the National Bank, the commercial deficit increased during the first semester. While the volume of exports has increased with 448.5 million dollars, reaching 2.4 billion dollars, the imports have increased with 584 million dollars and reach approximately 3.1 billion dollars for the six first months of the year.

The commercial deficit reaches thus 700 million dollars. Cambodia mainly exports agricultural and farm products (rice, rubber trees, fish) and imports general consumers goods and oil.