Prime Minister calls for ministries to cut spending amid lower tax revenue

Prime Minister Hun Sen speaks during a cabinet meeting on Friday at the Peace Palace. KT/Khem Sovannara

Prime Minister Hun Sen has asked ministries to be careful with operational expenditure in a bid to save money due to declining national revenue.

A document seen by Khmer Times quoted Mr. Hun Sen as saying this during a cabinet meeting at the Peace Palace on Friday.

“I ask all the government institution leaders to be extra-careful with the operational spending to support Cambodia’s long-term economic strategy,” Mr. Hun Sen said.

“That means, no promotion of civil servants or new appointments,” he said.

Mr. Hun Sen said the only exception will be for the current armed forces deputy commanders who are over 70-years-old, adding they will be replaced by younger ones.

“Meanwhile, our operational budget is in good shape and we are still able to collect revenue through tax and customs duty,” he said.

The World Bank predicted that Cambodia’s economy in 2020 is expected to register its slowest growth since 1994, contracting by between -1 percent and -2.9 percent.

However, Mr. Hun Sen said Cambodia still has funding for all its public investments, such as $400 million recently invested in electricity production as well as $150 million for infrastructure development in Siem Reap.

“Although the government did not collect revenues as high as before the arrival of COVID-19, we still have enough budget to cover our expenses,” he said at the meeting.

“We had a budget surplus in the first semester of 2020 of some $150 million,” he said.

In the first semester of 2020, the government achieved 78 percent of the tax collection target, equivalent to $2,880 million, and 62 percent of its customs duty collection target, equivalent to $1,818 million, Mr. Hun Sen said.

Advocacy and Policy Institute (API) director Lam Socheat told Khmer Times yesterday that government spending must not only be carefully managed amid the pandemic but it must also be frugal with spending for 2021, 2022, and beyond.

“The people pay tax to the state which it uses to develop the country. But the people cannot earn income at the moment, so the state’s tax income has dropped. Therefore the government should only spend on crucial activities. To navigate through this period will require good governance,” he said.

Socheat said the government must fight against all types of corruption to prevent it from losing any income, which would weaken its operational capacity.