Transparency watchdogs have warned that $1.5 billion of unallocated funds in next year’s budget will only encourage nepotism and embezzlement.

The Draft Budget Law was approved at the National Assembly on Tuesday in a unanimous vote of 66 ruling Cambodian People’s Party MPs.

The opposition’s 55 elected lawmakers have yet to take their seats in parliament following July’s disputed election.

The $3.4 billion spending bill included about $1.5 billion in “unallocated” money, which amounts to more than 44 per cent of the total budget.

“This is a huge amount and a concern for us,” said Chhith Sam Ath, director of Cambodia’s NGO Forum, which works with the US-based International Budget Partnership (IBP) to advocate for greater fiscal transparency. “Our experience is that in previous years, we see … that it gives more flexibility [to the authorities to allocate funds] without passing through the National Assembly.”

In 2012, IBP’s Open Budget Index ranked Cambodia 81st out of the 100 countries surveyed and second to last in Southeast Asia with a score of 15, beating only Myanmar and falling far behind the regional average.

Cheam Yeap, a senior CPP lawmaker, said the $1.5 billion had not been allocated because reserve money could be needed for natural disasters or if conflict broke out with Thailand.

“We have no ability to protect against Thailand if we do not have a reserve budget,” he said. “And also natural disasters; we lost nearly $1 billion in the recent [flooding].”

However, while the amount of money not allocated in the annual budget has steadily increased in recent years – from about $948 million in 2009 to $1.4 billion last year – it has remained between 46 and 52 per cent of the total.

Ou Virak, director of the Cambodian Center for Human Rights, said unassigned money in the budget kept the door open for corruption.

“Actually, it’s common. It means that the prime minister can basically do whatever he wants [with this money],” Virak said. “He can allocate money to whatever projects he wants.… In the past, they have given money to companies owned by their own sons, for example.”

While it is normal for governments to have “discretionary funds” in their budgets, Kol Preap, executive director of Transparency International Cambodia, said that anything over 10 per cent should be a cause for alarm.

“We are concerned that such an amount could be potentially misused or that there will be a lack of transparency.… It’s not a good practice. Any amount below 10 per cent would be reasonable,” he said.

Son Chhay, a senior Cambodia National Rescue Party lawmaker, said the government was “fooling around” with the budget.

“We found last year that the unallocated budget has been increasing from around 27 per cent in 2007, to about 40 per cent now,” he said. “We need an explanation of why this is becoming common practice in this country.”

Political analyst Peter Tan Keo called on the CNRP to match those words with actions, saying the party’s resources could be “better spent combing through the budget proposal” than calling for an electoral investigation.