Cambodia is planning for government revenue and spending equivalent to 23.07 per cent and 26.29 per cent of GDP (gross domestic product) in 2024, respectively.
This is according to a Royal Government of Cambodia (RGC) circular on the draft Strategic Budget Plan 2024-2026 and 2024 Law on Financial Management – next year’s edition of what is commonly called the “budget law”.
The 2024 goal for current revenue – which comprises tax and non-tax revenue but excludes capital receipts – has been tentatively set at 22.33 per cent of GDP, up 0.8 percentage points (pp) from the 2023 target, as well as up 13.3 per cent in monetary terms, according to the circular, which was signed by Prime Minister Hun Sen and dated June 29.
The circular breaks down current revenue into revenue from the General Department of Taxation (GDT) and General Department of Customs and Excise of Cambodia (GDCE) – both of which are under the Ministry of Economy and Finance – and other current non-tax revenue.
The GDT and GDCE are expected to generate revenues totalling 11.79 per cent and 7.78 per cent of GDP, respectively, up 0.74pp and down 0.73pp from their corresponding 2023 targets, as well as up 16.6 per cent and down 0.2 per cent in monetary terms. Other current non-tax revenue is tipped to reach 2.76 per cent of GDP.
On the capital revenue front, the circular pegs foreign financing for public investment, other domestic revenues, and budget support to respectively come in at 0.44 per cent, 0.25 per cent and 0.05 per cent of GDP.
The circular did not provide estimates for Cambodia’s GDP in 2023 or 2024.
However, using the GDT’s 2023 target of $3.57170 billion as reference, the circular’s numbers would suggest a GDP in the range of $32.293-32.353 billion this year and $35.293-35.354 billion in 2024, accounting for rounding. For comparison, the International Monetary Fund (IMF) puts Cambodia’s 2023 and 2024 GDP figures at $30.628 billion and $32.934 billion, respectively.
Meanwhile, government spending is targeted to reach 26.29 per cent of GDP in 2024, down 3.68pp against the 2023 target, as well as down 4.2 per cent in monetary terms. Of that, capital government expenditures were set at 18.43 per cent of GDP, up 0.9pp from the 2023 target, as well as up 14.9 per cent in monetary terms.
Central and local government expenditures were pegged at 24.42 per cent and 2.96 per cent, respectively, although 1.09pp of the former is expected to be fiscal transfers and thus subtracted from the overall total.
All aforementioned targets are included in the annual financial management law, or budget law, for the corresponding year.
The government anticipates a current budget surplus of approximately 3.89 per cent of GDP, but a total budget deficit of about 3.22 per cent of GDP in 2024. It hopes that the extra spending will lead to increased investment and higher productivity, as well as added value for the economy buoyed by ongoing growth.
It also sees investments made in promising new areas for economic growth, along with improved institutional capacities and support for beneficiaries of social assistance programmes such as pensioners.
Additionally, it vowed an increase in the minimum wage for civil servants in a bid to boost social welfare, strengthen societal resilience, and ensure the fulfilment of key development goals outlined in the policy agenda for the first year of the seventh term of the RGC.
At a recent roundtable discussion on the global economic crisis organised by the Royal Academy of Cambodia (RAC), finance ministry secretary of state Phan Phalla stressed that the world economy is forecast to grow by just three per cent this year and only accelerate to a “high” rate in 2029, citing the IMF.
In Cambodia, the government projects that the economy will expand by 5.6 per cent this year, up from an estimated growth of 5.2 per cent in 2022.
According to Phalla, the Strategic Budget Plan 2024-2026 and 2024 Law on Financial Management will both include several policies designed to drive the Cambodian economy towards its predetermined goals.
“Our focus lies in self-empowerment, human resource development, resilience building, social protection, strengthening private sector development, fostering competitiveness and infrastructural expansion, and advancing the digital socio-economic vision. These are enormous tasks, but we’ll keep at it,” he said.
RAC economist Ky Sereyvath claimed that customs duties and other taxes account for “approximately 60 per cent” of all government revenue globally.
“We’re currently overlooking non-tax revenue, and the government has yet to show effective management of tax revenue. The government should disclose its sources of non-tax revenue, such as ferry crossings or sand dredging operations,” he said.
The current draft version of the 2024-2026 budget plan presents a baseline estimate of 6.6 per cent for Cambodia’s economic growth in 2024, with the industrial, service and agricultural sectors respectively seen to grow by 8.5 per cent, 6.9 per cent and 1.1 per cent next year.