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Budget cuts for most of the government coming due to Covid

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The Ministry of Economy and Finance (MEF) has instructed all other ministries, central administrative institutions, public administration institutions, among others, to prepare for revisions to the 2021 budget. Hong Menea

Budget cuts for most of the government coming due to Covid

The Ministry of Economy and Finance (MEF) has issued a circular on the revision and strengthening of the national budget expenditures in 2021 because the lockdown measures in some geographical areas are having a general impact on the 2021 National budget framework.

According to the ministry, this crisis requires the government to reconsider some of its planned expenditures to save money in order to divert funds to address its current priorities in combating the spread of Covid-19 and counteracting the negative socio-economic impact on Cambodia.

Along these lines, the ministry has also instructed all other ministries, central administrative institutions, public administration institutions, among others, to prepare for revisions to the 2021 budget.

Finance minister Aun Pornmoniroth stated in the circular that the cost-effective implementation of the revised budget should be organised to ensure the regular functioning of state institutions and maintaining stability in people's lives.

Pornmoniroth said the conservation of financial resources was also to divert funds to meet the urgent needs of the government in the fight against Covid-19, especially with the implementation of lockdown measures in some areas.

"To increase economic security for all people, especially poor and vulnerable families, all ministries, institutions, public institutions, relevant administrations and units under the ministry must implement this circular effectively from the date of signing," he said.

According to the ministry’s circular, some ministries and institutions are required to reduce their national budget expenditures by at least 50 per cent of the approved figures and to reduce the national budget capital expenditures by suspending about 11 per cent of the joint credit package.

However, this circular also exempts the budgets of sub-national administrations and all specialised departments of the municipality and provinces that are part of the fight against Covid-19. It also provides exemptions for the current budget of the ministries of Health, National Defence and Interior (public security sector).

These exemptions are based on the fact that these institutions have been directly involved in activities to prevent the spread of Covid-19. These three institutions can also fully regulate internal credit through financial procedures to meet the necessary requirements.

Cambodian Institute for Democracy president Pa Chanroeun said the ministry's refinement of the national budget shows that the government is facing serious financial challenges to prevent the crisis, especially the cost of Covid-19 treatment and other measures to combat the virus.

Chanroeun is concerned that the reduction of expenditures by these ministries will affect the quality of life and affordability of the activities and services that they provide to the people. Meanwhile the budget reductions will not only affect society as a whole due to the Covid-19 crisis, but also make some ministries unable to function fully as planned, he said.

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