The government is on track to spend more than $2.127 billion or about three-fifths of Cambodia’s state savings of $3.5 billion over the 2020-2022 period to manage the impact of the Covid-19 crisis on key sectors, according to Ministry of Economy and Finance secretary of state Vongsey Vissoth on February 18.
At a public forum on macroeconomic management and the 2022 budget law, Vissoth noted that the government spent just $246 million from state savings in 2020 to cope with Covid, out of a planned $1 billion.
Last year however, the state spent $1.381 billion compared to the $800 million initially earmarked from the reserves, and plans to spend $500 million in 2022, he said.
Additionally, official figures indicate that the state’s total Covid-related spending reached $830 million in 2020 and “$1.3 billion” in 2021, and that more than $1 billion is planned for 2022.
Vissoth added: “The budget for 2022 has been increased, and we’ll have to spend more, although resources will be more limited as the ASEAN chairmanship could cost the Kingdom $40-50 million, and commune elections will set us back $70 million more.”
To cope with such expenditures, revenue collectors such as customs or taxation authorities must “do their best”, the senior finance official said.
Vissoth remains optimistic that unlike some of its peers, Cambodia will not need to resort to borrowing money from external sources to counter the crisis.
Hong Vanak, director of International Economics at the Royal Academy of Cambodia (RAC), told The Post that the decline in state budget resources poses a major risk given the lingering Covid-linked threats.
Moreover, other pressing issues such as inflation and rising fuel prices may require the government to make additional funds available, leading to even further increases in expenditures, he said.
Still, he believes that the government will be able to resolve any corresponding issues, given its more than two years of experience with the Covid-19 crisis.
“This is not a new crisis for us, so I think the state must have already planned to deal with the Covid-19 issue, which has affected a number of key areas such as SMEs [small- and medium-sized enterprises], tourism and services, as well as additional investment in agriculture,” he said.
With that perspective in mind, Vanak called on everyone to adhere to Covid-19 prevention guidelines and do their bit to reduce state spending on health, for available funds to be spent on other necessary matters.
From 2020-2021, the government rolled out 10 rounds of economic relief measures to manage the impact on key sectors from Covid-19 and the ongoing recovery process, and bolster economic growth during and after the crisis.
The associated funds were spent on support for the poor, subsidies for factory workers, health expenditures, and Covid-19 vaccine purchases, among other things.