Draft 2023 Financial Law Responds to Post-Pandemic Economy

The draft 2023 law on financial management is under review with the Council of Ministers and lays out a raft of measures to plug the funding gap to reach $7 billion.
Ministry of Economy and Finance, October 26, 2022. Kiripost/Siv Channa
Ministry of Economy and Finance, October 26, 2022. Kiripost/Siv Channa

The draft Law on Financial Management 2023 is under review with the Council of Ministers and has been drawn up in response to the Cambodian economy recovering from the Covid-19 pandemic.

The 2023 budget will be invested in the healthcare system, agriculture, public services, human resource development, and salary increases for civil servants, as well as the National Assembly election, and hosting the South East Asian Games and ASEAN Para Games in 2023.

The 2023 national budget income is planned at 29,311,747 million riels, approximately $7 billion, equivalent to 22.33 percent of GDP. This is a 14.5 percent increase compared to the 2022 legislation.

Meanwhile, the total expenditure of the state budget is scheduled to be 39,206,205 million riels, approximately $9,429 million, corresponding to 29.87 percent of GDP, a 13 percent increase compared to the 2022 law.

As a result, the current budget surplus can be maintained at about 3.99 percent of GDP in 2023 and a total budget deficit of -7.54 percent of GDP. This deficit is offset by foreign financing to the amount of 4.7 percent of GDP, a budget support fund equivalent to 0.98 percent of GDP, government deposits bonds of 1.86 percent of GDP, equal to 2,439 billion Riels or $600 billion, and the issuance of state government bonds of 813 billion Riels or $200 million to meet expenditure needs.

Within the framework, the government must increase the total revenue of the state budget to 36,767,670 million Riels, approximately $8,842 million of which the national current revenue is 25,564,428 million Riels, or $6,148 million, including 23 fiscal revenues, 421 924 million Riels, or $101 million, in income tax, and 2,142,504 million Riels or $515 million in non-tax revenue.

The national budget capital revenue is planned at 8,600,735 million riels, equivalent to 6.55 percent of GDP, a 2.5 percent rise over the 2022 law, in which foreign capital revenue is comparable to almost 19 percent of the budget expenditure state total in 2023.

For 2023, the total expenditure of the state budget or the total expenditure of the national budget is planned to be 39,206,205 million Riels, equivalent to 29.87 percent of GDP. This is an increase of 13 percent compared to the 2022 law, in which current expenditure of the state budget was 22,928,932 million riels, equivalent to 17.47 percent of GDP, an increase of 10 percent compared to the 2022 law.

Capital expenditure of the state budget was 16,277,273 million Riels, equivalent to 12.4 percent of GDP, an increase of 17.5 percent compared to the 2022 law.

The 2023 budget has the strategic goal of setting expenditure at 36,603,698 million riels, equivalent to 27.88 percent of GDP. This is an increase of 12.4 percent compared to 2022, which set national expenditures at 20,839,425 million riels ($5,000 million) and national capital expenditure at 15,764,273 million riels ($3,790 million).