By:
• Meng Seavmey

• October 30, 2024 , 8:15 PM

PHNOM PENH – The government has greenlighted the draft budget with a slight increase for 2025 amid a slowdown in the rate of economic growth. Approval was given during Prime Minister Hun Manet's cabinet meeting on October 25.

The draft budget for 2025 spending is 37,950 billion riel, or about $9.3 billion, equating to 18.14 percent of the gross domestic product (GDP). The amount increased slightly from the 2024 budget draft of 37,110 billion riels, or about $9.1 billion.

Hong Vanak, economic researcher at the Royal Academy of Cambodia, said the draft budget is still small compared to development needs.

Still, it could balance the revenue from taxes and customs, including non-tax revenue, investments and tourism, to cover spending.

Developing countries usually need to spend a large amount to respond simultaneously to developments and needs but must balance incomes and expenses.  

“The revenue-expenditure balance must have been taken into consideration; otherwise, the government would not have increased the planned expenses,” he said.

“Despite the increased budget plan, the implemented budget must be in line with its capacity.

“This is not all. The government should always have a backup or saving budget and for repayments to creditors.”

Based on the draft budget, the government prioritizes essential sectors, including public investments and social services such as health, education and social protection funds.

“If the expenditure increases, it also means that the coverage on those services is expanded to improve infrastructure and create a good image to build trust among investors,” Vanak said.

According to a June World Bank report, growth was projected to reach around 6.1 percent in 2025 while the country was recovering from the pandemic and being affected by the global recession.

Ministry of Economy and Finance officials predicted last year that the economy would grow by about 6.6 this year after better performances by the non-garment sector and tourism plus a revival of the garment sector.

In September, the Asian Development Bank assessed Cambodia’s inflation as dropping from 2.0 percent in April to only 0.5 percent, while the growth prediction remained at 6 percent for 2025.

In a separate interview in September, Vanak agreed with the projection, saying it reflected the momentum of growth, ranging from the growth of important sectors including garment, agriculture, investments and tourism. 

The draft budget projected that growth could reach 6.3 percent next year, raising the GDP to around $51.46 billion, and the GDP per capita may reach $2,924. Meanwhile, inflation was projected to be around 2-2.5 percent again. 

It showed that the biggest contribution came from sectors such as garment and construction which would grow by 8.6 percent; service sectors such as tourism, transport, telecommunication, trade, and real estate to grow by 5.6 percent; and agriculture to grow by 1.1 percent.