“We have to use money to grow money,” Prime Minister Hun Sen told meeting

State coffers swell with financial reforms: govt
Written by Kay Kimsong
Friday, 30 May 2008
Improved tax collection and money management has boosted state coffers
by an average of 23 percent each year since 2005, satisfying a key
donor demand for better fiscal management, senior officials said while
announcing the completion of the first round of public sector finance
reforms.

Just over $1 billion was collected in 2007, up from $656 million two
years earlier, Finance Minister Keat Chhon said on May 28 at the
conclusion of an annual review of the financial sector.

During the same period, foreign currency reserves doubled and
expenditures increased an average of 20 percent, indicating a reversal
from chronic cash shortages to surpluses, he said.

“We have to use money to grow money,” Prime Minister Hun Sen told
meeting participants, including officials from international financial
institutions.

The International Monetary Fund’s resident representative, John
Nelmes, called the government’s fiscal turnaround “commendable,”
saying the new fiscal procedures had kept spending largely in line
with the budget.

“Sound fiscal outcomes such as this are critical for macroeconomic
stability, particularly now, to help combat domestic inflation
pressures,” he said.

Cambodia is wrestling with double-digit inflation which economists say
is not likely to ease amid rising global oil and food prices that have
driven up the cost of local consumer goods by as much as 30 percent,
leaving many staples out of reach for the country’s poorest.

Nelmes said many of the reforms introduced during the first stage of
the government’s financial review program were complex and affected
some fundamental core government functions.

“Because of this, it is not surprising that their implementation
remains ongoing and will need continued attention during stage two,”
he said, adding that continued attention had to be paid to further
improvements in financial reporting and budget transparency.

Chhon acknowledged the challenges ahead for Cambodia, which has
emerged from decades of civil strife as one of the region’s most
corrupt countries, losing an average of $350 million to graft each
year, according to the think tank Economic Institute of Cambodia.

“The more we do, the more we come to understand ... the demanding
nature of the task and challenges we have set ourselves,” Chhon said.

Greater transparency remains a key platform of opposition politicians,
who have dismissed the government’s fiscal reforms.

Sam Rainsy Party lawmaker Yim Sovann, speaking to the Post on May 29,
said the government’s improved revenue collection was not a clear
indication that it was moving ahead with better financial management.

“The government has failed to reform financial management,” said
Sovann, describing the amount of tax revenue collected as “very
small.”
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