As the government works to close a $55 million budget gap, Japan donated $15.7 million in commodities aid to generate revenue for the national budget at a ceremony Wednesday at the Ministry of Commerce.
Though the aid helps some, Commerce Minister Cham Prasidh said the government must also raise taxes.
“In the process of establishing the Asean Free Trade Area, in which we start reducing customs duties, we must start increasing domestic taxes in order to maintain the balance of our national budget without affecting our fiscal revenues,” Cham Prasidh said.
Since tax collection may be delayed or insufficient to keep the budget balanced, he said, the government will be covered by “other sources,” such as Japan’s gift.
The donated commodities, which include fuel, writing paper and construction materials, are to be sold by the government to private companies around the world through a public bidding process. The revenue generated is to aid the national budget.
“This form of budgetary support has turned out to be a kind of grant aid for Cambodia, which is more needed than ever before,” Cham Prasidh said. “The budgetary support from Japan will be a great help to ensure macroeconomic stability.”
Since 1993, Japan has provided general grant aid worth $739 million to build roads and fund economic and social projects, Cham Prasidh said.
About $132 million of that aid has funded budget shortfalls, Japanese Ambassador Gotaro Ogawa said. He added that Japan will continue to assist Cambodia in the future. “I…strongly hope that this Japanese [aid] will continue to contribute to the promotion of the Cambodian economy and the socio-economic development that will enable the [government] to upgrade the life of the Cambodian people and achieve durable poverty reduction,” the ambassador said.
