Poverty-Linked Ministries Underspent in 2006: Report

Several ministries directly involved with poverty reduction once again underspent money allocated to them in 2006, while many other ministries overspent, sometimes by several times what they were budgeted, a soon to be released NGO Forum report states.

The report argues that given the government’s pro-poor policy, priority status should be given to ministries they say have a direct impact on poverty reduction: Health, Education, Women’s Affairs, Agriculture, Rural Development, Public Works, and Labor.

“We consider these ministries really important,” said Ou Sivhouch, budget monitoring project officer for NGO Forum. “If the projects of these ministries are implemented then the poverty rate will drop.”

The report states that non-priority ministries and government bodies overspent a total of more than $90 million last year.

Nearly all the priority ministries spent money allocated to them for 2006 for current expenditures, which relates to payments for goods and services for the year such as salaries and stationary.

But none of these ministries, except Education, spent all of the money allocated to them for capital expenditures, which include longer-term expenses such as construction and renovations.

According to the report, the Ministry of Health spent only 67 percent of its allocated capital expenditure budget; Agriculture spent 87 percent; Rural Development, 81 percent; Public Works, 49 percent; Women’s Affairs, 38 percent; and the Labor Ministry spent none.

By contrast, the Ministry of Industry, Mines and Energy spent 339 percent of its current expenditure budget, the Council of Ministers spent 173 percent, and the Ministry of Finance spent 156 percent.

As for capital expenditures, some ministries spent many times more than they were supposed to.

The Interior Ministry spent 458 percent of its allocated budget; the Justice Ministry, 364 percent; the Finance Ministry, 318 percent; and the Ministry of Industry, 244 percent. But the biggest overspender as a percentage of allocated money was by far the Ministry of Environment, which spent 1,145 percent of its capital expenditure budget last year.

Ou Sivhouch said it was difficult to say why some priority ministries underspent while others were able to spend so freely.

“Whether money is diverted from the priority sector to other ministries, we really cannot say, but it is likely to be so,” he said.

Finance Ministry officials directed all questions to Secretary of State Ouk Rabun, who handles budget matters, and Budget Department Director Sok Saravuth. A man answering Ouk Rabun’s phone Thursday morning denied that he was the secretary of state, and further attempts to reach him were unsuccessful. Sok Saravuth said that he was out of the country and could not comment.

Rural Development Minister Lu Laysreng said his ministry did not spend all that it had been allocated because capital expenditure projects were not completed over the course of the year, so the ministry did not pay out its entire budget.

“My administration moved too slow; we cannot spend it all,” he said.

Um Sokha, director of the Ministry of Public Works and Transport’s accounting department, said her ministry may appear to have underspent because some projects were not completed, and thus not fully paid for until early 2007. But she added that the whole of the budget was ultimately used.

“We did a lot of construction work and had remarkable results,” she said.

An assistant to Labor Minister Vong Sauth directed all questions regarding his ministry’s reported underspending to the ministry’s finance department Director Say Vicheth, who could not be reached for comment.

Minister of Industry Suy Sem denied his ministry had spent 339 percent of its current expenditures and 224 percent of its capital expenditures.

“I think that figure on ministry spending is not correct,” he said. “Mine is a poor ministry, we don’t even have enough paper,” he added.

Environment Minister Mok Mareth also denied his ministry had overspent.

“These predictions are wrong,” he said. “We can not spend more than the budget,” he added.

Interior Ministry spokesman Lieutenant General Khieu Sopheak referred all questions about his ministry’s spending to the ministry’s finance department, members of which could not be contacted.

SRP lawmaker Son Chhay said he agreed with the report. He said that he has noticed that the budget approved by the National Assembly each year is routinely ignored with no explanation given.

“I don’t see enough transparency in the spending of state money,” he said.

CPP lawmaker Cheam Yeap, chairmen of the Assembly commission on finance, said that in general the government addresses the needs of its ministries, but acknowledged that some priority ministries have spent less money that non-priority ministries.

Cheam Yeap added that ministries are spending their funds properly and are supervised by international bodies including the UN and the World Bank.

John Nelmes, resident representative for the International Monetary Fund, wrote in an e-mail that the ministries put forward by the report as “priorities” broadly make sense.

But according to data in the report, even though the Health Ministry might have not spent its entire budget in 2006, its expenditures were still almost 10 times more than the Ministry of Industry, despite that ministry’s over-runs, Nelmes wrote.

Robert Taliercio, senior country economist for the World Bank, wrote by e-mail that over the past decade the government has drastically changed its spending patterns by shifting “away from the defense and security sector toward the priority sectors of education health, agriculture and rural development.”

“Compared to several years ago, overall budget execution is more timely and predictable,” Taliercio said.   “The budget is becoming a more credible instrument of policy implementation,” he said, though he added that Cambodia’s financial management process is in the midst of a 10-year reform program.

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