Domestic revenues are an increasingly vital source of finance for the Kingdom’s development, accounting for 19% of gross domestic product (GDP) last year and is expected to reach 22.5% by the end of 2025, said the UN on July 16.
The United Nations Development Program (UNDP) made the remark on the basis of a report titled “Cambodia’s Development Finance Assessment” released the same day.
The study, he said, “analyzes the compositions and trends of all Cambodia’s financial flows, covering the public, private, international and domestic sources available to support development investments in the country” and “estimates the probable reductions in these flows resulting from the Covid-19 crisis ”.
“While official development assistance [ODA] flows remain significant – estimated at around 7.9% of GDP – their composition has shifted more towards loans and, in this context, towards less concessional conditions.
“Covid-19 has resulted in total losses of funding flows estimated at $ 3.6 billion, representing 19.8% of total flows, for 2020. The three most affected are national income, foreign direct investment. [FDI] and private domestic investment.
“The report also underlines the importance of a set of financing policy innovations to strengthen the state’s capacity to manage public finances and ensure high levels of private capital flows. This highlights some of the green finance mechanisms that should be explored to achieve the Sustainable Development Goals. [SDG]”Said the UN agency.
UNDP Resident Representative in Cambodia, Nick Beresford, hailed the report as the most accurate illustration of the Kingdom’s expected financial inflows achieved through such a comprehensive overview.
“Once we are able to ease the restrictions related to Covid-19, we can expect strong growth in development finance flows. Within these flows, domestic sources are becoming more and more important.
“Cambodia can expect to graduate from the least developed countries [LDC] status towards the end of the 2020s. The time has come to prepare new sources of funding, as this report makes clear. For example, being able to issue Khmer riel bonds is an option being considered and strongly supported by UNDP, ”he said.
The Secretary of State of the Ministry of Economy and Finance, Ros Seilava, stressed that the government “is considering launching the 2021-2023 post-Covid-19 economic recovery plan which will be financed by public resources while considering also to mobilize additional resources from other financing options, hence this report. will provide us with an overview of the different financing options ”.
Seilava hailed the report’s policy recommendations as “another contribution from [the] UNDP will provide evidence-based policy recommendations to the government.