Less than a fifth of this year’s Cambodian budget is for “unallocated spending”, whereas in 2014 “unallocated spending” accounted for half the budget. Private Tye explains what is going on.
Remember that in ancient times there was no difference between a leader’s wealth and that of the state. The Egyptians paid their taxes to the Pharaoh and he spent the money however he liked. He might buy a new chariot, build a temple or expand the army.
Now move forward to the 21st century and we find that a leader needs the approval of the BBC and CNN. To do this you need to be elected. That’s easy enough. You can buy votes or assassinate all your opponents, the BBC does not care as long as you have the votes. However, in a Democracy the wealth of the Prime Minister and that of the state are supposed to be separate.
The Cambodian Prime Minister’s solution was simple. Half the tax revenue was for public institutions, the other half was “unallocated spending” which he could use to buy things like new cars, condominiums in London and beach-front villas in the Bahamas. However, this is such an obvious scam that even CNN might notice (especially if you are being friendly with China rather than the USA).
What you should do is this: All the tax money goes into the public funds. Then you initiate a big project, say, road building. You arrange for one of your cronies to get the contract. The crony spends one third of the money on the roads, keeps one third for himself and transfers the other third to your bank account in the British Virgin Islands. You use the Virgin Islands money to buy your new yacht, your London Condominium Etc. Not even CNN could criticize this procedure.
However, there can still be problems. If you want to avoid being the victim of American regime change you will need to make a huge contribution to the Clinton Foundation and this will have to come out of your Virgin Islands money.
Oops, the Clinton Foundation just got Trumped. Hun Sen seems to have seen this coming, and no doubt saved a lot of money. Looks like he is really learning to play the game these days.
The story from the Cambodia Daily (25 Nov):
Budget’s Biggest Item Is ‘Unallocated Spending’
Where does the money go? It’s the perennial question of Cambodia’s civil society and opposition parties when the time comes for parliament to pass the national budget, as it did on Wednesday.
“The budget process is not transparent and the amount of information contained in the budget document is too abstract for anyone to do accurate analysis,” Preap Kol, director of Transparency International (T.I.) in Cambodia, said in an email.
In a country perceived as the most corrupt in the region by T.I.’s rankings last year, the largest line item in the budget seems especially opaque: almost $854 million set aside for “unallocated spending,” out of a total budget of $5 billion.
The government insists there’s nothing nefarious about the funds, which it says are spent on disaster relief and other spontaneous needs. But critics claim the practice gives wide latitude to Prime Minister Hun Sen with very little oversight.
Finance Ministry officials could not be reached for comment. Responding to criticism in 2014, however, when reserve funds totaled $1.53 billion and constituted almost half of the budget, the ministry said in a statement that the money went toward electricity subsidies, repaying loans, diplomatic missions and infrastructure projects.
But the ministry’s wording was imprecise, specifying that over half of the funds would go to unspecified “ministries and institutions.”
Council of Ministers spokesman Phay Siphan urged “stupid” critics in the opposition party to scrutinize end-of-year budget reports, which contain breakdowns of the “emergency, unpredictable funding” for items like flood relief.
“Every Friday, we always hold a meeting. Any proposal to spend extra money, [ministers] have to submit to the government meeting,” he said. The funding is then voted up or down by the prime minister’s Cabinet, according to Mr. Siphan.
“The government has to close that account. Any urgent need, they have to explain at the end of the year,” he said. The opposition should “go back and read that table.”
But opposition lawmaker Son Chhay said the government’s explanations were too vague and the practice was inappropriate.
“That is not the proper way. The government can do whatever it likes,” he said, adding that “we hardly see money” for disaster relief. “When it comes time to the election, they use this money to do the propaganda,” he said.
The practice of setting aside such a large chunk of money “isn’t very common, at all” in other countries, said Miguel Chanco, lead regional analyst for the Economist Intelligence Unit.
“Governments around the region would consider themselves lucky if they ever found themselves in a situation where they can set aside funds for ‘reserve.’ That Cambodia’s government continues with this practice—and doing so in large amounts—fuels long-standing concerns over the lack of fiscal transparency,” he wrote in an email.
The practice also eroded the authority of the National Assembly, according to Markus Karbaum, a German political scientist focused on Cambodia.
“Budgeting is the most prominent right of the legislative,” he wrote. Giving control to the prime minister “means a self-disempowerment of Cambodia’s parliament as its members will hardly vote on the concrete spending.”
“However, as this reserve was incredible high at 44 percent in 2014, the reduction is clearly a development into the right direction,” he added.
Sophal Ear, an associate professor of diplomacy and world affairs at Occidental College in Los Angeles, said he was encouraged that the government appeared to be steering more funding through the budget rather than off the books, as it had in the past.
“This would be a huge step towards bringing the budgeting process in line with international standards,” he said.
“Then comes the hard part: what is in the budget should be spent properly; it should be procured competitively; it should be delivered to the right places and should not be sold in markets,” he added.
“$5 billion is a lot of money…. If you have a leaky bucket (or budget), a lot of that is going to end up elsewhere."