CAMBODIANESS NEWS– The Government has to allocate at least $209 million of its savings to meet the year’s $8.7 billion expenses as spending has rapidly exceeded revenue, according to the mid-year report of the Ministry of Economics and Finance.

In the first half of 2025, the government collected only $3.7 billion, which is expected to increase by only 97.5 percent by the ​​end of the year, requiring another allocation to fill the gap.

National budget revenue implemented 53.4 percent of the Financial Law, a 7.9 percentage point increase from the first half of 2024. Meanwhile, national budget spending has increased significantly, reaching 54.6 percent of the Finance Law, surpassing the rate of the previous year.

The Ministry predicts a 2025 budget deficit of $1.7 billion, which is 3.5 percent of GDP, higher than the planned 3.09 percent.

The government may need to use its savings, in addition to the budget allocated by the 2025 Finance Law, to meet its planned spending requirements and maintain a balanced budget.

On the contrary, the government can maintain its 2025 Finance Law policy of not using savings if revenue collection, particularly tax and customs revenue, exceeds the estimated results, aligning with cost efficiency goals.

During the first six months, the primary source of income was taxes, amounting to $1.8 billion. However, the ministry predicts that revenue from taxes will only amount to $86.5 million of the annual budget plan. The government has spent 54.6 percent of the budget law.

The decline in income tax, value-added tax, and special tax, along with slow growth in the construction and real estate sectors and the implementation of government water policies, contribute to this situation.

The national defense, security, and public order sector has used 47.5 percent of the Financial Law, 2.3 percentage points faster than in 2024, and 8.2 percent higher in cash expenditure compared to the same period in 2024.

The high expenditure is attributed to additional credit to the Ministry of Interior for contract payments, detainee support, and the 80th anniversary celebration of the Cambodian National Police. 

The additional spending is also allocated to the Ministry of Justice to support improvements to the justice system. Meanwhile, the State Secretariat for Border Affairs supports border surveying and demarcation, as well as funds for maintaining a border data center.

Meanwhile, the Ministry of Defense is prioritizing activities to achieve its set goals, including strengthening the capacity of the police and armed forces, defending national sovereignty, territorial integrity, security, and safety, and supporting civilian rescue operations.

The national defense sector continues to support public security, passport and identity card production, and the “Safe Villages, Communes” policy. It also promotes democratic development at the sub-national level and improves the justice system through extrajudicial dispute resolution mechanisms.

The Supreme Council of Magistrates, courts, and judicial administration will continue to receive support, along with assistance in case management, human resource training, defense funds for the Bar Association, and border affairs. 

All of these activities are why government spending in 2025 is expected to increase significantly above plan, while revenue may be lower.

Over $260 million in foreign aid in first half 

At the same time, the government received $266.22 million in aid in the first half of 2025 to implement 10 projects, with $69.74 million from grant financing and $196.48 million from concessional loans.

The government also plans to borrow $2 billion from abroad and about $125 million from domestic investors in 2025, as per the Law on Financial Management for 2025, to fund the budget and public investment.