More Tax Revenue Needed To Cover Spending, Says IMF

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Traffic goes past the General Department of Taxation headquarters along Russian Blvd in Phnom Penh. KHMER TIMES / FABIEN MOURET

At the conclusion of its annual Article IV consultation, the International Monetary Fund (IMF) noted that despite Cambodia’s continued strong economic performance the government will face the need to enhance revenue collection through more stringent tax measures to contain near-term deficits from increased spending.

“Cambodia over the medium term faces several important pressures relating to development including improving infrastructure,” said IMF economist Jarkko Turunen. “And as Cambodia moves up in terms of income, the sources of [government] income will change and the country will receive fewer grants as a higher income economy.”

“Prudent fiscal management in recent years has kept fiscal deficits in check and public debt low,” he said, adding that a rise in tax collection last year had improved revenues to over 15 percent of the GDP. “But this year fiscal deficit is projected to widen to about 3.7 percent of GDP, owing to higher public sector wages and another current spending.”

The outlook for the Cambodian economy remained widely positive amongst the team of economists thanks to a sturdy projected growth of 7 percent for 2017 and 2018, even though private investment decreased due to election uncertainties at the start of the year, according to Turunen.

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