The budget is the instrument through which the government implements its fiscal policy; it addresses four key financial functions of the State, namely: (i) resource mobilization; (ii) allocation of resources; (iii) distributive justice; and (iv) macroeconomic stabilization.

Prior to 1970, the Cambodian financial system drew its inspiration from the French system and this was repeated with Law No. 1 NS 93 of December 28, 1993 on the Finance Laws and Budget System respecting the financial system and finance laws. This law was updated and replaced by the Law on Public Financial System adopted on 4th April 2008 and promulgated by the Royal Kram No. NS/RKM/ 0508/016 of May 13, 2008. Cambodia's financial and accounting regulations were consolidated by a series of government decrees, namely:

1. ⇒ Government Decree No. 82 of November 16, 1995 on General Regulations for Public Accounting.

2. ⇒ Government Decree No. 81 of November 16, 1995 instituting Financial Control.

3. ⇒ Government Decree No. 105 of October, 18, 2006 on the Procedures for Public Procurement.

These regulations prescribe the legal framework applicable to public financial management. They established the conditions under which financial and accounting operations resulting from implementation of the Budget Laws are performed, recorded in the books, and audited.

Technical Framework of the Budget

In Cambodia, public finance is based on budget principles, rules, and practices linked to the doctrine of the market economy. The technical framework of the budget is determined by the following principles: authoritativeness; annual budget or a twelve - month financial year; comprehensiveness; unity; universality; specialty; balance; accountability; transparency; stability; and achievability. However, the core principles are annual budget, unity, universality, specificity and balance.

The annual budget rule prescribes that the State budget be prepared in a yearly framework; the government also produces a three-year budget forecast called the Medium Term Expenditure Framework (MTEF). The budget year starts on January 1 and ends on December 31. The Minister of Economy and Finance (MEF) submits to the Prime Minister a comprehensive budget based on a preliminary set of expenditure priorities and a macroeconomic framework.