IMF Staff Completes a Staff Visit to Cambodia
IMF News, March 17, 2018
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Bibliographic details
- Published: March 17, 2018
Mission overview
- An IMF team led by Mr. Jarkko Turunen visited Phnom Penh from March 12 to 16, 2018, to conduct interim discussions on recent developments and Cambodia’s economic outlook.
- Statement issued on March 17, 2018.
- The team met with senior officials of the Royal Government of Cambodia, National Bank of Cambodia, and other public agencies, and with a wide range of stakeholders including representatives of the business and banking sectors, think tanks, and development partners.
Near-term economic outlook and recent developments
- Cambodia’s near-term economic outlook remains positive with GDP growth at around 7 percent.
- Inflation declined to 2.0 percent in January 2018.
- The current account deficit is estimated to have remained broadly stable at 8.4 percent of GDP in 2017.
- Foreign reserves continued to grow, reaching US$8.9 billion in January 2018.
- Bank credit growth moderated somewhat to 17.2 percent in January 2018, though credit growth to real estate and construction related activities continues to grow at a higher pace than credit to other sectors.
Fiscal and external positions (selected statistics)
- The general government deficit is estimated to have widened to 2.6 percent of GDP in 2017.
- Government deposits increased to 12.6 percent of GDP.
- Public external debt remained relatively low at US$6,671 million (about 30 percent of GDP) at end-2017.
- The 2018 budget includes further increases in public wages and capital spending, highlights education, health and social protection among priority development areas, and targets a higher deficit at about 5 percent of GDP.
Risks and upside factors
- Downside risks: Macro-financial and external risks remain significant; political uncertainties could dampen consumer and investor sentiment.
- Upside potential: Stronger global growth may increase foreign demand for goods exports and tourism.
Policy recommendations and reforms
- Policies should focus on:
- Managing macro-financial risks.
- Safeguarding fiscal sustainability.
- Advancing reforms to support growth, resilience, and inclusion.
- Specific measures and notes:
- Recently introduced credit risk and capital buffer regulations are welcome; implementation of these, as well as further steps outlined in the 2017 Article IV report, are needed to build resilience.
- A medium-term budget framework with a new revenue strategy is needed to safeguard fiscal sustainability, as recommended in the 2017 staff report.
IMF staff end-of-mission statement, March 17, 2018.