IMF Staff Completes 2025 Article IV Mission to Cambodia

IMF News, September 3, 2025

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Real GDP growth reached 6 percent in 2024.
Growth is projected to moderate to 4.8 percent in 2025.
Inflation is expected to rise moderately to about 2.8 percent but remains contained.
The outlook is subject to considerable downside risks.

2024 performance supported by a robust rebound in garment and agricultural exports and a recovery in tourism.
Momentum continued in early 2025.
Significant external headwinds: trade policy uncertainty and regional tensions, including the border dispute with Thailand (despite the recent ceasefire).
External shocks are expected to weigh on external demand, tourism, and remittance inflows.

Risks are heavily tilted to the downside.
A sharper-than-expected escalation in trade and border tensions could further weaken exports, tourism, and growth.
Domestic financial sector vulnerabilities are a key concern:
- High private sector debt.
- Rising NPLs, which have surpassed 7 percent—particularly in the tourism and real estate sectors—could lead to corporate and household financial stress and weigh on the recovery.
Upside scenario: successful reintegration of returning workers into the domestic labor force could support consumption and mitigate some adverse growth effects.

Short term:
- Provide temporary and targeted support to vulnerable households and displaced workers affected by shocks.
- Maintain overall fiscal discipline while offering targeted assistance.
Medium term:
- Undertake a gradual, growth-friendly fiscal consolidation to rebuild buffers and ensure long-term sustainability of public debt.
- Prioritize a credible revenue mobilization strategy, including:
- Reducing extensive tax exemptions.
- Strengthening tax compliance.
- Create fiscal space for critical spending on social protection, education, health, and infrastructure.

Monetary policy:
- Remain agile to navigate the uncertain economic environment.
- Continue efforts by the National Bank of Cambodia to modernize its monetary policy framework to enhance policy effectiveness and advance the de-dollarization strategy.
Financial stability:
- Safeguarding financial stability is the priority.
- The IMF team welcomes the authorities’ plans to address rising NPLs.
- Recommended actions:
- Carefully calibrated exit from regulatory forbearance so banks adequately recognize provisions for loan losses.
- Strengthen supervision of banks and non-bank financial institutions with high exposure to the real estate sector.
- Enhance crisis management and bank resolution frameworks to maintain stability.

Accelerate structural reforms to build productive capacity and diversify growth drivers.
With Cambodia’s impending graduation from Least Developed Country status by end-2029, urgent reform priorities include:
- Enhancing the business environment by strengthening governance and anti-corruption efforts.
- Improving the rule of law, property rights, and access to information.
- Strengthening social safety nets.
- Investing in human capital to support employment, attract foreign direct investment, and facilitate a shift toward higher value-added industries.

Address data limitations and improve macroeconomic data quality.
Enhance inter-agency information sharing to benefit economic monitoring and policymaking.
The IMF will continue to provide technical assistance to help improve statistics and in other areas of capacity development.

An IMF team, led by Mr. Kenichiro Kashiwase, held discussions with the Cambodian authorities, private sector representatives, and developing partners from August 20 to September 2 for the 2025 Article IV consultation.
At the end of the mission, Mr. Kashiwase issued a statement summarizing the preliminary findings and recommendations.
The views expressed in the statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

IMF Staff Completes 2025 Article IV Mission to Cambodia — Press Release No. 25/287, September 2, 2025.