IMF Executive Board Concludes 2019 Article IV Consultation with Cambodia
IMF News, December 26, 2019
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- Published: December 26, 2019
Growth and inflation
- Growth accelerated to 7½ percent in 2018.
- Real GDP growth expected at around 7 percent in 2019.
- Inflation remains stable at around 2.5 percent.
- Deterioration of external conditions is expected to lead to a slowdown in growth to below 7 percent in 2020.
External sector and reserves
- The current account deficit widened to about 12 percent of GDP in 2018 and is expected to widen further in 2019.
- Robust Foreign Direct Investment inflows and an increase in other short-term inflows contributed to an accumulation of gross international reserves to about 7 months of prospective imports in August 2019.
- Selected balance of payments figures (in millions of dollars unless otherwise indicated):
- Exports, f.o.b.: 9,339 (2015); 10,278 (2016); 11,229 (2017); 12,963 (2018); 14,765 (2019); 16,727 (2020).
- Imports, f.o.b.: -13,286 (2015); -14,121 (2016); -15,504 (2017); -18,806 (2018); -21,950 (2019); -24,725 (2020).
- Current account (including official transfers): -1,598 (2015); -1,732 (2016); -1,797 (2017); -2,993 (2018); -3,600 (2019); -3,918 (2020).
- Current account (In percent of GDP): -8.8 (2015); -8.6 (2016); -8.1 (2017); -12.2 (2018); -13.5 (2019); -13.6 (2020).
- Gross official reserves 3/: 6,798 (2015); 9,093 (2016); 12,169 (2017); 14,598 (2018); 16,929 (2019); 18,753 (2020).
- Gross official reserves (In months of prospective imports): 4.9 (2015); 6.0 (2016); 6.7 (2017); 7.2 (2018); 7.1 (2019).
Financial conditions and credit
- Financial conditions have been accommodative.
- Private sector credit has accelerated and is increasingly concentrated in the real-estate and construction sectors.
- Private sector credit growth: 27.1 (2015); 18.5 (2016); 23.2 (2017); 28.0 (2018); 25.0 (2019).
- Directors noted the financial system is profitable, has sizeable capital buffers, and has low nonperforming loan ratios, but called for prompt actions to moderate credit growth.
- Policy suggestions from Directors include additional macroprudential measures and a broad-based policy response to address risks stemming from the real estate sector.
- Directors called for further progress to strengthen financial sector oversight, including AML/CFT supervision, and promoted financial market development and local currency use to allow the central bank to move toward a more robust and flexible monetary policy framework.
Fiscal performance and public finances
- Robust revenue performance continues; strong administrative efforts produced a 2018 fiscal balance (GFS 2014 format) showing a surplus close to 1 percent of GDP in 2018.
- The fiscal position is projected to remain in surplus in 2019.
- Public finance indicators (in percent of GDP):
- Revenue: 19.6 (2015); 20.8 (2016); 21.6 (2017); 24.4 (2018); 23.6 (2019); 22. (2020).
- Domestic revenue: 17.7 (2015); 18.3 (2016); 19.7 (2017); 21.7 (2018); 22.4 (2019); 22.2 (2020).
- Of which : Tax revenue: 15.6 (2015); 15.8 (2016); 16.9 (2017); 18.8 (2018); 19.2 (2019); 19.3 (2020).
- Grants: 1.9 (2015); 2.5 (2016); 2.0 (2017).
- Expenditure: 20.3 (2015); 21.1 (2016); 23.1 (2017); 25.3 (2018); 25. (2019).
- Expense: 12.5 (2015); 13.5 (2016); 15.4 (2017); 15.9 (2018).
- Net lending (+)/borrowing(-): -0.6 (2015); -0.3 (2016); -0.8 (2017); 0.7 (2018); 0.5 (2019); -1.7 (2020).
- Net lending (+)/borrowing(-) excluding grants: -2.6 (2015); -2.8 (2016); -2.7 (2017); -1.4 (2018); -3.1 (2019).
- Net acquisition of financial assets: 2.3 (2015); 3.1 (2016); 0.3 (2017).
- Net incurrence of liabilities 2/: 2.1 (2015).
- Directors welcomed plans to scale up priority social and infrastructure spending to meet SDG targets by 2030 but stressed the need to:
- Restrain non-development current spending, including the wage bill.
- Continue to strengthen revenue mobilization and enhance tax efficiency.
- Improve fiscal governance to raise revenue collection, manage fiscal risks from public-private partnerships, increase spending efficiency by strengthening public investment management, and reduce opportunities for corruption.
- Publish the medium-term fiscal framework and implement a debt-based fiscal anchor to help safeguard fiscal sustainability over the medium term.
Structural reforms, SDGs, and data
- Directors commended significant progress toward the SDGs owing to strong growth and structural reforms.
- They welcomed the authorities’ structural reform plan to improve competitiveness and diversification through trade facilitation, lowering the cost of doing business, and improving governance.
- Directors emphasized meeting SDG targets by 2030 will require sustained policy efforts, particularly in:
- Improving education and health outcomes.
- Investing in infrastructure.
- To improve economic resilience, Directors recommended addressing structural constraints through:
- Diversifying growth drivers.
- Ensuring a reliable energy supply.
- Strengthening anti-corruption efforts.
- Enhancing the regulatory environment.
- Directors underscored the importance of renewed efforts to address data gaps and improve data quality.
Risks highlighted by the Executive Board
- Cambodia’s economic outlook is subject to significant downside risks.
- A key risk is the on-going Everything but Arms (EBA) review by the EU—Cambodia’s primary export partner—which could lead to a suspension of preferential trade access later next year and could have a large negative impact on economic activity.
- Other risks include weaker-than-expected global growth.
Cambodia: Selected Economic Indicators, 2015–20 (key series)
- Output and prices (annual percent change):
- GDP in constant prices: 7.0 (2015); 6.9 (2016); 7.5 (2017); 6.8 (2018).
- Inflation (end-year): 2.8 (2015); 3.9 (2016); 2.2 (2017); 1.6 (2018); 2.7 (2019).
- Inflation (Annual average): 1.2 (2015); 3.0 (2016); 2.9 (2017); 2.4 (2018); 2.6 (2019).
- Saving and investment balance (in percent of GDP):
- Gross national saving: 13.6 (2015); 14.1 (2016); 14.9 (2017); 11.5 (2018); 10.4 (2019); 10.2 (2020).
- Government saving: 5.2 (2015); 4.8 (2016); 6.3 (2017).
- Private saving: 8.4 (2015); 9.2 (2016); 10.1 (2017); 3.7 (2018).
- Gross fixed investment: 22.5 (2015); 22.7 (2016); 23.0 (2017); 23.7 (2018); 23.9 (2019); 23.8 (2020).
- Government investment: 7.8 (2015); 7.6 (2016); 7.7 (2017); 8.2 (2018); 9.4 (2019).
- Private investment: 14.7 (2015); 15.1 (2016); 15.5 (2017); 16.0 (2018); 15.7 (2019); 14.4 (2020).
- Money and credit (annual percent change):
- Broad money: 18.0 (2015); 24.0 (2016); 25.2 (2017).
- Velocity of money 1/: 1.5 (2015); 1.4 (2016); 1.0 (2017); 0.9 (2018).
- External debt (in millions of dollars unless otherwise indicated):
- Public external debt: 5,648 (2015); 5,861 (2016); 6,669 (2017); 7,021 (2018); 7,544 (2019); 8,112 (2020).
- Public external debt (In percent of GDP): 31.2 (2015); 29.1 (2016); 30.0 (2017); 28.6 (2018); 28.5 (2019); 28.3 (2020).
- Public debt service: 137 (2015); 186 (2016); 211 (2017); 266 (2018); 342 (2019); 402 (2020).
- Public debt service (In percent of exports of goods and services): 1.3 (2015); 1.7 (2016).
- Memorandum items:
- Nominal GDP (in billions of Riels): 73,423 (2015); 81,242 (2016); 89,754 (2017); 98,919 (2018); 108,550 (2019); 118,982 (2020).
- Nominal GDP (In millions of U.S. dollars): 18,083 (2015); 20,043 (2016); 22,189 (2017); 24,444 (2018); 26,688 (2019); 28,850 (2020).
- Exchange rate (Riels per dollar; period average): 4,060 (2015); 4,053 (2016); 4,045 (2017); 4,047 (2018).
IMF Communications Department, Press Release No. 19/490, December 26, 2019.
