{
  "title": "IMF Executive Board Concludes 2019 Article IV Consultation with Cambodia",
  "publication": "IMF News, December 26, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/12/26/pr19490-cambodia-imf-executive-board-concludes-2019-article-iv-consultation",
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  "summary": "Growth accelerated to 7½ percent in 2018.",
  "publishDate": "2019-12-26",
  "sections": [
    {
      "heading": "Growth and inflation",
      "content": "- Growth accelerated to 7½ percent in 2018.\n- Real GDP growth expected at around 7 percent in 2019.\n- Inflation remains stable at around 2.5 percent.\n- Deterioration of external conditions is expected to lead to a slowdown in growth to below 7 percent in 2020."
    },
    {
      "heading": "External sector and reserves",
      "content": "- The current account deficit widened to about 12 percent of GDP in 2018 and is expected to widen further in 2019.\n- 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.\n- Selected balance of payments figures (in millions of dollars unless otherwise indicated):\n  - Exports, f.o.b.: 9,339 (2015); 10,278 (2016); 11,229 (2017); 12,963 (2018); 14,765 (2019); 16,727 (2020).\n  - Imports, f.o.b.: -13,286 (2015); -14,121 (2016); -15,504 (2017); -18,806 (2018); -21,950 (2019); -24,725 (2020).\n  - Current account (including official transfers): -1,598 (2015); -1,732 (2016); -1,797 (2017); -2,993 (2018); -3,600 (2019); -3,918 (2020).\n  - Current account (In percent of GDP): -8.8 (2015); -8.6 (2016); -8.1 (2017); -12.2 (2018); -13.5 (2019); -13.6 (2020).\n  - Gross official reserves 3/: 6,798 (2015); 9,093 (2016); 12,169 (2017); 14,598 (2018); 16,929 (2019); 18,753 (2020).\n  - Gross official reserves (In months of prospective imports): 4.9 (2015); 6.0 (2016); 6.7 (2017); 7.2 (2018); 7.1 (2019)."
    },
    {
      "heading": "Financial conditions and credit",
      "content": "- Financial conditions have been accommodative.\n- Private sector credit has accelerated and is increasingly concentrated in the real-estate and construction sectors.\n- Private sector credit growth: 27.1 (2015); 18.5 (2016); 23.2 (2017); 28.0 (2018); 25.0 (2019).\n- 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.\n- Policy suggestions from Directors include additional macroprudential measures and a broad-based policy response to address risks stemming from the real estate sector.\n- 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."
    },
    {
      "heading": "Fiscal performance and public finances",
      "content": "- 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.\n- The fiscal position is projected to remain in surplus in 2019.\n- Public finance indicators (in percent of GDP):\n  - Revenue: 19.6 (2015); 20.8 (2016); 21.6 (2017); 24.4 (2018); 23.6 (2019); 22. (2020).\n  - Domestic revenue: 17.7 (2015); 18.3 (2016); 19.7 (2017); 21.7 (2018); 22.4 (2019); 22.2 (2020).\n  - Of which : Tax revenue: 15.6 (2015); 15.8 (2016); 16.9 (2017); 18.8 (2018); 19.2 (2019); 19.3 (2020).\n  - Grants: 1.9 (2015); 2.5 (2016); 2.0 (2017).\n  - Expenditure: 20.3 (2015); 21.1 (2016); 23.1 (2017); 25.3 (2018); 25. (2019).\n  - Expense: 12.5 (2015); 13.5 (2016); 15.4 (2017); 15.9 (2018).\n  - Net lending (+)/borrowing(-): -0.6 (2015); -0.3 (2016); -0.8 (2017); 0.7 (2018); 0.5 (2019); -1.7 (2020).\n  - Net lending (+)/borrowing(-) excluding grants: -2.6 (2015); -2.8 (2016); -2.7 (2017); -1.4 (2018); -3.1 (2019).\n  - Net acquisition of financial assets: 2.3 (2015); 3.1 (2016); 0.3 (2017).\n  - Net incurrence of liabilities 2/: 2.1 (2015).\n- Directors welcomed plans to scale up priority social and infrastructure spending to meet SDG targets by 2030 but stressed the need to:\n  - Restrain non-development current spending, including the wage bill.\n  - Continue to strengthen revenue mobilization and enhance tax efficiency.\n  - 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.\n  - Publish the medium-term fiscal framework and implement a debt-based fiscal anchor to help safeguard fiscal sustainability over the medium term."
    },
    {
      "heading": "Structural reforms, SDGs, and data",
      "content": "- Directors commended significant progress toward the SDGs owing to strong growth and structural reforms.\n- They welcomed the authorities’ structural reform plan to improve competitiveness and diversification through trade facilitation, lowering the cost of doing business, and improving governance.\n- Directors emphasized meeting SDG targets by 2030 will require sustained policy efforts, particularly in:\n  - Improving education and health outcomes.\n  - Investing in infrastructure.\n- To improve economic resilience, Directors recommended addressing structural constraints through:\n  - Diversifying growth drivers.\n  - Ensuring a reliable energy supply.\n  - Strengthening anti-corruption efforts.\n  - Enhancing the regulatory environment.\n- Directors underscored the importance of renewed efforts to address data gaps and improve data quality."
    },
    {
      "heading": "Risks highlighted by the Executive Board",
      "content": "- Cambodia’s economic outlook is subject to significant downside risks.\n- 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.\n- Other risks include weaker-than-expected global growth."
    },
    {
      "heading": "Cambodia: Selected Economic Indicators, 2015–20 (key series)",
      "content": "- Output and prices (annual percent change):\n  - GDP in constant prices: 7.0 (2015); 6.9 (2016); 7.5 (2017); 6.8 (2018).\n  - Inflation (end-year): 2.8 (2015); 3.9 (2016); 2.2 (2017); 1.6 (2018); 2.7 (2019).\n  - Inflation (Annual average): 1.2 (2015); 3.0 (2016); 2.9 (2017); 2.4 (2018); 2.6 (2019).\n- Saving and investment balance (in percent of GDP):\n  - Gross national saving: 13.6 (2015); 14.1 (2016); 14.9 (2017); 11.5 (2018); 10.4 (2019); 10.2 (2020).\n  - Government saving: 5.2 (2015); 4.8 (2016); 6.3 (2017).\n  - Private saving: 8.4 (2015); 9.2 (2016); 10.1 (2017); 3.7 (2018).\n  - Gross fixed investment: 22.5 (2015); 22.7 (2016); 23.0 (2017); 23.7 (2018); 23.9 (2019); 23.8 (2020).\n  - Government investment: 7.8 (2015); 7.6 (2016); 7.7 (2017); 8.2 (2018); 9.4 (2019).\n  - Private investment: 14.7 (2015); 15.1 (2016); 15.5 (2017); 16.0 (2018); 15.7 (2019); 14.4 (2020).\n- Money and credit (annual percent change):\n  - Broad money: 18.0 (2015); 24.0 (2016); 25.2 (2017).\n  - Velocity of money 1/: 1.5 (2015); 1.4 (2016); 1.0 (2017); 0.9 (2018).\n- External debt (in millions of dollars unless otherwise indicated):\n  - Public external debt: 5,648 (2015); 5,861 (2016); 6,669 (2017); 7,021 (2018); 7,544 (2019); 8,112 (2020).\n  - 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).\n  - Public debt service: 137 (2015); 186 (2016); 211 (2017); 266 (2018); 342 (2019); 402 (2020).\n  - Public debt service (In percent of exports of goods and services): 1.3 (2015); 1.7 (2016).\n- Memorandum items:\n  - Nominal GDP (in billions of Riels): 73,423 (2015); 81,242 (2016); 89,754 (2017); 98,919 (2018); 108,550 (2019); 118,982 (2020).\n  - 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).\n  - Exchange rate (Riels per dollar; period average): 4,060 (2015); 4,053 (2016); 4,045 (2017); 4,047 (2018).\n\nIMF Communications Department, Press Release No. 19/490, December 26, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Staff Report\n- Cambodia and the IMF\n- IMF Policy Advice -- A Factsheet\n- Special Drawing Rights (SDRs) -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/12/26/pr19490-cambodia-imf-executive-board-concludes-2019-article-iv-consultation"
    }
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    "Published: December 26, 2019",
    "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.",
    "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):",
    "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.",
    "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):",
    "Directors welcomed plans to scale up priority social and infrastructure spending to meet SDG targets by 2030 but stressed the need to:",
    "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:",
    "To improve economic resilience, Directors recommended addressing structural constraints through:",
    "Directors underscored the importance of renewed efforts to address data gaps and improve data quality.",
    "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.",
    "Output and prices (annual percent change):",
    "Saving and investment balance (in percent of GDP):",
    "Money and credit (annual percent change):",
    "External debt (in millions of dollars unless otherwise indicated):",
    "Memorandum items:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Staff Report](https://www.imf.org/en/Publications/CR/Issues/2019/12/23/Cambodia-2019-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-48912)",
    "[Cambodia and the IMF](http://www.imf.org/external/country/KHM/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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