## IMF Executive Board Concludes 2023 Article IV Consultation with Cambodia _IMF News, January 31, 2024_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2023 Article IV Consultation with Cambodia](https://www.imf.org/en/news/articles/2024/01/30/pr2431-cambodia-imf-executive-board-concludes-2023-article-iv-consultation) ## Other formats - [Markdown version](/en/news/articles/2024/01/30/pr2431-cambodia-imf-executive-board-concludes-2023-article-iv-consultation/index.md) - [Structured JSON version](/en/news/articles/2024/01/30/pr2431-cambodia-imf-executive-board-concludes-2023-article-iv-consultation/index.json) - [Bundle manifest](/en/news/articles/2024/01/30/pr2431-cambodia-imf-executive-board-concludes-2023-article-iv-consultation/bundle-manifest.json) ## Bibliographic details - Published: January 31, 2024 --- ### Macroeconomic outlook and recent performance - Cambodia achieved GDP growth of 5.2 percent in 2022 and is projected to grow by 5.3 percent in 2023. - Projected GDP growth for 2024–2028: - 2024: 6.0 - 2025: 6.4 - 2026: 6.5 - 2027: 6.2 - 2028: 6.3 - Sectoral drivers and developments: - Manufacturing added over 3 percent to real GDP in the recovery. - Non-garment goods exports expanded, with electronics exports (particularly solar panels) showing resilience and helping offset a decline in garment exports. - Services rebounded strongly; tourism is recovering and was boosted by the 2023 South-East Asia Games. - Agriculture faced challenges from weather and rising costs. - Inflation dynamics: - Inflation was volatile, declined from a peak in June last year, and rebounded to 3.9% in October due to higher food and fuel prices. - Monetary and financial conditions: - The central bank gradually unwound pandemic-era support measures, including increasing reserve requirements for foreign currencies. - Broad money annual percent change: 15.3 (2020), 8.2 (2021), 11.0 (2022), 12.3 (2023), 12.8 (2024), 8.3 (2025). - Private sector credit annual percent change: 17.2 (2020), 23.6 (2021), 13.0 (2022). - Velocity of money 1/: 0.8 (2020), 0.7 (2021), 0.6 (2022). - External sector: - Exports, f.o.b. (in millions of dollars): 18,470 (2020), 19,527 (2021), 23,179 (2022), 23,387 (2023), 25,229 (2024), 27,361 (2025), 29,686 (2026), 32,209 (2027), 34,944 (2028). - Imports, f.o.b. (in millions of dollars): -20,993 (2020), -30,726 (2021), -32,005 (2022), -27,360 (2023), -30,760 (2024), -33,226 (2025), -36,004 (2026), -39,075 (2027), -42,468 (2028). - Current account (including official transfers) (in millions of dollars): -870 (2020), -11,179 (2021), -7,535 (2022), -647 (2023), -1,954 (2024), -2,141 (2025), -2,312 (2026), -2,521 (2027), -2,860 (2028). - Gross official reserves 3/ (in millions of dollars): 21,334 (2020), 21,119 (2021), 17,805 (2022), 20,869 (2023), 23,348 (2024), 25,881 (2025), 28,534 (2026), 31,478 (2027), 34,583 (2028). - Gross official reserves (in months of prospective imports): 7.8 (2020), 7.3 (2021), 7.4 (2022). ### Fiscal developments and projections - Fiscal performance: - Fiscal positions improved in 2022 due to stronger-than-expected revenue performance. - The fiscal deficit is expected to widen in 2023 because of: - Extended targeted social supports to households and firms affected by COVID-19 and the cost-of-living crisis. - Increased spending associated with the 2023 South-East Asia Games and the General Election. - Finalization of incomplete infrastructure projects from 2022. - From 2024, the deficit is projected to narrow as temporary support measures (including cash transfers) are scaled back while retaining targeted fiscal support through social protection system reform. - Public finance aggregates (in percent of GDP): - Revenue: 21.6 (2020), 23.0 (2021), 23.2 (2022), 23.3 (2023), 23.4 (2024), 23.5 (2025). - Domestic revenue: 22.0 (2020), 20.0 (2021), 22.2 (2022), 21.7 (2023), 21.9 (2024), 22.1 (2025). - Of which: Tax revenue: 19.7 (2020), 18.0 (2021), 18.9 (2022), 19.1 (2023), 19.2 (2024), 19.3 (2025), 19.4 (2026), 19.6 (2027). - Grants: 1.9 (2020), 1.6 (2021), 1.8 (2022), 1.3 (2023), 1.2 (2024). - Expenditure: 27.3 (2020), 28.6 (2021), 26.6 (2022), 25.2 (2023), 26.0 (2024), 26.3 (2025), 26.1 (2026). - Expense: 17.1 (2020), 17.6 (2021), 17.5 (2022). - Net lending (+)/borrowing(-): -3.4 (2020), -7.1 (2021), -1.0 (2022), -3.6 (2023), -2.0 (2024), -2.7 (2025), -2.9 (2026), -2.6 (2027). - Net lending (+)/borrowing(-) excluding grants: -5.3 (2020), -8.6 (2021), -4.9 (2022), -3.3 (2023), -4.0 (2024), -4.2 (2025), -3.8 (2026). - Net incurrence of liabilities 2/: 4.0 (2020), 3.4 (2021), 3.2 (2022), 2.8 (2023), 2.7 (2024). - Total public debt (in percent of GDP): 34.4 (2020), 35.9 (2021), 34.8 (2022), 35.8 (2023), 36.3 (2024), 36.5 (2025), 36.4 (2026), 36.8 (2027). ### Risks and vulnerabilities - Near-term downside risks: - Weaker-than-expected growth in the U.S. (accounting for over 40 percent of Cambodia's exports) and China. - U.S. monetary tightening and tighter global financial conditions. - High levels of private debt domestically. - Medium-term and structural risks: - Geopolitical tensions and trade policy uncertainties, including trade fragmentation. - Structural decline in growth from China. - Commodity price fluctuations and climate events. - Debt and external vulnerabilities: - Public external debt (in millions of dollars): 8,810 (2020), 9,505 (2021), 9,971 (2022), 10,926 (2023), 11,805 (2024), 12,727 (2025), 13,627 (2026), 14,701 (2027), 15,937 (2028). - Public debt service (in millions of dollars): 365 (2020), 397 (2021), 427 (2022), 413 (2023), 430 (2024), 446 (2025), 461 (2026), 482 (2027), 503 (2028). - Public debt service (in percent of exports of goods and services): 2.0 (2020), 1.7 (2021), 1.5 (2022), 1.4 (2023). - The risk of debt distress remains low, though vulnerabilities arise from shocks to exports and growth. ### Executive Board assessment and policy recommendations - Overall assessment: - The economy is continuing to recover from the pandemic, driven by expansion of non-garment goods exports and a rebound in tourism; garment exports remain weak. - The compositional shift in tourist arrivals yields less income per tourist compared to the pre-pandemic era. - Fiscal policy recommendations: - Fiscal policy in 2023 was appropriately expansionary; fiscal consolidation should begin as recovery progresses. - The fiscal stance should return to neutral in 2024 as pandemic-related spending needs subside. - Over the medium term, strengthen the tax base and tax and customs administration to safeguard revenues, given revenue erosion from tax incentives and an already low revenue-to-GDP ratio. - Improve evaluation and execution of public investments to ensure spending supports economic development. - Monetary and financial sector recommendations: - Continue normalizing monetary policy toward the pre-pandemic setting. - Phasing out of pandemic-related forbearance measures and the increase of USD reserve requirement are welcome. - Ensure NPLs are adequately provisioned for. - Allow credit growth to recalibrate after recent rapid expansion, reflecting normalization of financial conditions and high private sector indebtedness. - Continue improving the supervisory framework and data gathering and analysis. - Strengthen legal and operational frameworks for corporate insolvency and bank resolution. - Structural and governance reforms: - Substantial reforms needed to sustain medium-term improvements in living standards: - Improve both quality and quantity of human capital to adapt as comparative advantage in labor cost diminishes. - Invest in key infrastructure: transportation, energy, logistics, and telecommunication to support diversification and scale. - Governance and anti-corruption reforms to attract broader FDI and sustain high growth: - Strengthen frameworks on asset declarations, whistleblower protection, and access to information. - Allocate adequate resources and authorities to oversight and investigative bodies to reduce the cost of doing business and improve attractiveness for tourists and investors. ### Key economy-wide statistics and memoranda - Nominal GDP (in billions of Riels): 105,892 (2020), 110,506 (2021), 121,030 (2022), 131,086 (2023), 142,221 (2024), 155,128 (2025), 169,582 (2026), 184,812 (2027), 201,549 (2028). - Nominal GDP (in millions of U.S. dollars): 25,771 (2020), 26,601 (2021), 28,818 (2022), 30,872 (2023), 33,130 (2024), 35,744 (2025), 38,649 (2026), 41,662 (2027), 44,941 (2028). *Executive Board of the International Monetary Fund press release, January 31, 2024.* --- ## References - [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) - [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) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [[1]](https://www.imf.org/en/news/articles/2024/01/30/EditorPage.aspx?da=core&di=0&ed=FIELD1358669999&fbd=1&fld=%7B5E30EA8C-0335-4122-B707-513176E32724%7D&hdl=H1358692417&id=%7B3551094F-072C-4F6D-81BF-7EDB6AB4A695%7D&la=en&mo=&pe=0&so=%2Fsitecore%2Fsystem%2FSettings%2FHtml+Editor+Profiles%2FRich+Text+Full&vs=) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2024/01/30/pr2431-cambodia-imf-executive-board-concludes-2023-article-iv-consultation_