IMF Staff Completes 2026 Article IV Mission to Cambodia

IMF News, July 8, 2026

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Real GDP growth slowed to 5.3 percent in 2025 from 6.0 percent in 2024.
Growth is projected to slow to 3 percent in 2026 before recovering in 2027.
Near-term headwinds cited: higher energy prices, trade policy uncertainty, weak tourism, subdued domestic demand, reputational damage associated with scam activities, and softer external demand.
Domestic demand, construction, and real estate remained subdued in 2025.
Foreign direct investment remained strong.

Inflation averaged 2.5 percent in 2025.
Inflation rose sharply in May 2026.
Inflation is projected to average 5.6 percent in 2026.
Inflation is projected to moderate in 2027.
The riel has remained broadly stable and serves as a nominal anchor in Cambodia’s highly dollarized economy.

The external position deteriorated in 2025, with the current account moving from a small surplus to a deficit.
Drivers: imports outpaced still-strong exports and remittances declined following the return of migrant workers.
International reserves remain adequate at about eight months of imports.

Risks to growth are tilted to the downside; risks to inflation are tilted to the upside.
External risks: higher or more volatile energy prices, economic impacts of El Niño, trade policy uncertainty, and weaker tourism demand.
Domestic risks: financial sector vulnerabilities, real estate weakness, and asset-quality deterioration.
Real estate weakness is highlighted as a key vulnerability given banks’ exposure to the sector.

Fiscal policy should cushion near-term shocks through temporary and targeted support while preserving medium-term fiscal discipline.
Support should be temporary and targeted to vulnerable households and affected firms and avoid adding to inflation pressures.
Broad fuel-related support is described as regressive and should be unwound as price pressures ease to safeguard fiscal revenues.
Over the medium term, a credible revenue mobilization strategy is essential to:
- Sustain priority spending.
- Allocate budget for realization of the country’s development objectives.
- Preserve debt sustainability.
Revenue mobilization measures suggested: stronger tax compliance, improved governance of tax exemptions, and efforts to broaden the tax base.

Monetary policy should remain agile: preserve orderly liquidity conditions while guarding against second-round inflationary pressures.
Continue efforts to strengthen monetary operations, deepen interbank markets, and improve policy transmission to support gradual de-dollarization.
Safeguarding financial stability is a key priority. The end of broad regulatory forbearance was an important step.
The National Bank of Cambodia implemented early supervisory intervention and should continue to ensure timely recognition of losses and adequate provisioning.
Crisis management and bank resolution frameworks should be fully operationalized, with emergency liquidity assistance available only to solvent institutions and with appropriate safeguards.

Financial integrity risks should be addressed decisively.
Recommendations: improved understanding of risks, stronger inter-agency coordination, and international cooperation to strengthen licensing frameworks, governance supervision, and enforcement.
Strengthening financial integrity is important to enhance confidence among depositors and investors and ensure system-wide stability.

Structural reforms are critical, particularly as Cambodia prepares for graduation from Least Developed Country status.
Priorities include:
- Improving the business climate.
- Strengthening governance and the rule of law.
- Enhancing skills and labor market absorption.
- Supporting export diversification.
- Attracting higher-quality investment.
- Improving energy security and efficiency.
- Greater climate resilience and reforms to support renewable energy.

Improving data availability, quality, timeliness, and inter-agency information sharing is essential for timely assessment and policy decisions.
Specific data gaps noted: labor markets, remittances, real estate, financial conditions, and informal activity.

IMF team led by Mr. Kenichiro Kashiwase held discussions with the Cambodian authorities, private sector representatives, and development partners from June 24 to July 8 for the 2026 Article IV consultation.
End-of-mission statement emphasizes resilience amid shocks, downside growth risks, upside inflation risks, and policy recommendations summarized above.

Source: Press Release No. 26/241 — IMF staff end-of-mission statement, July 8, 2026.