The International Monetary Fund (IMF) Executive Board has concluded its Article IV consultation with Cambodia, projecting modest economic growth for the country. The IMF forecasts real GDP growth to increase from 5.5% in 2024 to 5.8% in 2025, with inflation expected to rise from 0.5% to 2% over the same period.
The report highlights an uneven recovery, driven primarily by external demand and a strong rebound in garment and agricultural exports. However, tourism is experiencing a structural shift leading to a slower recovery in receipts, while non-tradable sectors remain weak. The construction and real estate sectors are undergoing corrections with rising non-performing loans.
The fiscal deficit is projected at 2.4% of GDP in 2025, down from 3% in 2024, with public debt expected to remain below 30% of GDP over the next decade. The current account balance is anticipated to swing back to a deficit of 1.8% of GDP in 2024, increasing slightly to 2.5% in 2025 due to moderating export growth.
Executive Directors welcomed Cambodia's economic recovery but noted its uneven nature and downside risks. They emphasized the importance of policies that ensure macro financial stability and promote inclusive growth. A neutral fiscal stance was supported, alongside gradual consolidation underpinned by sound fiscal frameworks.
Directors recommended strengthening the medium-term fiscal framework with more conservative rules and improving revenue mobilization through tax reforms and efficient spending management. They also highlighted the need for developing the domestic government bond market as foreign financing access decreases post-graduation from Least Developed Country status.
Monetary policy normalization was supported at a measured pace while maintaining adequate liquidity within the financial system. Directors encouraged modernizing monetary policy frameworks and enhancing risk-based supervision amidst ongoing sectoral corrections.
Structural reforms were deemed essential for economic diversification and competitiveness improvement. Recommendations included enhancing human capital, investing in infrastructure, promoting renewable energy, and strengthening governance frameworks.