An International Monetary Fund (IMF) team led by Kenichiro Kashiwase concluded its Article IV consultation mission to Cambodia, which took place from August 20 to September 2, 2025. The team met with Cambodian authorities, private sector representatives, and development partners in Phnom Penh.
According to a statement from Mr. Kashiwase, Cambodia’s economy experienced strong growth in 2024, with real GDP increasing by 6 percent. This was driven by a rebound in garment and agricultural exports as well as a recovery in tourism. The positive trend continued into early 2025. However, the IMF projects that growth will slow to 4.8 percent for the year due to trade tensions and an ongoing border dispute with Thailand, despite a recent ceasefire. These factors are expected to impact external demand, tourism, and remittance inflows. Inflation is forecasted to rise moderately to about 2.8 percent but remains contained.
"Risks to the outlook are heavily tilted to the downside. A sharper-than-expected escalation in trade and border tensions could further weaken exports, tourism, and growth. Domestically, financial sector vulnerabilities are a key concern. High private sector debt and rising NPLs, which have surpassed 7 percent—particularly in the tourism and real estate sectors—could lead to corporate and household financial stress and weigh on the recovery. On the upside, successful reintegration of returning workers into the domestic labor force could support consumption and mitigate some of the adverse growth effects," said Mr. Kashiwase.
He added that fiscal policy should offer temporary support for vulnerable households and displaced workers while maintaining fiscal discipline overall. Over time, he said gradual fiscal consolidation is needed to rebuild buffers and ensure public debt sustainability.
"A credible revenue mobilization strategy is a central priority. This should include reducing extensive tax exemptions and strengthening tax compliance to create space for critical spending on social protection, education, health, and infrastructure," Mr. Kashiwase stated.
The IMF also recommended that monetary policy remain flexible given economic uncertainty and noted ongoing reforms at the National Bank of Cambodia aimed at modernizing its monetary policy framework as important steps toward enhancing effectiveness and advancing de-dollarization efforts.
On financial stability concerns stemming from high non-performing loans (NPLs), particularly in tourism and real estate sectors where NPLs have exceeded 7 percent, Mr. Kashiwase commented: "Safeguarding financial stability is the priority for financial sector policies. The IMF team welcomes the authorities’ plans to address rising NPLs. A carefully calibrated exit from regulatory forbearance is essential to navigate banks to adequately recognize provision for loan losses."
He emphasized strengthening supervision of banks with high exposure to real estate as well as enhancing crisis management frameworks.
Looking ahead toward Cambodia’s planned graduation from Least Developed Country status by end-2029, Mr. Kashiwase highlighted structural reform priorities such as improving productivity and competitiveness through better governance practices; stronger rule of law; improved property rights; increased access to information; investment in human capital; social safety nets; attracting foreign direct investment; and encouraging higher value-added industries.
“Addressing data limitations, improving macroeconomic data quality, and enhancing inter-agency information sharing would benefit monitoring of the economy and policymaking,” he said.
The IMF will continue providing technical assistance in statistics improvement as well as other areas related to capacity development.
Mr. Kashiwase concluded by expressing appreciation for “the warm hospitality and productive discussions” held with officials from various government agencies including the Royal Government of Cambodia and National Bank of Cambodia along with business leaders and development partners.