On November 28, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Cambodia.
Real GDP is projected to grow at 7¼ percent in 2018 due to strong external demand and expansionary fiscal policies, while inflation is expected to remain low. Strong economic performance is broad-based, with garment exports, tourism and the construction sectors growing at robust rates.
Higher imports are expected to contribute to a widening of the current account deficit to around 10 percent of GDP in 2018. Gross international reserves are expected to increase to around US$9.6 billion (around 5 months of prospective imports) at end-2018.
Bank credit is expected to grow by around 20 percent in 2018, with MFI credit expanding at an even higher rate, resulting in a credit-to-GDP gap that is conservatively estimated at close to 10 percentage points.
Fiscal performance in 2017 was considerably stronger than anticipated with tax revenues growing 26 percent in nominal terms, partly due to one-off factors. The fiscal stance has turned expansionary this year. Both current and capital expenditure are expected to increase, while tax revenue is expected to remain broadly stable as a share of GDP, in part reflecting VAT exemptions and import tariff reductions for fuel and basic foods. As a result, the deficit is expected to widen to 2.2 percent of GDP, resulting in lower government deposits.
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.