On December 6, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Cambodia.
Growth accelerated to 7½ percent in 2018. Economic activity remains robust this year with real GDP growth expected at around 7 percent, owing to continued export growth and strong construction activity, while inflation remains stable at around 2.5 percent.
The current account deficit widened to about 12 percent of GDP in 2018 and is expected to widen further this year. Robust Foreign Direct Investment inflows, as well as an increase in other short-term inflows, have nevertheless contributed to an accumulation of gross international reserves to about 7 months of prospective imports in August 2019.
Financial conditions have been accommodative. Private sector credit, increasingly concentrated in the real-estate and construction sectors, has accelerated and is expected to grow around 28 percent in 2019.
Robust revenue performance continues, and, thanks to strong administrative efforts, the 2018 fiscal balance (following the Government Finance Statistics Manual 2014 format) shows a surplus close to 1 percent of GDP in 2018. The fiscal position is projected to remain in surplus also this year.
Deterioration of external conditions is expected to lead to a slowdown in growth to below 7 percent in 2020. Cambodia’s economic outlook is subject to significant downside risks. The on-going Everything but Arms (EBA) review by the EU—Cambodia’s primary export partner—could lead to a suspension of preferential trade access later next year, which could have a large negative impact on economic activity.
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.