IMF Completes 2025 Article IV Mission to Cambodia Noting Targeted Policies and Accelerated Structural Reforms Needed for Challenging Economic Environment Ahead

An International Monetary Fund (IMF) team, led by Kenichiro Kashiwase, IMF Mission Chief to Cambodia, held discussions with the Cambodian authorities, private sector representatives, and developing partners from August 20 to September 2, 2025, for the 2025 Article IV consultation.

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with member countries, usually every year. During country visits, IMF staff have discussions with public and private sector officials about risks to domestic and global stability and policies and reforms to address those risks, in an attempt to assess each country’s economic health and forestall future financial problems.

According to an IMF press release, Kashiwase issued the following statement at the end of the mission:

"Cambodia’s economy performed strongly in 2024, with real GDP growth reaching 6 per cent, supported by a robust rebound in garment and agricultural exports and a recovery in tourism. This momentum continued in early 2025. However, growth is expected to moderate to 4.8 percent in 2025 as trade tensions and the border dispute with Thailand—despite the recent ceasefire—begin to weigh on external demand, tourism, and remittance inflows. Inflation is expected to rise moderately to about 2.8 per cent 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 per cent—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.

"In this challenging environment, fiscal policy should provide temporary and targeted support to vulnerable households and displaced workers, while maintaining overall fiscal discipline. Over the medium term, a gradual, growth-friendly fiscal consolidation is essential to rebuild buffers and ensure long-term sustainability of public debt. 

A credible revenue mobilisation 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.

"Monetary policy should remain agile to navigate the uncertain economic environment. Continued efforts by the National Bank of Cambodia to modernise its monetary policy framework are important. These reforms will enhance policy effectiveness and are integral to advancing the de-dollarisation strategy.

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 recognise provision for loan losses. Strengthening supervision of banks and non-bank financial institutions with high exposure to the real estate sector and enhancing the crisis management and bank resolution frameworks are also critical steps to maintain the stability of the economy.

"Sustaining Cambodia’s economic development and resilience requires accelerating structural reforms that build productive capacity and diversify growth drivers. With Cambodia’s impending graduation from Least Developed Country status by end-2029, there is a renewed urgency to improve productivity and competitiveness. Priorities should include enhancing the business environment by strengthening governance and anti-corruption efforts, improving the rule of law, property rights and access to information, strengthening social safety nets, and investing in human capital to support employment, attract foreign direct investment, and facilitate a shift toward 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. The IMF will continue to provide technical assistance to help improve statistics, and in other areas of capacity development.

"The IMF team held discussions with senior officials of the Royal Government of Cambodia, the National Bank of Cambodia, and other public agencies, as well as a wide range of stakeholders, including representatives of the business and banking sectors, and development partners. The team wishes to express its deep appreciation to the Cambodian authorities and other stakeholders for their warm hospitality and productive discussions."

This article is based on a press release.