The International Monetary Fund published a staff statement at the end of its 2026 Article IV consultation mission to Cambodia, saying the economy remains resilient but is losing momentum and faces higher inflation and rising financial stability risks. The IMF said real gross domestic product growth slowed to 5.3 percent in 2025 from 6.0 percent in 2024 and is projected to slow further to 3 percent in 2026 before recovering in 2027. It linked the weaker outlook to higher energy prices, softer external demand and reputational damage associated with scam activities, which it said are weighing on activity, weakening tourism and creating risks for the financial system. Inflation averaged 2.5 percent in 2025 but is projected to average 5.6 percent in 2026 after a sharp rise in May, while the external position worsened in 2025 as the current account moved from a small surplus to a deficit. International reserves were described as adequate at about eight months of imports. Against that backdrop, the IMF said fiscal policy should cushion near-term shocks through temporary, targeted support for vulnerable households and affected firms, while avoiding broader measures that add to inflation pressure. It recommended unwinding broad fuel-related support as conditions permit and called for a credible medium-term revenue mobilization strategy built on stronger tax compliance, better governance of tax exemptions and a broader tax base. On monetary and financial policy, it said liquidity management should remain agile, the broadly stable riel-U.S. dollar exchange rate should continue to anchor the highly dollarized economy, and further work is needed to strengthen monetary operations, deepen interbank markets and improve policy transmission. The statement also urged continued supervisory action on real estate-related risks, timely loss recognition and provisioning, full operationalization of crisis management and bank resolution frameworks, decisive action on financial integrity risks, and structural and data reforms to support competitiveness, risk monitoring and Cambodia's transition from Least Developed Country status.
International Monetary Fund2026-07-08
International Monetary Fund projects Cambodia growth to slow to 3 percent in 2026 and urges targeted support and stronger financial safeguards
In its 2026 Article IV mission statement on Cambodia, the International Monetary Fund said growth is expected to slow to 3 percent in 2026, with higher energy prices, weaker external demand and scam-related reputational damage weighing on activity and financial stability. It called for temporary targeted fiscal support, unwinding broad fuel subsidies as conditions permit, and stronger monetary, supervisory and financial integrity measures. The IMF also urged structural and data reforms to improve resilience and support Cambodia's longer-term growth model.