Synopsis: In response to systemic economic challenges, Pornmoniroth details the government’s fiscal recalibration to reinforce socio-economic stability and secure sustainable growth targets through the medium term.
Deputy Prime Minister and Minister of Economy and Finance (MEF) Aun Pornmoniroth Monday met with top officials of the International Monetary Fund (IMF) to map out Cambodia’s economic outlook, technical assistance priorities and preparations for the IMF’s 2027 Article IV consultation, as the country faces mounting economic challenges.
Pornmoniroth held extensive discussions with the visiting delegation led by IMF Mission Chief for Cambodia Kenichiro Kashiwase and the IMF’s Regional Advisor on Anti-Money Laundering and Combating the Financing of Terrorism for the Asia-Pacific region, Julio Bacio Terracino at the MEF headquarters.
According to a ministry press statement on Tuesday, the discussions focused on recent macroeconomic developments and the outlook, technical assistance requirements and preparations for the IMF’s 2027 Article IV mission.
During the meeting, Pornmoniroth thanked the IMF for its continued provision of valuable insights and recommendations to support Cambodia’s economic policymaking. He also welcomed the upcoming 2027 Article IV mission, which will assess the country’s economic situation amid continued uncertainty in the global economy.
Addressing the economic outlook, Pornmoniroth said Cambodia’s growth is now projected at approximately 4% in 2026 and 4.8% in 2027, below earlier forecasts due to mounting external and domestic pressures.
“The downward revision to the greater-than-expected impact of several factors, including the Middle East conflict, rising fuel prices, intensified crackdowns on cyber fraud and the continued closure of the Cambodia-Thailand land border,” he added.
“These challenges have weighed on several key sectors, particularly agriculture, construction and real estate, tourism and related services.”
Pornmoniroth added that the El Niño phenomenon had created further pressure on agriculture by affecting cultivated land and production capacity. However, export-oriented industries, particularly garment and non-garment manufacturing, are expected to maintain strong growth and continue supporting the economy in 2027.
He noted that Cambodia is adapting to uncertainty and the ripple effects of multiple, overlapping shocks.
“In response, the Royal Government of Cambodia has introduced a series of immediate measures to protect livelihoods, particularly among vulnerable groups. These include tax concessions on selected imports, including gasoline, diesel and certain electrical equipment, to ease inflationary pressures and encourage a shift away from fossil fuels,” he added.
Pornmoniroth also highlighted the government’s shift towards a more growth-supportive fiscal policy aimed at maintaining socio-economic stability and sustaining economic growth over the medium term.
On his part, Kashiwase noted that the global economy had remained resilient despite persistent uncertainty and rising inflation. Cambodia’s economy had also demonstrated resilience, supported by its export sector, he said.
He underscored the importance of maintaining the integrity of the financial sector and reaffirmed the IMF’s commitment to supporting Cambodia through technical assistance tailored to the country’s practical needs.
Priority areas include domestic revenue mobilisation, the Medium-Term Expenditure Allocation and Management Strategy and virtual asset management, among other initiatives – all of which will contribute to strengthening human resource capacity in public financial management and help build a more robust and reliable financial management system.
According to the IMF press release issued in September, Cambodia’s economic growth is projected to slow sharply to 3% in 2026 from 5.3% last year, as higher energy costs, weaker tourism and remittances, slowing garment exports, subdued domestic demand and tighter financial conditions weigh on economic activity.
It added that growth could recover to 4% in 2027 as some of the current pressures ease. However, inflation is expected to remain elevated, averaging 5.6% in 2026 before moderating as energy prices normalise.
“Inflation increased sharply in early 2026, initially driven by higher energy prices before becoming more broad-based. At the same time, financial conditions tightened, with slower credit and deposit growth and increasing pressure on asset quality,” the IMF said.
The IMF expects Cambodia’s current account deficit to widen significantly in 2026, although resilient foreign direct investment and adequate foreign exchange reserves are expected to provide important buffers.
During a cabinet meeting last month chaired by Prime Minister Hun Manet at the Peace Palace in Phnom Penh, the government reviewed the country’s macroeconomic performance in the first nine months of 2026 and revised its Medium-Term Fiscal Framework for 2027-2029.
According to the Office of the Council of Ministers, the MEF updated the framework using the latest economic data to provide a more realistic assessment of developments and strengthen the credibility of fiscal policy formulation and the draft 2027 budget law.
The government identified garment and non-garment manufacturing, food and beverage production and tobacco manufacturing as key industrial growth drivers in 2027. Services growth is expected to be supported by hospitality, food services, wholesale and retail trade, transportation, storage and information and communications technology. Agriculture is expected to benefit from crop production, livestock and fisheries.
To maintain economic stability and support growth, the government plans to strengthen domestic revenue mobilisation, prioritise public spending, improve expenditure efficiency and prudently manage fiscal risks to preserve fiscal space and ensure medium-term public finance sustainability.
However, international institutions have offered more cautious assessments. The Asian Development Bank projected growth of 3.9% in 2026 and 4.7% in 2027, while the World Bank forecast 3.5% and 4%, respectively.
During a working meeting with Kashiwase last month, Senate Second Vice-President Thun Vathana said that economic assessments by the IMF, World Bank, Asian Development Bank, ASEAN+3 Macroeconomic and Research Office and the government point towards slower growth and higher inflation compared with previous years.
“Agricultural and industrial exports continue to expand, providing an important source of income for farmers and workers,” he said.
Vathana raised concerns over the impact of ongoing global conflicts and geopolitical tensions, which have disrupted supply chains, increased inflation and placed burdens on households.
He highlighted difficulties facing vulnerable populations and communities along the border, stressing the importance of ensuring that economic policies translate into support for those affected.
Vathana called for closer cooperation between Cambodia and the IMF to support sustainable, resilient and inclusive economic development.