Posted by: mulrickillion | December 22, 2011

Press Release: IMF Mission Concludes the 2011 Article IV Consultation Discussions with Cambodia

Press Release No. 11/447
December 7, 2011

An International Monetary Fund (IMF) mission from Washington, D.C., headed by Olaf Unteroberdoerster, visited Cambodia from November 28 to December 8, to conduct the annual Article IV consultation discussions.1 During the visit, the mission assessed macroeconomic developments, held policy discussions with ministers and senior officials of the Royal Government of Cambodia, and met a large group of stakeholders, including academic and business communities, NGOs, and development partners.

At the conclusion of the visit, Mr. Unteroberdoerster issued the following statement:“Buoyant garments exports, increasing tourist arrivals, and a gradually-improving real estate sector have supported a broadening recovery. Agriculture, though strong in the first three quarters—with rice exports through September tripling—suffered from the recent floods, which are expected to exert only a transient setback. Nonagriculture GDP growth in 2011 is forecast to exceed 7½ percent, the highest rate in four years. Assuming agriculture will return to pre-flood trends, overall GDP growth is forecast to reach 7¼ percent in 2012 and move toward a stronger medium-term potential growth of 7–8 percent.

“Inflationary pressures increased in 2011, driven by higher food and fuel prices and reinforced by strong credit growth at over 32 percent in October. Headline inflation is expected to average 5.7 percent in 2011 and remain at 5 percent in 2012 despite a moderation in global commodity prices.

“The current account deficit (including official transfers) is projected to increase to 9 percent of GDP in 2011, but remains fully financed through foreign direct investment and official loans. Gross official reserves rose to over US$3 billion in October, equivalent to 4.2 months of prospective imports.

“The elevated uncertainty in advanced economies exposes Cambodia’s concentrated export base to downside risks. Any immediate financial spillovers, however, would likely be limited and mostly indirect. However, a largely reduced fiscal space from the previous crisis and the need to preserve financial stability limit the scope to cushion such shocks. On the other hand, upside potential could stem from better-than-expected returns on investments in the power sector and rural infrastructure areas against the backdrop of positive spillovers from Asia’s economic rebalancing. . . .

Press Release: IMF Mission Concludes the 2011 Article IV Consultation Discussions with Cambodia

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