Cambodia

Cambodia’s economic and financial development was held back for many years by armed conflict and political strife, but in the 1990s it regained some stability and economic growth was restored. There were no formal targets for monetary policy, but – amid very high dollarisation – fiscal conservatism prevented excessive monetary expansion and allowed inflation to be controlled.

Years

Targets and attainment

Classification

1974-92

low monetisation worsened by civil war to 1974 and 1975-9 upheavals and direct controls; 1974 exchange rate falling fast, monetary growth fuelled by large budget deficits; 1975 money and banks abolished; new government in most of country from 1980 tries to revive economy and reintroduces national currency (with monobank system), then moves towards market economy from 1985 and embarks on deeper economic reform from 1989, partly in response to ending of aid from USSR and CMEA: end of single tier banking and opening up of new banks, multiple exchange rates unified and official rate linked more or less closely to parallel market rate; but deficit-driven monetary expansion leads to high inflation, with monetisation still limited and some dollarisation, while central bank lacks monetary policy instruments; political developments including peace agreement signed in Paris 1991 pave way for general election; from 1975 to 1992 few data and no IMF reports available, 1992 relations with IMF restored

unstructured discretion UD

1993-2017

late 1992 stabilisation package halts both inflation and depreciation; dollarisation and low bancarisation limit scope for monetary policy; reserve requirements and periodic forex auctions from late 1993; some focus on and clear success in controlling monetary financing of budget deficits, in order to limit inflation and (with help of some forex intervention) stabilise exchange rate; 2000-2 major rationalisation of banking system, ongoing concern with improving bank supervision; 2013 start of interbank market based on Khmer Riel and USD CDs; plans for organised interbank forex market and for government bond market; some macroprudential measures; major improvements over time in statistical database

loosely structured discretion LSD

Selected IMF references: RED 1974 pp15-19, 29-30; RED 1993 pp1-5, 15, 28-34, 48-51; SR 1993 pp2-6; RED 1994 pp4-8, 11-12; SR 1995 pp13-15; RED 1997 pp25-34; SR 1997 pp15-16; RED 1998 p13; SR 1998 pp9, 16; SI 2000 pp30-7; SISA 2003 pp34-43; SR 2006 p13; SR 2011 pp13-15; SR 2014 pp10, 13; SR 2016 pp17-18.

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