Although Cambodia's economy is showing signs of recovery, the country's macroeconomic stability "continues to critically depend on prudent fiscal policies," the IMF has said. In a report on its Article IV consultations with Cambodia, the Fund also said that the National Bank of Cambodia (NBC, the central bank) cannot meet its oversight responsibilities and advised a temporary halt on licensing new banks. Even though the IMF commended Cambodia's tripling of the minimum amount of registered capital for banks to CR150bn (US$37m) at the end of 2010, the NBC's human resources, crisis management and enforcement were cited as concerns. The 2008-09 global economic and financial crisis has exposed Cambodia's long-standing structural vulnerabilities, according to the IMF, which cited the country's chief weaknesses as its narrow export base, limited room for fiscal policy manoeuvres and effectiveness, as well as a small and highly dollarised financial system.

Nevertheless, the IMF said that signs of a recovery are evident. Garment exports and tourist arrivals, notably by air, have bounced back, with both growing by 10-20% year on year in the second quarter of 2010, although construction activity appears to remain sluggish and a late start to the rainy season may have dented agricultural growth. Near-term risks tend towards the downside, the Fund said, but in the medium term better-than-expected returns on investments in the power sector and in rural infrastructure could offer significant upside growth potential. Under the IMF's baseline scenario, real GDP growth is expected to gradually return to around 6-7% a year during the medium term.

In consultations with Cambodian ministers, central bank managers, senior officials, and representatives from the private sector and donor community, IMF staff have emphasised the need for fiscal adjustment beyond 2010. The Fund estimates that Cambodia's tax/GDP ratio is around 5-7 percentage points below its potential. Smuggling, tax arrears and weak administration are significant causes of revenue loss, according to the IMF. Cambodia's status as Asia's most dollarised economy was also remarked upon, with the Fund's warning that high levels of dollarisation mean that the NBC loses its ability to act as the lender of last resort. The IMF noted that seigniorage revenue is also lost.