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Cambodia risks overheating as credit booms: IMF

Published on Jan 9, 2013 6:37 AM

WASHINGTON (REUTERS) - Cambodia's financial system could be overheating, posing a risk to the country's strong economic growth, International Monetary Fund (IMF) staff reported after their annual health check on the economy.

In the past year, private credit expanded by nearly a third in Cambodia and reached 37 per cent of national income, zooming above levels seen in similar low-income countries in South-east Asia, IMF staff said in documents released on Tuesday.

The ratio between credit and national income is now much higher than the long-term trend, which puts the economy at risk.

The National Bank of Cambodia should do more to cool down bank lending beyond simply raising reserve requirements, as it did recently, the IMF staff said.

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