IMF researchers advise Cambodia to tighten lending measures on real estate amid high credit growth

• 31 October 2019
• Local News
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New End-of-Mission statements by the staff teams of the International Monetary Fund (IMF) advises Cambodia to tighten its lending measures on the real estate sector amid the booming industry and high credit growth.

According to an IMF press release, Cambodia’s GDP growth remains positive standing at around 7% in 2019, yet further policies are needed to address elevated financial sector vulnerabilities.

Following a visit to Cambodia, IMF staff teams said that lending by real-estate developers remains largely unmonitored and unregulated and official data on real-estate prices are not yet available.

Private sector credit, increasingly concentrated in the real estate and construction sectors, has accelerated and is expected to grow around 28% in 2019, the IMF team noted in the press release.

“Priority measures include implementation of targeted policies, such as higher risk weights and provisioning requirements for real estate lending as well as introducing a prudent aggregate loan-to-value limit, to address risks associated with the real-estate sector,” the press release said.

The recently released data from the Ministry of Land Management Urban Planning and Construction (MLMUPC) revealed that between January and September this year, the ministry approved 3,433 construction projects valued at more than US$6.4 billion. (Read more)

The IMF report comes as the Ministry of Economy and Finance has forecasted that the construction and real estate sectors are set to experience a slowdown from 2019 to 2022, although growth is expected to remain high. (Read more)

• Economy and Finance