In the context of the Cambodian economy between 2024 and 2026, a stark contradiction is observed between seemingly positive macroeconomic growth and a widespread household-level insolvency crisis. According to an International Monetary Fund (IMF) report released in late 2024, the Royal Government of Cambodia maintained a remarkably low public debt-to-GDP ratio of approximately 26.6%.
However, this glowing figure masks the predatory risks within the private debt sector. Based on IMF baseline data from 2022 and subsequent monitoring through 2024, private sector debt has surged to over 180% of GDP. This debt trajectory has been driven by a systemic policy framework that prioritizes the liquidity and profitability of financial institutions and real estate developers over the fundamental rights and economic security of Cambodian citizens.
According to the IMF’s Article IV Consultation in January 2024, excessive credit expansion in Cambodia grew faster than nominal GDP, an occurrence analyzed as a decoupling from economic fundamentals. This issue is exacerbated by high levels of dollarization; the IMF noted in 2022 that up to 87% of private debt is denominated in US dollars. This creates a massive mismatch for borrowers earning in Khmer Riel, especially as global interest rates remain volatile through 2025.
While the IMF projects public debt to reach 38.5% by the end of 2026, the true immediate risk lies in the Non-Performing Loan (NPL) ratio. According to reports from the National Bank of Cambodia and the World Bank, the NPL rate spiked to a decade-high of 8.9% to 9.0% by late 2024—a red flag for financial stability.
The microfinance sector in Cambodia has transformed from a tool for poverty reduction into a mechanism for land concentration. This key point was documented in detail by Human Rights Watch (HRW) in a September 24, 2025, report titled Debt Traps.
Data as of 2024 shows that Cambodia has over 3.1 million active micro-credit contracts among only 3.8 million total households. Most alarmingly, the average loan size has reached $5,800, which is more than four times the average annual per capita income (approx. $1,400 in 2023). HRW and LICADHO analyze this phenomenon as a shift by MFIs toward a ‘profit-maximization business model’ reliant on land titles as collateral. This has converted the microcredit system into asset-based lending, posing a high risk to citizens’ land tenure rights.
In Ratanakiri province, HRW documented in September 2025 how credit officers used strategies to inflate borrower incomes to facilitate larger loan approvals. These unethical practices have pushed ‘forced land sales,’ where borrowers are coerced into selling property through informal channels to resolve debts that exceed their repayment capacity.
The impact has been particularly devastating for indigenous communities. A February 2024 report highlighted claims from indigenous borrowers that MFIs accepted soft titles overlapping with communal land as collateral. This act violates and weakens legal protections intended to preserve collective land for indigenous peoples.
Amidst the real estate downturn, the government implemented fiscal responses perceived as biased. According to a December 31, 2024, notice from the Ministry of Economy and Finance, the stamp duty exemption for property transfers valued under $210,000 was extended until December 2026.
While introduced by Prime Minister Hun Manet to stimulate homeownership, the actual benefits flow primarily to developers and wealthy buyers. A $210,000 property remains far beyond the reach of average lower-middle-income citizens. Additionally, the government introduced other incentives for developers in early 2025, including:
- Delaying Capital Gains Tax implementation until 2026.
- Exempting unused land tax for plots under 5 hectares.
These measures reflect a priority on protecting real estate stability and investor cash flow rather than addressing the housing affordability crisis for the poor.
The National Bank of Cambodia’s Financial Sector Development Strategy (FSDS) 2025–2030, launched in December 2024, emphasizes institutional stability and digital innovation. However, implementation reflects a high priority on supporting creditors over protecting borrowers. On February 19, 2025, the National Bank issued a new Prakas (regulation) establishing a framework for Asset Management Institutions (AMIs) to purchase and manage NPLs.
By allowing banks to offload bad debt to these private entities, the government facilitated a ‘balance sheet cleaning’ mechanism that leads to stricter foreclosure measures. This includes expedited judicial auctions and daily penalties for non-compliance—pressures that fall directly on financially distressed borrowers.
This bias is further evidenced by ‘imbalanced bailouts.’ On January 14, 2025, the National Bank announced an annual license fee waiver for banks and MFIs operating in border provinces (affected by tensions with Thailand) to reduce their operational costs. Notably, no direct relief measures were mandated for borrowers in those areas, many of whom are frontline soldiers or displaced citizens who lost their income sources.
By late 2025, IMF reports noted that the government began significantly tightening social sector spending, rolling back pandemic-era relief to pre-crisis levels. While intended to curb the national budget deficit, this placed an additional burden on vulnerable citizens while the state continued providing financial concessions to large-scale private sectors.
Finally, the mechanism for accelerated asset seizure is guaranteed by a judicial system in a concerning state. According to the World Justice Project’s Rule of Law Index 2025, Cambodia ranked 141st out of 143 countries. This low ranking reflects structural barriers that make human rights protections minimal, as governance institutions are seen as tools serving the elite and creditors rather than the poor.
In this restrictive environment, LICADHO and civil society groups reported that as of September 2025, over 80 individuals were detained in connection with exercising their fundamental freedoms. This legal crackdown has created an atmosphere of fear, silencing criticism and protests against the debt crisis even as suffering deepens.
International oversight has also faced significant delays. According to LICADHO, by the end of 2025, the International Finance Corporation (IFC) board had delayed its investigation into human rights abuses in the microfinance sector despite mounting evidence.
The urgency of this crisis was highlighted during International Women’s Day in March 2026, where approximately 2,700 participants from 8 provinces emphasized that over-indebtedness is the primary barrier to women’s rights and political participation. Affected communities continue to call for a Right to Relief, stressing that a private debt ratio of 180% of GDP is not just a statistic—it is a systemic sovereignty crisis.
In summary, current economic policy frameworks over-prioritize the stability of financial institutions and real estate profits, leading to fiscal bias and the transformation of the judiciary into a foreclosure mechanism. Macroeconomic growth indices are being used as a shield to mask human rights violations and a deep-rooted debt crisis.
To resolve this, the government must implement direct debt relief for vulnerable groups, including:
- A temporary moratorium on land seizures.
- Facilitating credit restructuring without penalties.
- Expanding social protection budgets to ensure economic autonomy and social justice.
