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International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation highlights that Timor-Leste remains a fragile post-conflict nation with weak human and institutional capacity and large infrastructure gaps. The main challenge facing Timor-Leste is to effectively manage its petroleum wealth to reduce public-sector dependence, diversify the non-oil economy, generate jobs for a young and rapidly-growing population, and raise living standards. Political uncertainty constrained public spending in 2017–18, resulting in a sharp contraction of non-oil GDP in 2017 and flat growth in 2018. The report discusses that risks to the outlook are closely tied to the success of fiscal and structural reforms to maintain macroeconomic stability, ensure long-run fiscal sustainability, and facilitate economic diversification. The consultation recommends that a fiscal strategy should be pursued to improve expenditure control and efficiency, mobilize domestic revenue, and commit to protecting the wealth of the Petroleum Fund. Ongoing efforts to strengthen public financial management and promote good governance are crucial to ensure public investment efficiency and enhance the quality of public services.
Ali Alichi, Mr. Ippei Shibata, and Kadir Tanyeri
Government debt in many small states has risen beyond sustainable levels and some governments are considering fiscal consolidation. This paper estimates fiscal policy multipliers for small states using two distinct models: an empirical forecast error model with data from 23 small states across the world; and a Dynamic Stochastic General Equilibrium (DSGE) model calibrated to a hypothetical small state’s economy. The results suggest that fiscal policy using government current primary spending is ineffective, but using government investment is very potent in small states in affecting the level of their GDP over the medium term. These results are robust to different model specifications and characteristics of small states. Inability to affect GDP using current primary spending could be frustrating for policymakers when an expansionary policy is needed, but encouraging at the current juncture when many governments are considering fiscal consolidation. For the short term, however, multipliers for government current primary spending are larger and affected by imports as share of GDP, level of government debt, and position of the economy in the business cycle, among other factors.
Maura Francese and Delphine Prady
This paper discusses the definition and modelling of a universal basic income (UBI). After clarifying the debate about what a UBI is and presenting the arguments in favor and against, an analytical approach for its assessment is proposed. The adoption of a UBI as a policy tool is discussed with regard to the policy objectives (shaped by social preferences) it is designed to achieve. Key design dimensions to be considered include: coverage, generosity of the program, overall progressivity of the policy, and its financing.

Abstract

This volume contains seven chapters that consider how fiscal policies can address women’s and girls’ disadvantages in education, health, employment, and financial well-being. Researchers from a joint collaboration between the International Monetary Fund and the UK’s Department for International Development presented papers at a 2016 international conference on gender budgeting at the International Monetary Fund headquarters in Washington, DC, and detail the findings of their work here, which draws on published materials, a questionnaire sent to ministries of finance to all International Monetary Fund member countries, and interviews with country officials and international organizations that offer technical assistance to countries seeking to implement gender budgeting. They describe key gender budgeting efforts planning, allocating, and monitoring government expenditures and taxes to address gender inequality in sub-Saharan Africa, Asia and the Pacific, Europe, Latin America and Canada, the Middle East and Central Asia, and the Pacific Islands and Caribbean.

International Monetary Fund. Asia and Pacific Dept
This 2017 Article IV Consultation highlights that Timor-Leste’s non-oil real GDP growth in 2016 is estimated at 5.5 percent, supported by a near doubling of government capital spending, albeit with large import leakages. Real total GDP declined by 7.9 percent in 2016, owing to a sharp fall in oil production. The overall fiscal deficit widened to 30.8 percent of GDP in 2016. Non-oil real GDP growth is projected to moderate to 3 percent in 2017, owing to lower government expenditure and the slowdown of activity owing to the delayed formation of the new government after the parliamentary elections in July. Inflationary pressures remain low, albeit with a return to positive territory with rising global food and fuel prices.