After the decline in oil prices, many oil exporters face the need to improve their external
balances. Special characteristics of oil exporters make the exchange rate an ineffective
instrument for this purpose and give fiscal policy a sizeable role. These conclusions are
supported by regression analysis of the determinants of the current account balance and of
the trade balance. The results show little or no relationship with the exchange rate and,
especially for the less diversified oil exporters (including the Gulf Cooperation Council), a
strong relationship with the fiscal balance or government spending.
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
This report describes economic developments in Brunei Darussalam during the 1990s. During 1994–95, domestic demand picked up strongly mainly owing to the rise in government expenditure. As the government accelerated the implementation of key projects in the Sixth National Development Plan, large community-oriented projects were also implemented. The increase in investment spending and associated consumption boom resulted in a sharp growth in imports and a significant rise in inflation. In the meantime, broad money continued to expand rapidly as substantial funds were brought into the banking system from abroad to finance major development projects.