Timor–Leste’s initial efforts to develop a stable and healthy economy have been interrupted by the civil unrest of the past two years. The security situation remains fragile and an economic burden. The key challenge remains how to manage the abundant petroleum revenue to alleviate near-term social problems and develop a sustainable non-oil economy. Growth has rebounded in 2007, although the civil unrest continues to undermine the economy. Inflation has risen sharply, but remains low relative to regional comparators. Access to financial services remains limited and credit growth has stalled.
International Monetary Fund. External Relations Dept.
The IMF is helping low-income countries hit by high food prices take appropriate policy action while providing financial assistance to some of the worst-affected nations, Managing Director Dominique Strauss-Kahn said.
This paper examines the United Republic of Tanzania’s Fifth Review Under the Poverty Reduction and Growth Facility. Economic growth, inflation, and the external position have been evolving in a manner broadly consistent with program assumptions. For the medium term, challenges center on mobilization and efficient use of public resources, managing liquidity pressures from high aid inflows, and facilitation of private sector-led growth, while maintaining a sound macroeconomic framework. The government is actively considering measures to address the crisis situation in the energy sector.
The five Regional Economic Outlooks published biannually by the IMF cover Asia and Pacific, Europe, the Middle East and Central Asia, Sub-Saharan Africa, and the Western Hemisphere. In each volume, recent economic developments and prospects for the region are discussed as a whole, as well as for specific countries. The reports include key data for countries in the region. Each report focuses on policy developments that have affected economic performance in the region, and discusses key challenges faced by policymakers. The near-term outlook, key risks, and their related policy challenges are analyzed throughout the reports, and current issues are explored, such as when and how to withdraw public interventions in financial systems globally while maintaining a still-fragile economic recovery.These indispensable surveys are the product of comprehensive intradepartmental reviews of economic developments that draw primarily on information the IMF staff gathers through consultation with member countries.
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The global economic environment continued to provide little stimulus for SSA in 2003.2 While world economic growth increased from 3 percent in 2002 to 3.8 percent last year, world import demand did not keep pace and expanded by only 3.2 percent in the advanced economies, where most SSA exports are marketed. In addition, the external terms of trade for the region as a whole were largely unchanged, improving by about 2 percent for the oil exporters and declining by a similar amount for the non-oil economies. Some non-oil exporters received a boost to their terms of trade from stronger commodity prices, especially cotton (up 37 percent), groundnuts (up 30 percent), and robusta coffee (up 25 percent). However, despite these price increases, most key commodity prices remain very low relative to historical averages. On the positive side, world inflation remained low, helping contain inflation in SSA countries with exchange rate pegs. In addition, lower world interest rates kept domestic interest rates in SSA lower than would otherwise have been.
Six basic themes emerge from the 2003 outturn: (i) average growth in the region remains far below the 7 percent estimated to be needed for the region as a whole to reach the MDGs on income-based poverty; (ii) growth experiences continue to be diverse, and some countries appear to be on a path of relatively strong sustainable growth; (iii) domestic policies matter—countries facing the same external environment are having very different growth experiences; (iv) conflict, civil strife, drought, and poor policies continue to be the causes of the worst growth experiences; (v) net exports have not been the source of economic growth, except in the oil exporting countries; and (vi) the achievement of growth rates sufficient to significantly reduce poverty will require higher rates of investment, which, in the absence of higher rates of national savings, will need to be financed through larger official and private capital flows.
The outlook for 2004 is relatively upbeat. Economic growth rates will rise, inflation rates is expected to fall, investment and savings rates are projected to increase, external current account balances will be largely unchanged, and net international reserves coverage will stabilize. This improvement will be supported by a general reduction in fiscal deficits and a further tightening of monetary policy.
The world economy in 2003 provided little support for economic growth in SSA countries. World economic growth increased, but it still remained sluggish in the advanced economies and declined in the euro area. The terms of trade were broadly unchanged, and key commodity prices remained depressed by historical standards, despite some rebound during the year. However, the external environment is projected to improve this year.