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International Monetary Fund

The Timorese economy has improved owing to high oil-financed public spending and a rebound in agriculture, non-oil growth. Despite high bank deposit growth, private sector credit has remained stagnant. The medium-term outlook for growth is positive. Timor-Leste’s key challenge remains to use its petroleum wealth wisely to build a strong non-oil economy and raise living standards. Improvements in financial management and budget execution will be important. Productivity-enhancing structural reforms and efforts to build labor skills would improve competitiveness in non-oil industries and services.

International Monetary Fund

The financial system of Timor-Leste was disrupted by the postreferrendum turmoil. Therefore, various steps were taken to restore the financial system. In this paper, major oil/gas fields and their development, fiscal arrangements governing oil/gas activities, and the oil/gas revenues are discussed. Fiscal and quasi-fiscal operations in Timor-Leste are governed by the central government, nonfinancial autonomous agencies, multilateral institutions, and bilateral donors. This study also summarizes statistical data of economic indicators, GDP by sectoral origin and by expenditure, consumer price index, monetary survey, oil/gas revenues, tax system, and so on.

International Monetary Fund. Asia and Pacific Dept

2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste

International Monetary Fund

This Selected Issues paper presents evidence on linkages between investment and growth observed in other countries to gauge the expected impact of increasing public investment in Timor-Leste. The results indicate that the level of capital expenditure envisioned in the government’s strategy could significantly boost economic growth and reduce poverty. The paper reviews the major issues related to tax policy reform in Timor-Leste. It also discusses the current direction of Timor-Leste Petroleum Fund asset management and issues that might arise with eventual asset diversification.

International Monetary Fund

The staff report for the 2004 Article IV Consultation on the Democratic Republic of Timor-Leste highlights economic developments and policies. Progress has been made in consolidating the new government’s administrative power and fostering a stable political environment, despite some early challenges. Despite progress in economic reconstruction, significant economic challenges remain. These challenges center on the strengthening of medium-term growth prospects to alleviate widespread poverty. Given the constraints of the current regime, prudent fiscal and wage policies will be essential to help avoid attrition in Timor-Leste’s external competitiveness.

International Monetary Fund

This 2005 Article IV Consultation highlights that the economy of the Democratic Republic of Timor-Leste remains fragile. Cumulative growth over the last three years was near zero—mainly reflecting the drawdown in the presence of international agencies. Unemployment is high, 40 percent of the population lives below the poverty line, and social indicators are poor. At the same time, human capital remains scarce, physical infrastructure inadequate, and financing opportunities limited. The government is making good progress with the measures necessary to handle its new oil/gas wealth responsibly.

International Monetary Fund

Timor-Leste had made good progress in establishing the basis for a stable and healthy economy prior to the civil unrest in 2006, although it remains one of the poorest countries in the world. This 2006 Article IV Consultation highlights that real non-oil GDP growth turned positive in 2004–05 after contracting for two years. Macroeconomic stability was achieved through the early adoption and maintenance of prudent fiscal and monetary policies. The authorities have maintained a policy of avoiding domestic or external borrowing, hence there is no public sector debt.

Mr. Mauricio Villafuerte, Mr. Rolando Ossowski, Mr. Theo Thomas, and Mr. Paulo A Medas

Abstract

Oil-producing countries have benefited from rising oil prices in recent years, with important implications for their external and fiscal balances. The average price of oil tripled from US$18 a barrel in 1999 to US$53 a barrel in 2005, and rose further in 2006–07. The associated increase in oil exports and fiscal oil revenues had major macroeconomic and fiscal implications for oil-producing countries heavily dependent on oil revenues. External current accounts and fiscal balances have strengthened in many oil-producing countries. Moreover, policymakers conducted fiscal policy in a context where markets and observers increasingly came to expect a significant portion of the rise in oil prices to be long-lasting.

Mr. Mauricio Villafuerte, Mr. Rolando Ossowski, Mr. Theo Thomas, and Mr. Paulo A Medas

Abstract

This section provides an overview of the fiscal policy responses of oil-producing countries to the oil boom through 2005.1 Although the analysis focuses on broad trends, the significant diversity of the oil-producing countries in the sample should be borne in mind. In particular, country-specific factors that show great differentiation among oil-producing countries include level of development, institutional capacity, macroeconomic situation, fiscal dependence on oil revenue, public debt and liquidity positions, and the stock and expected duration of oil reserves in the ground. Box 1 compares developments under the recent oil boom with the oil shocks in the 1970s.

Mr. Mauricio Villafuerte, Mr. Rolando Ossowski, Mr. Theo Thomas, and Mr. Paulo A Medas

Abstract

Many oil-producing countries have had difficulties in addressing the challenges posed by dependence on oil revenues. Countries with large oil resources can benefit substantially from oil revenue, but some characteristics of this revenue—its volatility and uncertainty, exhaustibility, and the fact that it largely originates from abroad—have posed challenges to policymakers. In particular, many oil-producing countries have found it difficult to smooth government expenditure and decouple it from the short-term volatility of oil revenues, which has sometimes led to boom-and-bust cycles. Against this background, a number of oil-producing countries have established SFIs aimed at enhancing fiscal management. SFIs include oil funds, fiscal rules and fiscal responsibility legislation (FRL), and budgetary oil prices.