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.
The mission welcomes the progress made by the RK in improving the quality of GFS. The Ministry of Finance has taken into account several recommendations of the previous mission on increasing transparency, improving data quality, and regarding the channels used to provide GFS. In particular, updated bridge tables are used when generating statistics, National Fund (NF) data are recorded separately from national budget (NB) data, and GFS are disseminated through the IMF Integrated Data Collection System.
This 2021 Article IV Consultation determines that Kosovo’s people and its economy experienced a return to a certain degree of normality in 2021. Increased vaccination rates allowed a relaxation of stringency measures, supported mobility, and created the conditions for a resumption of diaspora travel. The fiscal response to the pandemic has been broadly adequate. Moreover, fiscal policy needs to return to a supportive stance in 2022. Focus, composition, and transparency of public spending needs strengthening including supporting economic resilience. While the objective to intensify vaccinations is both appropriate and commendable, intended policy actions under the “Economic Revival Program” need to be better defined, new social transfer programs should be more targeted, and the growth of existing transfers needs to be contained. Kosovo’s intentions to reduce carbon emissions are commendable. A credible climate and environment mitigation strategy should be centered around carbon pricing, while allocating its proceeds to investment in green projects and to mitigate the impact of higher energy prices on vulnerable households.
Indonesia entered the current global crisis with strong initial conditions. This 2009 Article IV Consultation highlights that notwithstanding the initial impact of the global crisis, the economy has rebounded in 2009. Macroeconomic policy responses have kept appropriate pace with the evolving economic conditions. Executive Directors have welcomed the resilience of the Indonesian economy, which owed much to strong initial fundamentals and appropriate policy responses. The financial sector has recovered from the adverse initial impact of the global turmoil, and investor sentiment has improved in recent months.