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Business and Economics > Public Finance

You are looking at 1 - 10 of 48 items for :

  • Type: Journal Issue x
  • Timor-Leste, Democratic Republic of x
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Cover Selected Issues Papers
How Has Dollarization Served Timor-Leste So Far?
Raju Huidrom
and
Danila Smirnov
This paper analyzes Timor-Leste’s historical economic performance and structure under dollarization. It considers several dimensions that determine the benefits and costs of the regime: (i) growth and inflation performance; (ii) business and financial cycle synchronization; (iii) adjustment to external shocks; and (iv) competitiveness. Dollarization has helped Timor-Leste achieve relatively low and stable inflation in the context of post conflict fragility, but may be contributing to weakening competitiveness. Improved performance under dollarization requires reduced fiscal imbalances and advancement of reforms that address structural bottlenecks that also undermine competitiveness.
Keywords:
Dollarization; business cycles; competitiveness; I. data description; inflation performance; Asia-Pacific department; weakening competitiveness; structure under dollarization; Inflation; Real effective exchange rates; Global
Cover IMF Staff Country Reports
Democratic Republic of Timor-Leste: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper analyzes Timor-Leste’s historical economic performance and structure under dollarization. It considers several dimensions that determine the benefits and costs of the regime: (1) growth and inflation performance; (2) business and financial cycle synchronization; (3) adjustment to external shocks; and (4) competitiveness. Dollarization has helped Timor-Leste achieve relatively low and stable inflation in the context of post conflict fragility, but may be contributing to weakening competitiveness. The severe overvaluation of the real effective exchange rate, following a series of external shocks in the past 10 years may be a contributing factor in addition to the structural bottlenecks that constrain the development of the private sector. While the choice of currency regime lies with the authorities, progress at addressing these challenges, as well as building technical capacity at the central bank, and improving the regulatory and legal framework for the financial system, should be seen as both important reforms to strengthen the economy’s performance under dollarization as well as pre-requisites before consideration is given to the introduction of a national currency.
Keywords:
I. data description; copyright page; trade linkage; trading partners; headline inflation in Timor-Leste; oil price shock; Timor-Leste's adjustment; Timor-Leste's business cycle; Dollarization; Inflation; Real effective exchange rates; Exchange rate arrangements; Global
Cover IMF Staff Country Reports
Democratic Republic of Timor-Leste: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste
International Monetary Fund. Asia and Pacific Dept
The 2023 Article IV Consultation discusses that Timor-Leste has made impressive progress since independence in 2002 but remains a fragile post-conflict nation with pressing development needs. With oil and gas production having recently come to a halt, progress on diversifying the economy and developing the private sector is urgently needed. The discussions focused on ensuring that Timor-Leste’s substantial savings are best utilized to support development objectives while achieving fiscal sustainability. In order to develop a vibrant private sector, Timor-Leste should undertake an ambitious agenda of reforms. Public expenditure should be reduced to align it with the economy’s absorptive capacity, and its quality improved including by further prioritizing spending on human and physical capital. Domestic revenue should be gradually mobilized. A medium-term fiscal framework should underpin these efforts by setting a clear roadmap to fiscal sustainability. To boost growth and diversify the economy, structural reforms should remove bottlenecks in the agriculture and tourism sectors and foster digitalization to boost productivity, while addressing legal constraints that hinder business operations and financial development.
Keywords:
Timorese authorities; fiscal cliff; private sector development; WTI crude; Timor-Leste authorities; Debt sustainability analysis; Oil; Global
Cover IMF Working Papers
Do Fiscal Rules Foster Fiscal Discipline in Resource-Rich Countries?
Ablam Estel Apeti
,
Olivier Basdevant
, and
Ms. Veronique Salins
This paper investigates the performance of fiscal rules in resource-rich countries (RRC). Using panel data for 57 commodity exporting countries from 1976 to 2021, we find that fiscal rules: (i) reduce the procyclicality of real public expenditures with terms of trade in oil exporting countries, and (ii) improve non-resource primary balances in all RRC, especially during terms of trade upturns. The rules’ design matters. Addressing the procyclicality of public expenditures with terms-of-trade can be achieved with expenditure rules, and, for oil-exporters, revenue rules (althoug limited data on the latter calls for taking the results cautiously). To improve non-resource fiscal balances, debt rules and fiscal balance rules are shown to have a positive impact, especially in oil exporting countries. We further investigate the effect of fiscal rules and other features of the fiscal framework through case studies (for Botswana, Mongolia, and Timor-Leste). These cases highlight that even when fiscal rules are not fully complied with, they lead to some degree of fiscal discipline. The case studies also highlight the importance of the quality of fiscal frameworks: frequent revisions, lack of compliance or low stringency of the rules can significantly hamper their effectiveness.
Keywords:
expenditure rule; forecasting commodity price; oil exporter; revenue rule; debt rule; design matter; Fiscal rules; Fiscal stance; Terms of trade; Oil exports; Global
Cover IMF Staff Country Reports
Democratic Republic of Timor-Leste: Selected Issues
International Monetary Fund. Asia and Pacific Dept
Selected Issues
Keywords:
D. policy implication; model application to Timor-leste; model calibration; copyright page; adaptation investment scenario; Infrastructure; Natural disasters; Private investment; Climate change; Government debt management; Global
Cover IMF Staff Country Reports
Democratic Republic of Timor-Leste: 2022 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. Asia and Pacific Dept
Timor-Leste has made impressive strides in economic development and institution building. Yet, it is a low-income and fragile country with pressing development needs. A large fraction of the population faces chronic food insecurity, and significant gaps exist in health, education, and infrastructure. With active oil fields nearly depleted, little progress has been made in diversification while fiscal sustainability is at high risk. Higher food and oil prices are fueling higher inflation, exacerbated by political spending pressures ahead of the general elections in 2023.
Keywords:
government expenditure rationalization; WTI crude; Timor-Leste authorities; oil GDP; merchandise export; Oil; Debt sustainability analysis; Global
Cover IMF Staff Country Reports
Timor-Leste: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Timor-Leste
International Monetary Fund. Asia and Pacific Dept
Although Timor-Leste has made considerable progress in many areas since its independence in 2002, it faces significant medium-term challenges. The nation has pressing development needs, young institutions, and is highly dependent on oil. Oil revenues from active fields, which have been the main source of funding for government spending, are drying up. The non-oil private sector economy remains underdeveloped and lack of good jobs and high youth unemployment are serious concerns.
Keywords:
Timorese authorities; oil GDP; WTI crude; government coalition; private sector development; Oil; Debt sustainability analysis; Global
Cover IMF Staff Country Reports
Democratic Republic of Timor-Leste: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Democratic Republic of Timor-Leste
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.
Keywords:
ISCR; CR; Timorese authorities; authority; majority government; U.S. dollar; PF balance; Banco Central de Timor-Leste; PF withdrawal; Oil; Global
Cover IMF Working Papers
Fiscal Policy Multipliers in Small States
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.
Keywords:
WP; real GDP; Government Spending; Fiscal Policy; Fiscal Multipliers; GDP cost; GDP effect; GDP impact; government investment multiplier; trend GDP; GDP statistics; cost of fiscal consolidation; effect of a consolidation; world GDP; GDP path; impacts of government consumption; fiscal multiplier; Public investment spending; Current spending; Government consumption; Caribbean; Global
Cover IMF Staff Country Reports
Republic of Timor-Leste: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Timor-Leste
International Monetary Fund. Asia and Pacific Dept
This paper discusses recent economic developments, economic outlook, and risks in Timor-Leste. Growth has moderated while inflation has fallen sharply. Owing to a sharp fall in oil revenues and large development needs, Timor-Leste is facing difficult policy challenges. According to industry estimates, unless new oil reserves are developed, oil production is expected to decline further and cease by 2023. Prioritization of government expenditures to facilitate high-return infrastructure investments is key in tandem with structural reforms that catalyze nonoil private sector growth. The 2016 budget outlined a significant scaling up of the public investment in 2017–19, which will strain fiscal sustainability.
Keywords:
ISCR; CR; real GDP; Timorese authorities; debt; current account; dollarization regime; oil GDP; WTI crude; PF withdrawal; Oil; Capital spending; Oil prices; Global; Southeast Asia; Pacific Islands; East Asia; Asia and Pacific