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Democratic Republic of Timor-Leste:Staff Report for the 2019 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund. Asia and Pacific Dept
Published Date:
May 2019
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Fund Relations

(As of February 28, 2019)

Membership Status

Joined: July 23, 2002; Article VIII

General Resources Account

SDR MillionPercent Quota
Quota25.60100.00
Fund holdings of currency21.2583.01
Reserve position in Fund4.3517.00

SDR Department

SDR MillionPercent Allocation
Net cumulative
allocation7.73100.00
Holdings3.3943.92

Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected payments to Fund:

(SDR Million; based on existing use of resources and present holdings of SDRs)

Forthcoming
20192020202120222023
Principal
Charges/Interest0.040.050.050.050.05
Total0.040.500.050.050.05

Exchange Rate Arrangements

The exchange rate arrangement (de jure and de facto) is an exchange arrangement with no separate legal tender. On January 24, 2000, the U.S. dollar was adopted as the official currency of then East Timor by the United Nations Transitional Administration in East Timor (UNTAET). This arrangement has been maintained after Timor-Leste’s independence on May 20, 2002. At present, the monetary authority does not undertake foreign exchange transactions; they are handled by commercial banks on the basis of rates quoted in the international markets. Timor-Leste has accepted the obligations under Article VIII, Sections 2(a), 3 and 4, and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions.

Article IV Consultations

Timor-Leste is on a 12-month consultation cycle. The last Article IV consultation was concluded on January 25, 2019. The end-of-mission press release for the 2019 Article IV Consultation may be found at: https://www.imf.org/en/News/Articles/2019/01/25/pr1915-imf-staff-concludes-2019-article-iv-consultation-mission-to-timor-leste. The country report for the 2017 Article IV Consultation may be found at: https://www.imf.org/en/Publications/CR/Issues/2017/12/07/Democratic-Republic-of-Timor-Leste-2017-Article-IV-Consultation-Press-Release-and-Staff-45447.

Resident Representative

The resident representative office in Dili, established in August 2000, closed at end-June 2009.

Information on the Activities of Other IFIS

Information on the activities of other IFIs in Timor-Leste can be found at:

Statistical Issues

(As of February 2019)

I. Assessment of Data Adequacy for Surveillance
General: Data provision to the Fund has serious shortcomings that significantly hamper surveillance. Areas of concern include, lagged dissemination of GDP data, inconsistency between national accounts and balance of payments on petroleum-related transactions, and weaknesses in compilation and dissemination of government financial statistics (GFS). The enhancement of the General Directorate of Statistics (GDS) within the Ministry of Finance is an ongoing priority.
National Accounts: GDP is compiled annually by production, expenditure and income using a contemporary base period (2015) and using methods that are reasonably consistent with the 2008 System of National Accounts. However, estimates are not timely. The oil sector presently accounts for up to 80 percent of total GDP, based on an assumption by the GDS that 90 percent of activity in the Joint Petroleum Production Area (JPDA) is resident in Timor-Leste. This conflicts with balance of payments estimates, including net exports and other income flows, produced by the Banco Central de Timor-Leste (BCTL), which assume all JPDA production is non-resident. IMF work to align these statistics by staff is underway and could result in significant, though likely largely offsetting revisions to GDP and GNI.
Price Statistics: The monthly, national CPI uses expenditure weights derived from 2014–15 Living Standard Survey. Data are also released monthly for Dili, Baucau, and regions other than Dili and Baucau. Starting 2018 August, the basket weights were updated, and CPI was rebased with an August 2018 reference period (i.e., August 2018=100).
Government Finance Statistics: Annual Government Finance Statistics (GFS) is compiled and disseminated, with 2017 general government data submitted as the latest for the GFS database. Compilation and dissemination of quarterly GFS has been deferred due to data discrepancies and challenges in resolving the source of those discrepancies. The last publication of quarterly GFS data (covering the period April-June 2016) was undertaken in Quarter 3, 2016. There is an on¬going technical assistance (TA) mission conducted by the PFTAC to assist the government of Timor-Leste in improving GFS compilation and dissemination practices including Public Sector Debt Statistics (PSDS). Timor-Leste does not report to the Quarterly Public Sector Debt database (QPSD), jointly developed by the World Bank and IMF.
Monetary and Financial Statistics:

The Banco Central de Timor-Leste (BCTL) compiles monetary statistics generally following the methodology of the Monetary and Financial Statistics Manual. However, data are incomplete because of the absence of official data on public currency holdings—which are difficult to compile under the current currency regime—and of banks’ positions with public nonfinancial corporations.

The BCTL reports detailed monthly monetary data for the central bank and other depository corporations are using the standardized report forms (SRFs). Data for other financial corporations, mainly insurance companies, are not compiled. An integrated monetary database meeting the monetary data needs of BCTL, APD, and STA is in operation.
Financial Sector Surveillance: Only basic market-based indicators are available, and their coverage, valuation and timeliness vary across such indicators. Data are not sufficiently available to conduct stress tests of the banking system or Balance Sheet Approach analysis. Cross border exposure data for financial corporations are not available. Financial soundness indicators are not reported to STA.
External Sector Statistics (ESS): While progress has been made, measuring non-Petroleum Fund-related current account transactions accurately remains a work in progress. Monthly merchandise trade data are now published regularly but there are significant gaps in the series for 2006 and 2007. Data on monthly merchandise exports and imports are based on the Automated System for Customs Data (ASYCUDA). Service transactions are largely estimated with data collection largely limited to the official and tourism sectors. Interest revenue from oil/gas is recorded as primary income.

Quarterly balance of payments and international investment position (IIP) data is available for 2006–Q3/2018. While methodology to produce basic annual estimates of the balance of payments statistics are in place, further development is needed to address limitations of existing data sources, in particular, merchandise trade statistics and service transactions. This includes work to ensure consistency between current account data and the new National Accounts Statistics, particularly related to the exports of commodities and imports of services.

Currently, publicly available information on remittances from Timorese working abroad is limited and improvement in the estimation and compilation procedures of such remittances should be pursued.

The October 2015 ESS TA Mission found that important improvements have been made on the integrated IIP, namely the classification of components; the treatment of changes in prices and changes in exchange rates; and the treatment of positions of the Petroleum Fund and IMF-related accounts (reserve position in the IMF, SDR allocations, and SDR holdings). Progress was also verified on actions toward Timor-Leste’s participation in IMF’s Coordinated Direct Investment (CDIS). However, the recommendation on improving the coverage of the direct investment survey to include Joint Petroleum Development Area (JPDA) companies’ equity valued at own funds at book value was not implemented. Also, the treatment in ESS of the JPDA companies’ activities consistent with national accounts, is still pending. According to the BCTL officials, this is due to the difficulty of obtaining source data from the National Petroleum Authority (NPA).
II. Data Standards and Quality
Timor-Leste began participating in the IMF’s General Data Dissemination System (now the enhanced GDDS) in 2012, marking a major step forward in the development of its statistical system. On February 15, 2019, Timor-Leste fully implemented e-GDDS by publishing the National Summary Data Page.
Table of Common Indicators Required for Surveillance(As of Februrary 15, 2019)
Date of latest observationDate receivedFrequency of Data7Frequency of Reporting7Frequency of Publication7
Exchange Rates2/20192/2019DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities112/20181/2019MMM
Reserve/Base Money12/20181/2019MMM
Broad Money12/20181/2019MMM
Central Bank Balance Sheet12/20181/2019MMM
Consolidated Balance Sheet of the Banking System12/20181/2019MMM
Interest Rates212/20181/2019MMM
Consumer Price Index12/20181/2019MMM
Revenue, Expenditure, Balance and Composition of Financing3 – General Government420173/2018AAA
Revenue, Expenditure, Balance and Composition of Financing3– Central Government20173/2018AAA
Central Government and Central Government-Guaranteed Debt520173/2018AAA
External Current Account BalanceQ3/20181/2019QQQ
Exports and Imports of Goods and ServicesQ3/20181/2019MMM
GDP/GNP201612/2018AAA
Gross External DebtQ3/20181/2019QQQ
International Investment Position6Q3/20181/2019QQQ

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic banks, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Includes only goods. There are significant gaps in the series. No information on services is available.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); NA: Not Available.

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic banks, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Includes only goods. There are significant gaps in the series. No information on services is available.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); NA: Not Available.

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