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IMF Country Report No. 19/310
BRUNEI DARUSSALAM
2019 ARTICLE IV CONSULTATION—PRESS RELEASE AND STAFF REPORT
October 2019
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2019 Article IV consultation with Brunei Darussalam, the following documents have been released and are included in this package:
A Press Release.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on a lapse of time basis following discussions that ended on July 8, 2019, with the officials of Brunei Darussalam on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on August 26, 2019.
An Informational Annex prepared by the IMF staff.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
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© 2019 International Monetary Fund
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BRUNEI DARUSSALAM
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION
August 26, 2019
Key Issues
Context. Brunei Darussalam’s economy has been adjusting to the lower oil and gas (O&G) prices since 2014, with the authorities undertaking wide-ranging reforms. The reforms aim to ensure long-term fiscal sustainability and intergenerational equity, and to foster economic diversification.
Outlook and risks. Growth is expected to pick up in 2019, with the outlook improving further over the medium term, driven by expansion in the O&G sector and large investment projects. Nonetheless, lower-than-expected O&G prices or production would reduce fiscal revenues and exports, with significant spillovers to the non-O&G sector.
Policy Recommendations:
Fiscal policy. Continue fiscal consolidation to ensure long-term sustainability and intergenerational equity, by enhancing the revenue and expenditure strategy, reforming subsidies, and continuing public financial management reforms;
Structural reforms. Step up structural reforms to encourage private sector-led growth, by continuing to improve the business climate, enhance human capital, attract FDI, and boost integration with the global economy, while leveraging digital innovations;
Financial sector. Develop the financial sector while safeguarding financial stability and integrity, by strengthening micro- and macroprudential policies and supervision;
External sector. The peg to the Singapore dollar remains appropriate, providing a credible nominal anchor and stability to the financial system; and
Data issues. Continue to improve data compilation and dissemination.
Approved By
Odd Per Brekk and Edward Gemayel
Discussions took place in Bandar Seri Begawan during June 26–July 8, 2019. The mission team comprised Tahsin Saadi Sedik (head), Kyung-Seol Min, Md Shah Naoaj, and Qianqian Zhang (all APD). The mission met with the Minister at the Prime Ministers’ Office and Minister of Finance and Economy II Hon. Dato Dr. Amin Abdullah, and other senior officials from the ministries, Autoriti Monetari Brunei Darussalam (AMBD), Anti-Corruption Bureau, and private sector representatives. Ms. Mahasandana (Executive Director) and Mr. Mahyuddin (OED Senior Advisor) also participated in the discussions. Justin Flinner and Claudia Marchini (both APD) assisted in preparing this report.
Contents
CONTEXT
RECENT DEVELOPMENTS, OUTLOOK, AND RISKS
MACROECONOMIC POLICIES
A. Continuing Fiscal Consolidation and Reducing the Procyclicality of Fiscal Policy
B. Structural Reforms to Support Diversification, Inclusive Growth, and Job Creation
C. Developing the Financial Sector while Preserving Financial Stability and Integrity
D. Data Issues and Capacity Building
STAFF APPRAISAL
FIGURES
1. Real and Fiscal Indicators
2. External and Financial Indicators
3. Fiscal Indicators in Comparison with GCC Countries
4. Financial Stability Indicators
5. Socioeconomic Developments
6. Doing Business and Governance Indicators
TABLES
1. Selected Economic and Financial Indicators, 2014–24
2. Budgetary Central Government Developments, 2014/15–2024/25
3. Balance of Payments, 2014–24
4. Monetary Developments, 2012–20
5. Financial Soundness Indicators and Other Indicators of Vulnerability, 2012–19
APPENDICES
I. Risk Assessment Matrix
II. Status of Staff Advice Made During the 2018 Article IV Consultation
III. Youth Unemployment in Brunei
IV. External Sector Assessment
V. Fiscal Policy in a Medium-Term Context
VI. Financial Deepening and Economic Diversification
Front Matter Page
BRUNEI DARUSSALAM
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
August 26, 2019
Prepared By
Asia and Pacific Department
Contents
FUND RELATIONS
STATISTICAL ISSUES
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Press Release No. 19/371
FOR IMMEDIATE RELEASE
October 10, 2019
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