Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix
IMF Staff Country Reports, February 28, 2007
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- Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix
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Bibliographic details
- Published: February 28, 2007
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451837346.002
Executive summary
- The paper assesses linkages between investment and growth observed in other countries to gauge the expected impact of increasing public investment in Timor-Leste.
- Key high-level conclusions:
- The level of capital expenditure envisioned in the government’s strategy could significantly boost economic growth and reduce poverty.
- The paper reviews major issues related to tax policy reform in Timor-Leste.
- The paper discusses the current direction of Timor-Leste Petroleum Fund asset management and issues that might arise with eventual asset diversification.
Public investment and growth
- Analytical focus:
- Evidence from cross-country linkages between investment and growth is used to estimate expected impacts of higher public investment in Timor-Leste.
- Findings:
- Increased public capital expenditure, at the levels envisioned in the government’s strategy, is assessed to have substantial positive effects on economic growth.
- Projected growth effects are linked explicitly to potential poverty reduction outcomes.
Tax policy reform
- Scope of review:
- Major issues related to tax policy reform in Timor-Leste are examined.
- Themes covered:
- Design and implications of income and capital gains taxes and income tax systems.
- Revenue administration and reform considerations relevant for strengthening tax capacity and revenue mobilization.
Timor-Leste Petroleum Fund (TLPF) asset management and diversification
- Analytical focus:
- The current direction of TLPF asset management is described.
- Potential issues associated with eventual asset diversification are discussed.
- Considerations highlighted:
- Asset allocation and investment objectives for the TLPF.
- Risks and operational issues that could arise during diversification of TLPF assets.
Key takeaways for policymakers
- Public investment:
- Pursuing the government’s envisioned capital expenditure program could materially boost growth and contribute to poverty reduction.
- Tax reform:
- Addressing major tax policy and revenue administration issues is important to support sustainable public finances and effective use of increased investment.
- Sovereign wealth management:
- Careful planning is needed for TLPF asset management and any diversification to manage risks and align with investment objectives.
Democratic Republic of Timor-Leste: Selected Issues and Statistical Appendix, February 28, 2007