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

IMF Staff Country Reports, May 7, 2019

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Canonical URL: 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

Timor-Leste remains a fragile post-conflict nation with weak human and institutional capacity and large infrastructure gaps.
The main challenge is to effectively manage petroleum wealth to:
- reduce public-sector dependence,
- diversify the non-oil economy,
- generate jobs for a young and rapidly-growing population,
- raise living standards.
Political uncertainty constrained public spending in 2017–18, resulting in:
- a sharp contraction of non-oil GDP in 2017,
- flat growth in 2018.
Risks to the outlook are closely tied to the success of fiscal and structural reforms to:
- maintain macroeconomic stability,
- ensure long-run fiscal sustainability,
- facilitate economic diversification.

Non-oil GDP experienced:
- a sharp contraction in 2017,
- flat growth in 2018.
The outlook is sensitive to the implementation and success of fiscal and structural policies.

Pursue a fiscal strategy to:
- improve expenditure control and efficiency,
- mobilize domestic revenue,
- 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,
- enhance the quality of public services.

Emphasized need for reforms that support economic diversification away from petroleum dependence.
Strengthening public financial management (PFM) and promoting good governance are core to improving service delivery and investment outcomes.