Brunei Darussalam: 2024 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, September 24, 2024
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Bibliographic details
- Published: September 24, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400288722.002
Overview
- The 2024 Article IV Consultation highlights that Brunei faces complex diversification challenges while it continues to contend with a protracted recovery since the pandemic.
- Real gross domestic product has rebounded moderately, driven mainly by the non-oil and gas (O&G) sector and earlier than expected supply from a new O&G field in Q4 2023.
- The recovery is expected to continue, with growth strengthening in 2024 given the increase in O&G production, including from new fields.
- Inflation is projected to remain unchanged.
- Fiscal and external balances are expected to stabilize alongside O&G prices.
Growth, output, and inflation
- Moderate rebound in real GDP primarily driven by the non-O&G sector.
- Earlier than expected supply from a new O&G field arrived in Q4 2023.
- Growth expected to strengthen in 2024 due to increased O&G production, including from new fields.
- Inflation projected to remain unchanged.
Fiscal and external outlook
- Fiscal balances are expected to stabilize alongside O&G prices.
- External balances are likewise expected to stabilize alongside O&G prices.
- The report emphasizes maintaining a prudent fiscal stance given:
- the narrowing output gap,
- uncertainty around O&G revenues,
- long-term decarbonization trends.
Monetary and financial sector policy
- Brunei’s currency board has served it well.
- Recommendation: continue to align policy rates with the Monetary Authority of Singapore.
- Recommendation: closely monitor credit growth.
- Recommendation: ensure that the foreign loans continue to be invested in high credit-rated assets to help mitigate credit risk.
Key policy recommendations (enumerated)
- Maintain a prudent fiscal stance in light of the narrowing output gap, uncertainty around O&G revenues, and long-term decarbonization trends.
- Continue to align policy rates with the Monetary Authority of Singapore under the currency board arrangement.
- Closely monitor credit growth.
- Ensure foreign loans are invested in high credit-rated assets to mitigate credit risk.
Source: Brunei Darussalam: 2024 Article IV Consultation-Press Release; and Staff Report (September 24, 2024).
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