## IMF Executive Board Concludes 2022 Article IV Consultation with Brunei Darussalam

_IMF News, September 16, 2022_

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## Bibliographic details
- Published: September 16, 2022

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### Economic developments and outlook
- GDP contracted by 1.6 percent in 2021, led by slowdowns in O&G mining, LNG manufacturing, and downstream activities.
- For 2022, growth is projected to rebound to 1.2 percent, driven by easing of mobility constraints and a positive terms of trade shock due to surges in O&G prices.
- Inflation was 2.2 percent at end 2021 and has increased in 2022; inflation pressures are expected to remain elevated in the short term due to supply disruptions and higher food and fuel prices.
- Economy shows continued diversification: double-digit growth of the food/agriculture sector and a new fertilizer sector commencing production.
- Risks to the outlook are tilted to the downside: potential new COVID-19 variants; increased global uncertainty from an escalation of the war in Ukraine; monetary tightening from the US; and a larger-than-expected growth slowdown in China.
- Upside risk: higher energy prices would further improve the terms of trade and restore fiscal positions in the short term, while partially contributing to build buffers for stronger intergenerational equity.

### Public finances and external sector
- Brunei has virtually no public debt and ample fiscal reserves; targeted fiscal support can leverage these reserves to alleviate pandemic effects on vulnerable businesses and households.
- Several fiscal consolidation initiatives implemented: fiscal consolidation program to reduce wasteful spending in the medium term; containment in public employment; introduction of new pension scheme to increase employer’s contribution rate.
- Current account balance (levels, millions of Brunei dollars):
  - 2017: 1,984
  - 2018: 937
  - 2019: 895
  - 2020: 514
  - 2021: 644
  - 2022: 2,080
  - 2023: 1,747
  - 2024: 2,056
  - 2025: 2,314
  - 2026: 2,450
  - 2027: 2,635
- Gross Official Reserves (millions of Brunei dollars):
  - 2017: 3,300
  - 2018: 3,221
  - 2019: 4,052
  - 2020: 3,721
  - 2021: 4,242
  - 2022: 4,952
  - 2023: 5,562
  - 2024: 5,674
  - 2025: 5,786
  - 2026: 5,898
  - 2027: 6,010
- In months of next year's imports of goods and services: 2017: 7.0; 2018: 5.7; 2019: 7.6; 2020: 4.7; 2021: 5.1; 2022: 6.0; 2023: 6.2; 2024: 6.4.

### Policy recommendations
- Short-term: continue targeted fiscal support, leveraging fiscal reserves to protect vulnerable businesses and households.
- Medium- to long-term fiscal policy:
  - Advance reforms to improve fiscal sustainability and intergenerational equity.
  - Continue fiscal consolidation measures to improve efficiency of public spending, streamline untargeted subsidy and social spending, rationalize public employment, and mobilize revenue.
  - Fully implement the medium-term fiscal framework to help stabilize public finances.
- Monetary and financial sector:
  - Remove pandemic relief measures to the financial sector.
  - Monetary policy should be mindful of inflation risks.
  - Strengthen AML/CFT regulatory and supervisory framework; implement the Basel III framework; upgrade stress testing.
  - Foster financial deepening to spur private sector development.
- Structural policies to support diversification and resilience:
  - Ramp up economic diversification beyond oil and gas by expanding export portfolio and attracting quality FDI.
  - Develop human capital and MSMEs to lay foundation for higher potential growth.
  - Support digital and green growth to strengthen long-term resilience.

### Structural reforms, capacity development, and international integration
- Authorities accelerated diversification efforts, attracting large FDIs in the oil refinery sector and increasing investments in agriculture and O&G downstream sectors.
- Participation in regional economic integration: engagement in the Regional Comprehensive Economic Partnership (RCEP) agreement and the new Indo-Pacific Economic Framework to provide market access and investment opportunities.
- Skills and MSME programs: i-Ready apprenticeship program and SkillsPlus program to upskill and reskill the workforce; policies to facilitate access to financial resources and entrepreneurship skill training for MSMEs.
- Data and capacity development:
  - Measures taken to improve data management; authorities encouraged to further improve data compilation and dissemination.
  - Welcomed recent close cooperation in Capacity Development (CD) with the IMF and authorities' plan to request further CD.

### Executive Board assessment
- Directors commended policies to cushion pandemic impact and the impressive vaccination rollout.
- Directors observed a strong economic recovery underway, supported by lifting of COVID-19 restrictions, investment in large petrochemicals projects, and higher oil and gas prices.
- Directors emphasized maintaining supportive policies until a private sector led recovery is on a firm path, while continuing reforms to promote economic transformation and accelerate green, digital, and inclusive growth.
- Peg to the Singapore dollar: Directors agreed the peg remains appropriate as a credible nominal anchor for macroeconomic and financial stability and supports trade and investment linkages.
- Directors highlighted the importance of ongoing diversification, expanding export portfolio, attracting quality FDI, improving the business environment, investing in human capital, and developing micro, small and medium size enterprises.

### Selected country statistics and indicators
- Area: 5,765 sq. kilometers
- Population (2021): 429,999
- Nominal GDP per capita (2021): US$32,573.3
- Main export destinations (2020): Japan (25.6 percent), Singapore (21.3), China (17.7), Malaysia (7.7), and India (5.3 percent)
- Unemployment rate (2020): 7.4%
- Labor force participation rate (2020): total 65.2%; male 74.0%; female 55.2%
- Selected series (levels or changes shown in source):
  - Nominal GDP (millions of Brunei dollars): 2017: 16,748; 2018: 18,301; 2019: 18,375; 2020: 16,564; 2021: 18,822; 2022: 25,355; 2023: 24,699; 2024: 24,783; 2025: 25,060; 2026: 25,400; 2027: 26,092
  - Real GDP (percentage change): 2017: 1.3; 2018: 0.1; 2019: 3.9; 2020: 1.1; 2021: -1.6; 2022: 3.3; 2023: 3.2; 2024: 2.5; 2025: 3.4
  - Oil production ('000 barrels/day): 2017: 113; 2018: 112; 2019: 121; 2020: 110; 2021: 106; 2022: 104; 2023: 103; 2024: 109; 2025: 114; 2026: 120; 2027: 124
  - Average Brunei oil price (U.S. dollars per barrel): 2017: 55.9; 2018: 73.2; 2019: 68.6; 2020: 43.1; 2021: 72.7; 2022: 86.0; 2023: 83.6; 2024: 71.6; 2025: 68.3; 2026: 63.8; 2027: 62.2
  - Total revenue (percent of GDP, budgetary central government): 2017: 22.7; 2018: 32.7; 2019: 26.4; 2020: 12.6; 2021: 23.2; 2022: 23.7; 2023: 21.6; 2024: 20.8; 2025: 20.3; 2026: 19.7; 2027: 19.6
  - Overall balance 2/ (percent of GDP): 2017: -12.9; 2018: 0.2; 2019: -5.6; 2020: -19.9; 2021: -4.6; 2022: -2.5; 2023: -3.4; 2024: -3.1
  - Non-oil and Gas Balance (percent of GDP): 2017: -60.0; 2018: -53.5; 2019: -49.5; 2020: -46.0; 2021: -42.4; 2022: -34.6; 2023: -32.9; 2024: -31.5; 2025: -30.2; 2026: -29.0; 2027: -27.8
  - Exports (millions of Brunei dollars): 2017: 5,475; 2018: 6,448; 2019: 7,213; 2020: 6,541; 2021: 7,908; 2022: 14,078; 2023: 11,285; 2024: 11,662; 2025: 12,011; 2026: 12,365; 2027: 12,846
  - Of which: oil and gas (exports, millions): 2017: 5,021; 2018: 2,691; 2019: 3,244; 2020: 2,943; 2021: 4,446; 2022: 8,329; 2023: 4,512; 2024: 4,734; 2025: 4,916; 2026: 4,946; 2027: 5,036
  - Imports (millions of Brunei dollars): 2017: 3,072; 2018: 4,089; 2019: 5,001; 2020: 5,176; 2021: 8,169; 2022: 11,615; 2023: 10,255; 2024: 9,839; 2025: 9,621; 2026: 9,498; 2027: 9,540
  - Services (net, millions): 2017: -698; 2018: -1,007; 2019: -1,188; 2020: -855; 2021: -867; 2022: -883; 2023: -896; 2024: -911; 2025: -925; 2026: -938; 2027: -949
  - Primary Income (net, millions): 2017: 721; 2018: 87; 2019: 362; 2020: 360; 2021: 538; 2022: 928; 2023: 2,021; 2024: 1,573; 2025: 1,271; 2026: 941; 2027: 702
  - Secondary Income (net, millions): 2017: -442; 2018: -506; 2019: -490; 2020: -350; 2021: -448; 2022: -429; 2023: -409; 2024: -422; 2025: -420; 2026: -424
  - Consumer prices (period average, percentage change): 2017: -1.3; 2018: 1.0; 2019: -0.4; 2020: 1.7; 2021: 1.5
  - Private Sector Credit (percent change): 2017: -5.3; 2018: -5.0
  - Narrow money (percent change): 2017: -5.7; 2018: -3.0; 2019: 6.6; 2020: 4.5
  - Broad money (percent change): 2017: 2.8; 2018: 4.3; 2019: -4.0; 2020: 1.8
  - Brunei dollars per U.S. dollar (period average): 2017: 1.38; 2018: 1.35; 2019: 1.36; 2020: 1.34
  - Brunei dollar per U.S. dollar (end of period): 2017: 1.37

*Press Release No. 22/307, September 16, 2022, IMF.*

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## References

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- [Singapore and the IMF](http://www.imf.org/external/country/SGP/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
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_Source: https://www.imf.org/en/news/articles/2022/09/16/pr22307-brunei-darussalam-imf-executive-board-concludes-2022-article-iv-consultation_