{ "title": "IMF Executive Board Concludes 2022 Article IV Consultation with Timor-Leste", "publication": "IMF News, September 22, 2022", "sourceUrl": "https://www.imf.org/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste", "canonical": "https://www.imf.org/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste", "overlayPath": "/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/index.md", "summary": "IMF Executive Board Concludes 2022 Article IV Consultation with Timor-Leste", "publishDate": "2022-09-22", "sections": [ { "heading": "Macro outlook and recent developments", "content": "- Timor-Leste is slowly emerging from several waves of COVID-19 outbreaks and from severe floods following cyclone Seroja in April 2021.\n- Steady progress with vaccination allowed the authorities to lift strict containment and travel restrictions.\n- After a sharp contraction in growth in 2020, there was a moderate rebound in 2021.\n- Inflation has been rising steadily since early 2021 driven by higher food and oil prices while non-tradable inflation remains muted.\n- Real non-oil GDP growth in 2022 is projected at 3.3 percent, underpinned by strong government support, a rebound in private consumption, and the reopening of borders.\n- Inflation is projected to pick up, reflecting the increase in food and energy prices.\n- A gradual recovery of private consumption and investment will underpin GDP growth at around 3 percent in the medium term." }, { "heading": "Executive Board assessment — key findings", "content": "- The Executive Board concluded the Article IV consultation on August 24, 2022 and endorsed the staff appraisal without a meeting on a lapse-of-time basis.\n- Non-oil real GDP is projected to grow at 3.3 percent in 2022, after an estimated growth of 1.5 percent in 2021, supported by public spending and rebounding private consumption.\n- Large downside risks remain:\n - Re-intensification of a health crisis.\n - Ongoing geopolitical tensions raising and prolonging high oil and food prices.\n - Domestic political instability that could stall reforms.\n - Natural disasters that could further slow the recovery.\n- The external sector position in 2021 was substantially weaker than implied by fundamentals and desirable policy settings.\n- Active oil fields are drying up, with oil revenues expected to cease in 2023.\n- The 2022 budget envisages large fiscal imbalances in the medium term that would deplete the Petroleum Fund in the long term, leading to a fiscal cliff." }, { "heading": "Fiscal and public financial management (PFM) recommendations", "content": "- Fiscal consolidation and structural reforms are needed to:\n - Secure fiscal sustainability.\n - Strengthen the external sector position.\n - Support a smoother transition to a private sector-led economy.\n- Domestic revenue mobilization and government expenditure rationalization are needed in future budgets to underpin fiscal consolidation.\n- Government spending should prioritize:\n - Investment projects to enhance the productive capacity of the economy.\n - Programs to protect the poor.\n- Addressing PFM weaknesses is essential to strengthen fiscal management and improve the quality of government spending.\n- High priority PFM reform areas:\n - Budget credibility.\n - Public investment management.\n - Procurement performance and monitoring.\n - Fragmentation caused by the proliferation of autonomous agencies.\n- The authorities have adopted some PFM reforms and are committed to continuing reform efforts with technical support from the Fund and other development partners.\n- The introduction of a Fiscal Responsibility Law (FRL) can help improve fiscal discipline by requiring a monitorable fiscal policy objective and a strategy to achieve it." }, { "heading": "Structural reform priorities", "content": "- Lift structural barriers to facilitate diversification and generate inclusive and resilient growth:\n - Transform predominantly subsistence-oriented agriculture into a commercially viable sector.\n - Raise productivity and enhance food security.\n - Improve the business environment.\n - Strengthen AML/CFT and anti-corruption effectiveness to foster private investment.\n- Progress in private sector development and job creation has been tepid; reforms have been slow and limited.\n- Invest in climate-resilient infrastructure to build resilience to natural disasters.\n- Key challenges: integration of adaptation plans into budgetary planning, coordination among public stakeholders, and capacity constraints to access external grant-financing." }, { "heading": "Key statistics and indicators (selected)", "content": "- Non-oil GDP at current prices (2020): US$1.595 billion\n- Population (2020): 1.318 million\n- Non-oil GDP per capita (2020): US$1,210\n- Quota: SDR 25.6 million\n\nReal sector (Annual percent change)\n- Real Non-oil GDP: 2018: -0.7; 2019: 2.1; 2020: -8.6; 2021: 1.5; 2022 (Proj.): 3.3; 2023 (Proj.): 4.2\n- CPI (annual average): 2018: 2.3; 2019: 0.9; 2020: 0.5; 2021: 3.8; 2022 (Proj.): 7.0; 2023 (Proj.): 4.0\n- CPI (end-period): 2018: 0.3; 2019: 1.2; 2020: 5.3\n\nCentral government operations (In percent of Non-oil GDP unless otherwise indicated)\n- Revenue: 2018: 57.6; 2019: 51.6; 2020: 57.0; 2021: 54.1; 2022 (Proj.): 51.9; 2023 (Proj.): 46.9\n- Domestic revenue: 2018: 12.0; 2019: 11.0; 2020: 11.4; 2021: 9.6\n- Estimated Sustainable Income (ESI): 2018: 34.8; 2019: 31.0; 2020: 34.1; 2021: 33.0; 2022 (Proj.): 30.8; 2023 (Proj.): 25.8\n- Grants: 2018: 10.8; 2019: 9.5; 2020: 11.5\n- Expenditure: 2018: 84.0; 2019: 81.9; 2020: 82.6; 2021: 97.2; 2022 (Proj.): 106.8; 2023 (Proj.): 114.4\n - Recurrent: 2018: 51.8; 2019: 54.0; 2020: 61.1; 2021: 77.5; 2022 (Proj.): 79.0; 2023 (Proj.): 62.4\n - Net acquisition of nonfinancial assets: 2018: 21.4; 2019: 18.4; 2020: 10.0; 2021: 8.3; 2022 (Proj.): 16.3; 2023 (Proj.): 40.6\n- Net lending/borrowing: 2018: -26.4; 2019: -30.3; 2020: -25.6; 2021: -43.2; 2022 (Proj.): -54.9; 2023 (Proj.): -67.6\n\nMoney and credit (Annual percent change)\n- Deposits: 2018: 2.8; 2019: -7.5; 2020: 10.1; 2021: 29.3; 2022 (Proj.): 10.5; 2023 (Proj.): 9.9\n- Credit to the private sector: 2018: -3.8; 2019: 5.5; 2020: 4.6; 2021: 8.9; 2022 (Proj.): 5.8\n\nBalance of payments (In millions of U.S. dollars unless otherwise indicated)\n- Current account balance: 2018: -191; 2019: 133; 2020: -308; 2021: 43; 2022 (Proj.): -284; 2023 (Proj.): -821\n- Current account balance (In percent of Non-oil GDP): 2018: -12; 2019: 8; 2020: -19; 2021: 3; 2022 (Proj.): -15; 2023 (Proj.): -40\n- Trade of Goods: 2018: -589; 2019: -566; 2020: -510; 2021: -569; 2022 (Proj.): -647; 2023 (Proj.): -726\n - Exports of goods: 2018: 25; 2019: 26; 2020: 17; 2021: 32; 2022 (Proj.): 35; 2023 (Proj.): 39\n - Imports of goods: 2018: 613; 2019: 592; 2020: 527; 2021: 601; 2022 (Proj.): 682; 2023 (Proj.): 765\n- Trade of Services: 2018: -349; 2019: -357; 2020: -275; 2021: -244; 2022 (Proj.): -279; 2023 (Proj.): -316\n- Primary Income: 2018: 843; 2019: 1,126; 2020: 620; 2021: 925; 2022 (Proj.): 718; 2023 (Proj.): 305\n - of which: other primary income (oil/gas) 1/: 2018: 510; 2019: 756; 2020: 324; 2021: 720; 2022 (Proj.): 634; 2023 (Proj.): 46\n- Secondary Income: 2018: -96; 2019: -70; 2020: -143; 2021: -77; 2022 (Proj.): -84\n- Overall balance: 2018: 129; 2019: -18; 2020: 0.2; 2021: 278; 2022 (Proj.): 62; 2023 (Proj.): 153\n- Public foreign assets (end-period) 2/: 2018: 16,477; 2019: 18,348; 2020: 18,946; 2021: 19,884; 2022 (Proj.): 18,442; 2023 (Proj.): 17,654\n - (In months of imports): 2018: 187; 2019: 212; 2020: 270; 2021: 275; 2022 (Proj.): 218; 2023 (Proj.): 181\n\nExchange rates\n- NEER (2010=100, period average): 2018: 130.9; 2019: 134.1; 2020: 135.8; 2021: 131.9\n- REER (2010=100, period average): 2018: 142.0; 2019: 143.8; 2020: 137.8\n\nMemorandum items\n- Nominal Non-oil GDP (in millions of U.S. dollars): 2018: 1,584; 2019: 1,704; 2020: 1,595; 2021: 1,681; 2022 (Proj.): 1,858; 2023 (Proj.): 2,043\n- Nominal Non-oil GDP per capita (in U.S. dollars): 2018: 1,249; 2019: 1,318; 2020: 1,210; 2021: 1,251; 2022 (Proj.): 1,357; 2023 (Proj.): 1,464\n- Crude oil prices (U.S. dollars per barrel, WEO) 3/: 2018: 68; 2019: 61; 2020: 41; 2021: 69; 2022 (WEO assumption): 106; 2023 (WEO assumption): 95\n- Petroleum Fund balance (in millions of U.S. dollars) 4/: 2018: 15,803; 2019: 17,692; 2020: 18,289; 2021: 18,949; 2022 (Proj.): 17,446; 2023 (Proj.): 16,504\n- Public debt (in millions of U.S. dollars): 2018: 998; 2019: 1,038; 2020: 1,146; 2021: 1,127; 2022 (Proj.): 939; 2023 (Proj.): 808\n- Population growth (annual percent change): 2018: 2.0; 2019: 1.9; 2020: (value not provided)\n\nSources: Timor-Leste authorities; and IMF staff estimates and projections.\n\nIMF Communications Department, Press Release No. 22/317 (September 22, 2022).\n\n---\n\n\n References\n\n- Democratic Republic of Timor-Leste and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste" } ], "bullets": [ "[Markdown version](/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/index.md)", "[Structured JSON version](/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/index.json)", "[Bundle manifest](/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/bundle-manifest.json)", "Published: September 22, 2022", "Timor-Leste is slowly emerging from several waves of COVID-19 outbreaks and from severe floods following cyclone Seroja in April 2021.", "Steady progress with vaccination allowed the authorities to lift strict containment and travel restrictions.", "After a sharp contraction in growth in 2020, there was a moderate rebound in 2021.", "Inflation has been rising steadily since early 2021 driven by higher food and oil prices while non-tradable inflation remains muted.", "Real non-oil GDP growth in 2022 is projected at 3.3 percent, underpinned by strong government support, a rebound in private consumption, and the reopening of borders.", "Inflation is projected to pick up, reflecting the increase in food and energy prices.", "A gradual recovery of private consumption and investment will underpin GDP growth at around 3 percent in the medium term.", "The Executive Board concluded the Article IV consultation on August 24, 2022 and endorsed the staff appraisal without a meeting on a lapse-of-time basis.", "Non-oil real GDP is projected to grow at 3.3 percent in 2022, after an estimated growth of 1.5 percent in 2021, supported by public spending and rebounding private consumption.", "Large downside risks remain:", "The external sector position in 2021 was substantially weaker than implied by fundamentals and desirable policy settings.", "Active oil fields are drying up, with oil revenues expected to cease in 2023.", "The 2022 budget envisages large fiscal imbalances in the medium term that would deplete the Petroleum Fund in the long term, leading to a fiscal cliff.", "Fiscal consolidation and structural reforms are needed to:", "Domestic revenue mobilization and government expenditure rationalization are needed in future budgets to underpin fiscal consolidation.", "Government spending should prioritize:", "Addressing PFM weaknesses is essential to strengthen fiscal management and improve the quality of government spending.", "High priority PFM reform areas:", "The authorities have adopted some PFM reforms and are committed to continuing reform efforts with technical support from the Fund and other development partners.", "The introduction of a Fiscal Responsibility Law (FRL) can help improve fiscal discipline by requiring a monitorable fiscal policy objective and a strategy to achieve it.", "Lift structural barriers to facilitate diversification and generate inclusive and resilient growth:", "Progress in private sector development and job creation has been tepid; reforms have been slow and limited.", "Invest in climate-resilient infrastructure to build resilience to natural disasters.", "Key challenges: integration of adaptation plans into budgetary planning, coordination among public stakeholders, and capacity constraints to access external grant-financing.", "Non-oil GDP at current prices (2020): US$1.595 billion", "Population (2020): 1.318 million", "Non-oil GDP per capita (2020): US$1,210", "Quota: SDR 25.6 million", "Real Non-oil GDP: 2018: -0.7; 2019: 2.1; 2020: -8.6; 2021: 1.5; 2022 (Proj.): 3.3; 2023 (Proj.): 4.2", "CPI (annual average): 2018: 2.3; 2019: 0.9; 2020: 0.5; 2021: 3.8; 2022 (Proj.): 7.0; 2023 (Proj.): 4.0", "CPI (end-period): 2018: 0.3; 2019: 1.2; 2020: 5.3", "Revenue: 2018: 57.6; 2019: 51.6; 2020: 57.0; 2021: 54.1; 2022 (Proj.): 51.9; 2023 (Proj.): 46.9", "Domestic revenue: 2018: 12.0; 2019: 11.0; 2020: 11.4; 2021: 9.6", "Estimated Sustainable Income (ESI): 2018: 34.8; 2019: 31.0; 2020: 34.1; 2021: 33.0; 2022 (Proj.): 30.8; 2023 (Proj.): 25.8", "Grants: 2018: 10.8; 2019: 9.5; 2020: 11.5", "Expenditure: 2018: 84.0; 2019: 81.9; 2020: 82.6; 2021: 97.2; 2022 (Proj.): 106.8; 2023 (Proj.): 114.4", "Net lending/borrowing: 2018: -26.4; 2019: -30.3; 2020: -25.6; 2021: -43.2; 2022 (Proj.): -54.9; 2023 (Proj.): -67.6", "Deposits: 2018: 2.8; 2019: -7.5; 2020: 10.1; 2021: 29.3; 2022 (Proj.): 10.5; 2023 (Proj.): 9.9", "Credit to the private sector: 2018: -3.8; 2019: 5.5; 2020: 4.6; 2021: 8.9; 2022 (Proj.): 5.8", "Current account balance: 2018: -191; 2019: 133; 2020: -308; 2021: 43; 2022 (Proj.): -284; 2023 (Proj.): -821", "Current account balance (In percent of Non-oil GDP): 2018: -12; 2019: 8; 2020: -19; 2021: 3; 2022 (Proj.): -15; 2023 (Proj.): -40", "Trade of Goods: 2018: -589; 2019: -566; 2020: -510; 2021: -569; 2022 (Proj.): -647; 2023 (Proj.): -726", "Trade of Services: 2018: -349; 2019: -357; 2020: -275; 2021: -244; 2022 (Proj.): -279; 2023 (Proj.): -316", "Primary Income: 2018: 843; 2019: 1,126; 2020: 620; 2021: 925; 2022 (Proj.): 718; 2023 (Proj.): 305", "Secondary Income: 2018: -96; 2019: -70; 2020: -143; 2021: -77; 2022 (Proj.): -84", "Overall balance: 2018: 129; 2019: -18; 2020: 0.2; 2021: 278; 2022 (Proj.): 62; 2023 (Proj.): 153", "Public foreign assets (end-period) 2/: 2018: 16,477; 2019: 18,348; 2020: 18,946; 2021: 19,884; 2022 (Proj.): 18,442; 2023 (Proj.): 17,654", "NEER (2010=100, period average): 2018: 130.9; 2019: 134.1; 2020: 135.8; 2021: 131.9", "REER (2010=100, period average): 2018: 142.0; 2019: 143.8; 2020: 137.8", "Nominal Non-oil GDP (in millions of U.S. dollars): 2018: 1,584; 2019: 1,704; 2020: 1,595; 2021: 1,681; 2022 (Proj.): 1,858; 2023 (Proj.): 2,043", "Nominal Non-oil GDP per capita (in U.S. dollars): 2018: 1,249; 2019: 1,318; 2020: 1,210; 2021: 1,251; 2022 (Proj.): 1,357; 2023 (Proj.): 1,464", "Crude oil prices (U.S. dollars per barrel, WEO) 3/: 2018: 68; 2019: 61; 2020: 41; 2021: 69; 2022 (WEO assumption): 106; 2023 (WEO assumption): 95", "Petroleum Fund balance (in millions of U.S. dollars) 4/: 2018: 15,803; 2019: 17,692; 2020: 18,289; 2021: 18,949; 2022 (Proj.): 17,446; 2023 (Proj.): 16,504", "Public debt (in millions of U.S. dollars): 2018: 998; 2019: 1,038; 2020: 1,146; 2021: 1,127; 2022 (Proj.): 939; 2023 (Proj.): 808", "Population growth (annual percent change): 2018: 2.0; 2019: 1.9; 2020: (value not provided)", "[Democratic Republic of Timor-Leste and the IMF](http://www.imf.org/external/country/TLS/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Press Releases](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/index.md", "json": "/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/index.json", "bundleManifest": "/en/news/articles/2022/09/22/pr22317-imf-executive-board-concludes-2022-article-iv-consultation-with-timor-leste/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T01:31:08.558Z" }