{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Brunei Darussalam",
  "publication": "IMF News, September 25, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/09/25/pr-24340-brunei-imf-concludes-2024-article-iv-consultation",
  "canonical": "https://www.imf.org/en/news/articles/2024/09/25/pr-24340-brunei-imf-concludes-2024-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded on September 16, 2024 the Article IV consultation with Brunei Darussalam on a lapse-of-time basis.",
  "publishDate": "2024-09-25",
  "sections": [
    {
      "heading": "Recent economic performance and staff appraisal",
      "content": "- Real GDP rose by 1.4 percent in 2023 after two years of recession, mainly driven by the non-oil and gas (O&G) sector and earlier-than-anticipated production from the new Salman oil field in Q4 2023.\n- Inflation fell to 0.4 percent in 2023 compared to 3.7 percent in 2022, supported by easing post-pandemic supply chain disruptions, softening commodity prices, and large subsidies and price controls.\n- Fiscal and external positions deteriorated in 2023 reflecting weaker O&G production and prices; the current account was also impacted by higher service imports and net income outflows.\n- The banking sector remains stable, liquid, and well capitalized with declining non-performing loans."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Growth is forecast at about 2.4 percent in 2024 on the back of expected increases in O&G production, including from new offshore oil fields, and a rebound in the downstream sector; domestic non-O&G non-tradeable sector growth is expected to plateau.\n- Inflation is expected to remain unchanged at 0.5 percent in 2024.\n- Fiscal and external balances would stabilize alongside O&G prices.\n- Near-term risks are tilted downward due to external factors and O&G production challenges.\n- Upside scenario: new O&G field discoveries would provide significant upside.\n- Structural and transition risks: decarbonization pressures and adoption of artificial intelligence pose economic and social challenges."
    },
    {
      "heading": "Executive Board recommendations on fiscal policy",
      "content": "- The narrowing output gap, O&G revenue uncertainty, and long-term decarbonization trends warrant a prudent fiscal stance while protecting the vulnerable and public investment.\n- Use of fiscal buffers in FY 2023/24 was appropriate; priority should shift to restoring fiscal buffers through growth-friendly fiscal consolidation.\n- Policy instruments recommended:\n  - Enhanced revenue generation.\n  - Consideration of a low-rate carbon tax.\n  - Expenditure rationalization, including more targeted subsidies.\n  - Development of a fiscal consolidation plan with clear fiscal targets.\n  - Establishment of a MTFF and fiscal anchors, and strengthening fiscal risk management and transparency."
    },
    {
      "heading": "Monetary policy, exchange arrangement, and liquidity management",
      "content": "- The currency board arrangement with Singapore is sound and has supported macroeconomic and financial stability.\n- Recommended improvements in monetary operations:\n  - Include Singapore's interbank transactions in analysis to understand influence of Singapore's policy rates since January 2024.\n  - Continue to narrow the corridor by raising the SFDR.\n  - Integrate I-bills into the Asset Maintenance Ratio.\n  - Launch a website for better communication on monetary policies.\n- Encourage enhanced inter-agency cooperation regarding issuance and management of sukuks.\n- Over the medium term, BDCB is encouraged to build internal capacity in liquidity forecasting to calibrate I-bill issuance and consider establishing a single treasury account."
    },
    {
      "heading": "Financial sector stability and regulatory priorities",
      "content": "- Financial sector remained stable with strong capital and liquidity buffers; systemic risk is assessed to be contained.\n- Monitoring and prudential measures advised:\n  - Careful tracking of credit growth in both offshore and domestic personal loans.\n  - Ensure foreign loans continue to be invested in highly credit-rated assets to mitigate credit risk.\n  - For domestic lending, deploy prudential measures like capping the Total Debt Service Ratio, assessing unsecured personal loan exposure, and maintaining NPL standards.\n  - Authorities encouraged to implement Basel III standards for better liquidity management by the end-2024.\n  - Implement stress tests, including consideration of stress testing for climate transition and physical risks.\n  - Strengthen prudential frameworks, develop a long-term sukuk market, adopt a green taxonomy and unify disclosure standards.\n  - Improve AML/CFT effectiveness and continue implementing the APG’s Mutual Evaluation Report recommendations."
    },
    {
      "heading": "Structural reforms, diversification, and climate agenda",
      "content": "- Authorities’ commitment to ambitious and sustained structural reforms is critical to ensure growth and diversification, including transition to a low-carbon economy.\n- Net zero emissions goal by 2050 will require continued development of the non-O&G sector and adoption of green technologies.\n- Priorities include continued skill development, addressing AI-related challenges, and closing structural gaps in first-generation reform areas (external sector trade facilitation, improving business regulation, and governance) vis-à-vis top peers to facilitate FDI and PPPs.\n- Completing the 2025 National Adaptation Plan and a Climate Vulnerability Assessment should support prioritization of adaptation strategies."
    },
    {
      "heading": "Data, statistical, and transparency issues",
      "content": "- Data provided to the Fund has some shortcomings that hamper surveillance; data quality should be strengthened.\n- Steps needed to close identified data gaps in national income, prices, external and fiscal sectors.\n- Recommended actions:\n  - Improve external sector data through a survey to better gauge trends in errors and omissions, and payables/receivables.\n  - Strengthen public financial management (PFM) to build more transparent and accountable fiscal systems and align further with GFSM (2014).\n  - Enhance dissemination via the Fund’s e-GDDS portal."
    },
    {
      "heading": "Key statistics and projections (selected, as reported)",
      "content": "- Area: 5,765 sq. kilometers\n- Population (2023): 450,500\n- Nominal GDP per capita (2023): US$33,581.1\n- Main export destinations (2023): Australia (21.5 percent), China (16.9), and Singapore (16.7)\n- Unemployment rate (2023): 5.1%\n- Labor force participation rate (2023): total 67.2; male 75.8%; female 57.3%\n- Real GDP (percentage change):\n  - 2019: 3.9\n  - 2020: 1.1\n  - 2021: -1.6\n  - 2022: 1.4\n  - 2023: 2.4\n  - 2024 (Proj.): 2.6\n  - 2025 (Proj.): 2.7\n  - 2026 (Proj.): 2.9\n  - 2027 (Proj.): 3.1\n- Oil production ('000 barrels/day):\n  - 2019: 121\n  - 2020: 110\n  - 2021: 107\n  - 2022: 92\n  - 2023: 74\n  - 2024 (Proj.): 84\n  - 2025 (Proj.): 94\n  - 2026 (Proj.): 99\n  - 2027 (Proj.): 90\n- Natural gas output (millions BTUs/day):\n  - 2019: 1,402\n  - 2020: 1,358\n  - 2021: 1,253\n  - 2022: 1,151\n  - 2023: 1,214\n  - 2024 (Proj.): 1,226\n  - 2025 (Proj.): 1,201\n  - 2026 (Proj.): 1,220\n  - 2027 (Proj.): 1,277\n  - 2028 (Proj.): 1,313\n- Average Brunei oil price (U.S. dollars per barrel):\n  - 2019: 68.6\n  - 2020: 43.3\n  - 2021: 72.1\n  - 2022: 107.7\n  - 2023: 87.1\n  - 2024 (Proj.): 89.5\n  - 2025 (Proj.): 83.3\n  - 2026 (Proj.): 79.9\n  - 2027 (Proj.): 77.0\n  - 2028 (Proj.): 75.1\n  - 2029 (Proj.): 73.8\n- Average Brunei gas price (U.S. dollars per million BTU):\n  - 2019: 9.1\n  - 2020: 6.7\n  - 2021: 14.4\n  - 2022: 10.9\n  - 2023: 8.6\n  - 2024 (Proj.): 9.9\n  - 2025 (Proj.): 8.7\n  - 2026 (Proj.): 7.8\n  - 2027 (Proj.): 7.4\n  - 2028 (Proj.): 7.0\n- Consumer prices (period average, percentage change):\n  - 2019: -0.4\n  - 2020: 1.9\n  - 2021: 3.7\n  - 2022: 0.4\n  - 2023: 0.5\n- Public Finances: Budgetary Central Government (Fiscal Year, In percent of GDP)\n  - Total revenue:\n    - 2019: 26.4\n    - 2020: 12.6\n    - 2021: 24.0\n    - 2022: 28.3\n    - 2023: 17.3\n    - 2024 (Proj.): 19.3\n    - 2025 (Proj.): 18.9\n    - 2026 (Proj.): 17.5\n    - 2027 (Proj.): 16.3\n    - 2028 (Proj.): 15.5\n    - 2029 (Proj.): 15.1\n  - Oil and gas revenue:\n    - 2019: 19.8\n    - 2020: 7.7\n    - 2021: 20.2\n    - 2022: 24.5\n    - 2023: 13.0\n    - 2024 (Proj.): 13.6\n    - 2025 (Proj.): 13.4\n    - 2026 (Proj.): 12.2\n    - 2027 (Proj.): 11.1\n    - 2028 (Proj.): 10.1\n    - 2029 (Proj.): 9.5\n  - Other revenue:\n    - 2019: 6.5\n    - 2020: 5.0\n    - 2021: 3.8\n    - 2022: 5.6\n    - 2023: 5.5\n    - 2024 (Proj.): 5.3\n    - 2025 (Proj.): 5.2\n    - 2026 (Proj.): 5.4\n  - Total Expenditure:\n    - 2019: 31.9\n    - 2020: 32.6\n    - 2021: 29.1\n    - 2022: 26.7\n    - 2023: 29.2\n    - 2024 (Proj.): 29.4\n    - 2025 (Proj.): 28.6\n    - 2026 (Proj.): 27.8\n    - 2027 (Proj.): 26.9\n    - 2028 (Proj.): 25.9\n    - 2029 (Proj.): 25.1\n  - Current expenditure:\n    - 2019: 29.5\n    - 2020: 31.3\n    - 2021: 28.0\n    - 2022: 25.7\n    - 2023: 27.4\n    - 2024 (Proj.): 27.0\n    - 2025 (Proj.): 26.2\n    - 2026 (Proj.): 25.4\n    - 2027 (Proj.): 23.6\n    - 2028 (Proj.): 22.8\n  - Overall balance 2/:\n    - 2019: -5.6\n    - 2020: -20.0\n    - 2021: -5.1\n    - 2022: 1.6\n    - 2023: -11.8\n    - 2024 (Proj.): -10.1\n    - 2025 (Proj.): -9.6\n    - 2026 (Proj.): -10.2\n    - 2027 (Proj.): -10.5\n    - 2028 (Proj.): -10.4\n    - 2029 (Proj.): -9.9\n  - Overall primary balance excluding royalties:\n    - 2019: -22.7\n    - 2020: -25.8\n    - 2021: -22.5\n    - 2022: -19.8\n    - 2023: -22.6\n    - 2024 (Proj.): -21.5\n    - 2025 (Proj.): -20.7\n    - 2026 (Proj.): -20.2\n    - 2027 (Proj.): -19.6\n    - 2028 (Proj.): -18.7\n    - 2029 (Proj.): -17.7\n  - Non-oil and Gas Balance (In percent of non-oil and gas GDP):\n    - 2019: -49.5\n    - 2020: -46.1\n    - 2021: -44.3\n    - 2022: -40.2\n    - 2023: -41.8\n    - 2024 (Proj.): -39.2\n    - 2025 (Proj.): -36.5\n    - 2026 (Proj.): -33.7\n    - 2027 (Proj.): -31.1\n    - 2028 (Proj.): -28.6\n    - 2029 (Proj.): -26.1\n- Balance of Payments (exports, imports, goods, services, current account):\n  - Goods (millions of U.S. dollars):\n    - 2019: 2,211\n    - 2020: 1,359\n    - 2021: 2,679\n    - 2022: 5,153\n    - 2023: 3,808\n    - 2024 (Proj.): 3,966\n    - 2025 (Proj.): 4,264\n    - 2026 (Proj.): 4,121\n    - 2027 (Proj.): 3,925\n    - 2028 (Proj.): 4,013\n    - 2029 (Proj.): 4,131\n  - Exports:\n    - 2019: 7,210\n    - 2020: 6,535\n    - 2021: 11,001\n    - 2022: 14,130\n    - 2023: 11,264\n    - 2024 (Proj.): 11,416\n    - 2025 (Proj.): 11,987\n    - 2026 (Proj.): 12,098\n    - 2027 (Proj.): 12,024\n    - 2028 (Proj.): 12,390\n    - 2029 (Proj.): 12,780\n  - Exports of which: oil and gas:\n    - 2019: 3,244\n    - 2020: 2,943\n    - 2021: 4,730\n    - 2022: 5,660\n    - 2023: 4,185\n    - 2024 (Proj.): 3,867\n    - 2025 (Proj.): 4,387\n    - 2026 (Proj.): 4,243\n    - 2027 (Proj.): 3,798\n    - 2028 (Proj.): 3,668\n    - 2029 (Proj.): 3,617\n  - Imports:\n    - 2019: 4,999\n    - 2020: 5,176\n    - 2021: 8,322\n    - 2022: 8,977\n    - 2023: 7,456\n    - 2024 (Proj.): 7,450\n    - 2025 (Proj.): 7,723\n    - 2026 (Proj.): 7,977\n    - 2027 (Proj.): 8,099\n    - 2028 (Proj.): 8,377\n    - 2029 (Proj.): 8,649\n  - Services (net):\n    - 2019: -1,189\n    - 2020: -855\n    - 2021: -696\n    - 2022: -848\n    - 2023: -1,305\n    - 2024 (Proj.): -1,324\n    - 2025 (Proj.): -1,271\n    - 2026 (Proj.): -1,173\n    - 2027 (Proj.): -1,086\n    - 2028 (Proj.): -1,029\n    - 2029 (Proj.): -989\n  - Primary Income (net):\n    - 2019: 362\n    - 2020: 360\n    - 2021: -370\n    - 2022: 194\n    - 2023: 327\n    - 2024 (Proj.): 226\n    - 2025 (Proj.): 193\n    - 2026 (Proj.): 146\n    - 2027 (Proj.): 119\n    - 2028 (Proj.): 83\n  - Secondary Income (net):\n    - 2019: -490\n    - 2020: -350\n    - 2021: -502\n    - 2022: -671\n    - 2023: -749\n    - 2024 (Proj.): -641\n    - 2025 (Proj.): -687\n    - 2026 (Proj.): -692\n    - 2027 (Proj.): -673\n    - 2028 (Proj.): -684\n    - 2029 (Proj.): -683\n  - Current Account Balance (millions of U.S. dollars):\n    - 2019: 894\n    - 2020: 514\n    - 2021: 1,570\n    - 2022: 3,264\n    - 2023: 1,949\n    - 2024 (Proj.): 2,328\n    - 2025 (Proj.): 2,532\n    - 2026 (Proj.): 2,448\n    - 2027 (Proj.): 2,311\n    - 2028 (Proj.): 2,419\n    - 2029 (Proj.): 2,541\n  - Current Account Balance (in percent of GDP):\n    - 2019: 11.2\n    - 2020: 19.6\n    - 2021: 12.9\n    - 2022: 15.0\n- Gross Official Reserves:\n  - 2019: 4,273\n  - 2020: 3,997\n  - 2021: 4,980\n  - 2022: 5,035\n  - 2023: 4,485\n  - 2024 (Proj.): 4,583\n  - 2025 (Proj.): 4,682\n  - 2026 (Proj.): 4,780\n  - 2027 (Proj.): 4,879\n  - 2028 (Proj.): 4,977\n  - 2029 (Proj.): 5,075\n- Gross official reserves in months of next year's imports of goods and services:\n  - 2019: 8.0\n  - 2020: 5.9\n- Brunei dollars per U.S. dollar (period average):\n  - 2019: 1.36\n  - 2020: 1.38\n  - 2021: 1.34\n- Brunei dollar per U.S. dollar (end of period):\n  - 2019: 1.35\n  - 2020: 1.33\n\nIMF Executive Board press release, September 25, 2024.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Brunei Darussalam 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/2024/09/25/pr-24340-brunei-imf-concludes-2024-article-iv-consultation"
    }
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    "Published: September 25, 2024",
    "Real GDP rose by 1.4 percent in 2023 after two years of recession, mainly driven by the non-oil and gas (O&G) sector and earlier-than-anticipated production from the new Salman oil field in Q4 2023.",
    "Inflation fell to 0.4 percent in 2023 compared to 3.7 percent in 2022, supported by easing post-pandemic supply chain disruptions, softening commodity prices, and large subsidies and price controls.",
    "Fiscal and external positions deteriorated in 2023 reflecting weaker O&G production and prices; the current account was also impacted by higher service imports and net income outflows.",
    "The banking sector remains stable, liquid, and well capitalized with declining non-performing loans.",
    "Growth is forecast at about 2.4 percent in 2024 on the back of expected increases in O&G production, including from new offshore oil fields, and a rebound in the downstream sector; domestic non-O&G non-tradeable sector growth is expected to plateau.",
    "Inflation is expected to remain unchanged at 0.5 percent in 2024.",
    "Fiscal and external balances would stabilize alongside O&G prices.",
    "Near-term risks are tilted downward due to external factors and O&G production challenges.",
    "Upside scenario: new O&G field discoveries would provide significant upside.",
    "Structural and transition risks: decarbonization pressures and adoption of artificial intelligence pose economic and social challenges.",
    "The narrowing output gap, O&G revenue uncertainty, and long-term decarbonization trends warrant a prudent fiscal stance while protecting the vulnerable and public investment.",
    "Use of fiscal buffers in FY 2023/24 was appropriate; priority should shift to restoring fiscal buffers through growth-friendly fiscal consolidation.",
    "Policy instruments recommended:",
    "The currency board arrangement with Singapore is sound and has supported macroeconomic and financial stability.",
    "Recommended improvements in monetary operations:",
    "Encourage enhanced inter-agency cooperation regarding issuance and management of sukuks.",
    "Over the medium term, BDCB is encouraged to build internal capacity in liquidity forecasting to calibrate I-bill issuance and consider establishing a single treasury account.",
    "Financial sector remained stable with strong capital and liquidity buffers; systemic risk is assessed to be contained.",
    "Monitoring and prudential measures advised:",
    "Authorities’ commitment to ambitious and sustained structural reforms is critical to ensure growth and diversification, including transition to a low-carbon economy.",
    "Net zero emissions goal by 2050 will require continued development of the non-O&G sector and adoption of green technologies.",
    "Priorities include continued skill development, addressing AI-related challenges, and closing structural gaps in first-generation reform areas (external sector trade facilitation, improving business regulation, and governance) vis-à-vis top peers to facilitate FDI and PPPs.",
    "Completing the 2025 National Adaptation Plan and a Climate Vulnerability Assessment should support prioritization of adaptation strategies.",
    "Data provided to the Fund has some shortcomings that hamper surveillance; data quality should be strengthened.",
    "Steps needed to close identified data gaps in national income, prices, external and fiscal sectors.",
    "Recommended actions:",
    "Area: 5,765 sq. kilometers",
    "Population (2023): 450,500",
    "Nominal GDP per capita (2023): US$33,581.1",
    "Main export destinations (2023): Australia (21.5 percent), China (16.9), and Singapore (16.7)",
    "Unemployment rate (2023): 5.1%",
    "Labor force participation rate (2023): total 67.2; male 75.8%; female 57.3%",
    "Real GDP (percentage change):",
    "Oil production ('000 barrels/day):",
    "Natural gas output (millions BTUs/day):",
    "Average Brunei oil price (U.S. dollars per barrel):",
    "Average Brunei gas price (U.S. dollars per million BTU):",
    "Consumer prices (period average, percentage change):",
    "Public Finances: Budgetary Central Government (Fiscal Year, In percent of GDP)",
    "Balance of Payments (exports, imports, goods, services, current account):",
    "Gross Official Reserves:",
    "Gross official reserves in months of next year's imports of goods and services:",
    "Brunei dollars per U.S. dollar (period average):",
    "Brunei dollar per U.S. dollar (end of period):",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Brunei Darussalam and the IMF](http://www.imf.org/external/country/BRN/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)"
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