## IMF Executive Board Concludes 2024 Article IV Consultation with Brunei Darussalam

_IMF News, September 25, 2024_

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## Bibliographic details
- Published: September 25, 2024

---

### Recent economic performance and staff appraisal
- 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.

### Outlook and risks
- 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.

### Executive Board recommendations on fiscal policy
- 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:
  - Enhanced revenue generation.
  - Consideration of a low-rate carbon tax.
  - Expenditure rationalization, including more targeted subsidies.
  - Development of a fiscal consolidation plan with clear fiscal targets.
  - Establishment of a MTFF and fiscal anchors, and strengthening fiscal risk management and transparency.

### Monetary policy, exchange arrangement, and liquidity management
- The currency board arrangement with Singapore is sound and has supported macroeconomic and financial stability.
- Recommended improvements in monetary operations:
  - Include Singapore's interbank transactions in analysis to understand influence of Singapore's policy rates since January 2024.
  - Continue to narrow the corridor by raising the SFDR.
  - Integrate I-bills into the Asset Maintenance Ratio.
  - Launch a website for better communication on monetary policies.
- 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 stability and regulatory priorities
- Financial sector remained stable with strong capital and liquidity buffers; systemic risk is assessed to be contained.
- Monitoring and prudential measures advised:
  - Careful tracking of credit growth in both offshore and domestic personal loans.
  - Ensure foreign loans continue to be invested in highly credit-rated assets to mitigate credit risk.
  - For domestic lending, deploy prudential measures like capping the Total Debt Service Ratio, assessing unsecured personal loan exposure, and maintaining NPL standards.
  - Authorities encouraged to implement Basel III standards for better liquidity management by the end-2024.
  - Implement stress tests, including consideration of stress testing for climate transition and physical risks.
  - Strengthen prudential frameworks, develop a long-term sukuk market, adopt a green taxonomy and unify disclosure standards.
  - Improve AML/CFT effectiveness and continue implementing the APG’s Mutual Evaluation Report recommendations.

### Structural reforms, diversification, and climate agenda
- 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, statistical, and transparency issues
- 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:
  - Improve external sector data through a survey to better gauge trends in errors and omissions, and payables/receivables.
  - Strengthen public financial management (PFM) to build more transparent and accountable fiscal systems and align further with GFSM (2014).
  - Enhance dissemination via the Fund’s e-GDDS portal.

### Key statistics and projections (selected, as reported)
- 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):
  - 2019: 3.9
  - 2020: 1.1
  - 2021: -1.6
  - 2022: 1.4
  - 2023: 2.4
  - 2024 (Proj.): 2.6
  - 2025 (Proj.): 2.7
  - 2026 (Proj.): 2.9
  - 2027 (Proj.): 3.1
- Oil production ('000 barrels/day):
  - 2019: 121
  - 2020: 110
  - 2021: 107
  - 2022: 92
  - 2023: 74
  - 2024 (Proj.): 84
  - 2025 (Proj.): 94
  - 2026 (Proj.): 99
  - 2027 (Proj.): 90
- Natural gas output (millions BTUs/day):
  - 2019: 1,402
  - 2020: 1,358
  - 2021: 1,253
  - 2022: 1,151
  - 2023: 1,214
  - 2024 (Proj.): 1,226
  - 2025 (Proj.): 1,201
  - 2026 (Proj.): 1,220
  - 2027 (Proj.): 1,277
  - 2028 (Proj.): 1,313
- Average Brunei oil price (U.S. dollars per barrel):
  - 2019: 68.6
  - 2020: 43.3
  - 2021: 72.1
  - 2022: 107.7
  - 2023: 87.1
  - 2024 (Proj.): 89.5
  - 2025 (Proj.): 83.3
  - 2026 (Proj.): 79.9
  - 2027 (Proj.): 77.0
  - 2028 (Proj.): 75.1
  - 2029 (Proj.): 73.8
- Average Brunei gas price (U.S. dollars per million BTU):
  - 2019: 9.1
  - 2020: 6.7
  - 2021: 14.4
  - 2022: 10.9
  - 2023: 8.6
  - 2024 (Proj.): 9.9
  - 2025 (Proj.): 8.7
  - 2026 (Proj.): 7.8
  - 2027 (Proj.): 7.4
  - 2028 (Proj.): 7.0
- Consumer prices (period average, percentage change):
  - 2019: -0.4
  - 2020: 1.9
  - 2021: 3.7
  - 2022: 0.4
  - 2023: 0.5
- Public Finances: Budgetary Central Government (Fiscal Year, In percent of GDP)
  - Total revenue:
    - 2019: 26.4
    - 2020: 12.6
    - 2021: 24.0
    - 2022: 28.3
    - 2023: 17.3
    - 2024 (Proj.): 19.3
    - 2025 (Proj.): 18.9
    - 2026 (Proj.): 17.5
    - 2027 (Proj.): 16.3
    - 2028 (Proj.): 15.5
    - 2029 (Proj.): 15.1
  - Oil and gas revenue:
    - 2019: 19.8
    - 2020: 7.7
    - 2021: 20.2
    - 2022: 24.5
    - 2023: 13.0
    - 2024 (Proj.): 13.6
    - 2025 (Proj.): 13.4
    - 2026 (Proj.): 12.2
    - 2027 (Proj.): 11.1
    - 2028 (Proj.): 10.1
    - 2029 (Proj.): 9.5
  - Other revenue:
    - 2019: 6.5
    - 2020: 5.0
    - 2021: 3.8
    - 2022: 5.6
    - 2023: 5.5
    - 2024 (Proj.): 5.3
    - 2025 (Proj.): 5.2
    - 2026 (Proj.): 5.4
  - Total Expenditure:
    - 2019: 31.9
    - 2020: 32.6
    - 2021: 29.1
    - 2022: 26.7
    - 2023: 29.2
    - 2024 (Proj.): 29.4
    - 2025 (Proj.): 28.6
    - 2026 (Proj.): 27.8
    - 2027 (Proj.): 26.9
    - 2028 (Proj.): 25.9
    - 2029 (Proj.): 25.1
  - Current expenditure:
    - 2019: 29.5
    - 2020: 31.3
    - 2021: 28.0
    - 2022: 25.7
    - 2023: 27.4
    - 2024 (Proj.): 27.0
    - 2025 (Proj.): 26.2
    - 2026 (Proj.): 25.4
    - 2027 (Proj.): 23.6
    - 2028 (Proj.): 22.8
  - Overall balance 2/:
    - 2019: -5.6
    - 2020: -20.0
    - 2021: -5.1
    - 2022: 1.6
    - 2023: -11.8
    - 2024 (Proj.): -10.1
    - 2025 (Proj.): -9.6
    - 2026 (Proj.): -10.2
    - 2027 (Proj.): -10.5
    - 2028 (Proj.): -10.4
    - 2029 (Proj.): -9.9
  - Overall primary balance excluding royalties:
    - 2019: -22.7
    - 2020: -25.8
    - 2021: -22.5
    - 2022: -19.8
    - 2023: -22.6
    - 2024 (Proj.): -21.5
    - 2025 (Proj.): -20.7
    - 2026 (Proj.): -20.2
    - 2027 (Proj.): -19.6
    - 2028 (Proj.): -18.7
    - 2029 (Proj.): -17.7
  - Non-oil and Gas Balance (In percent of non-oil and gas GDP):
    - 2019: -49.5
    - 2020: -46.1
    - 2021: -44.3
    - 2022: -40.2
    - 2023: -41.8
    - 2024 (Proj.): -39.2
    - 2025 (Proj.): -36.5
    - 2026 (Proj.): -33.7
    - 2027 (Proj.): -31.1
    - 2028 (Proj.): -28.6
    - 2029 (Proj.): -26.1
- Balance of Payments (exports, imports, goods, services, current account):
  - Goods (millions of U.S. dollars):
    - 2019: 2,211
    - 2020: 1,359
    - 2021: 2,679
    - 2022: 5,153
    - 2023: 3,808
    - 2024 (Proj.): 3,966
    - 2025 (Proj.): 4,264
    - 2026 (Proj.): 4,121
    - 2027 (Proj.): 3,925
    - 2028 (Proj.): 4,013
    - 2029 (Proj.): 4,131
  - Exports:
    - 2019: 7,210
    - 2020: 6,535
    - 2021: 11,001
    - 2022: 14,130
    - 2023: 11,264
    - 2024 (Proj.): 11,416
    - 2025 (Proj.): 11,987
    - 2026 (Proj.): 12,098
    - 2027 (Proj.): 12,024
    - 2028 (Proj.): 12,390
    - 2029 (Proj.): 12,780
  - Exports of which: oil and gas:
    - 2019: 3,244
    - 2020: 2,943
    - 2021: 4,730
    - 2022: 5,660
    - 2023: 4,185
    - 2024 (Proj.): 3,867
    - 2025 (Proj.): 4,387
    - 2026 (Proj.): 4,243
    - 2027 (Proj.): 3,798
    - 2028 (Proj.): 3,668
    - 2029 (Proj.): 3,617
  - Imports:
    - 2019: 4,999
    - 2020: 5,176
    - 2021: 8,322
    - 2022: 8,977
    - 2023: 7,456
    - 2024 (Proj.): 7,450
    - 2025 (Proj.): 7,723
    - 2026 (Proj.): 7,977
    - 2027 (Proj.): 8,099
    - 2028 (Proj.): 8,377
    - 2029 (Proj.): 8,649
  - Services (net):
    - 2019: -1,189
    - 2020: -855
    - 2021: -696
    - 2022: -848
    - 2023: -1,305
    - 2024 (Proj.): -1,324
    - 2025 (Proj.): -1,271
    - 2026 (Proj.): -1,173
    - 2027 (Proj.): -1,086
    - 2028 (Proj.): -1,029
    - 2029 (Proj.): -989
  - Primary Income (net):
    - 2019: 362
    - 2020: 360
    - 2021: -370
    - 2022: 194
    - 2023: 327
    - 2024 (Proj.): 226
    - 2025 (Proj.): 193
    - 2026 (Proj.): 146
    - 2027 (Proj.): 119
    - 2028 (Proj.): 83
  - Secondary Income (net):
    - 2019: -490
    - 2020: -350
    - 2021: -502
    - 2022: -671
    - 2023: -749
    - 2024 (Proj.): -641
    - 2025 (Proj.): -687
    - 2026 (Proj.): -692
    - 2027 (Proj.): -673
    - 2028 (Proj.): -684
    - 2029 (Proj.): -683
  - Current Account Balance (millions of U.S. dollars):
    - 2019: 894
    - 2020: 514
    - 2021: 1,570
    - 2022: 3,264
    - 2023: 1,949
    - 2024 (Proj.): 2,328
    - 2025 (Proj.): 2,532
    - 2026 (Proj.): 2,448
    - 2027 (Proj.): 2,311
    - 2028 (Proj.): 2,419
    - 2029 (Proj.): 2,541
  - Current Account Balance (in percent of GDP):
    - 2019: 11.2
    - 2020: 19.6
    - 2021: 12.9
    - 2022: 15.0
- Gross Official Reserves:
  - 2019: 4,273
  - 2020: 3,997
  - 2021: 4,980
  - 2022: 5,035
  - 2023: 4,485
  - 2024 (Proj.): 4,583
  - 2025 (Proj.): 4,682
  - 2026 (Proj.): 4,780
  - 2027 (Proj.): 4,879
  - 2028 (Proj.): 4,977
  - 2029 (Proj.): 5,075
- Gross official reserves in months of next year's imports of goods and services:
  - 2019: 8.0
  - 2020: 5.9
- Brunei dollars per U.S. dollar (period average):
  - 2019: 1.36
  - 2020: 1.38
  - 2021: 1.34
- Brunei dollar per U.S. dollar (end of period):
  - 2019: 1.35
  - 2020: 1.33

*IMF Executive Board press release, September 25, 2024.*

---


## References

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- [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)

_Source: https://www.imf.org/en/news/articles/2024/09/25/pr-24340-brunei-imf-concludes-2024-article-iv-consultation_