## IMF Executive Board Concludes 2025 Article IV Consultation for Timor-Leste

_IMF News, September 26, 2025_

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## Bibliographic details
- Published: September 26, 2025

---

### Growth and inflation outcomes (2023–2024; May 2025)
- Growth is estimated to have risen to 4.1 percent in 2024, supported by fiscal expansion and strong credit growth.
- Inflation declined from 8.4 percent in 2023 to 2.1 percent in 2024, driven by moderating global food prices and the rollback of tax hikes.
- Inflation fell further to -0.2 percent y/y in May 2025.

### Outlook and projections (2025–2026)
- Growth projections:
  - 2025: 3.9 percent (supported by a strong fiscal impulse and continued rapid credit growth).
  - 2026: 3.3 percent (ASEAN accession begins to support growth through stronger FDI inflows and non-oil exports, but is more than offset by the expected drag from fiscal policy).
- Inflation projections:
  - Averaging 0.9 percent in 2025.
  - Averaging 1.8 percent in 2026.
  - Inflation is expected to rise modestly in the second half of 2025 as global food prices rise.
- Risks to the outlook are described as balanced.

### Executive Board assessment and priorities
- Key Board concerns:
  - Cessation of oil production in 2025.
  - Substantial fiscal and external imbalances.
- Urgent priorities:
  - Gradual fiscal consolidation to avoid depletion of the Petroleum Fund and secure fiscal and external sustainability.
  - Growth-enhancing structural reforms to promote economic diversification.
- Positive developments welcomed:
  - Timor-Leste’s WTO accession and forthcoming accession to ASEAN, expected to boost trade and attract more foreign investment.

### Fiscal policy, revenue, and public spending
- Directors’ recommendations:
  - Improve composition and quality of public spending.
  - Gradually enhance revenue mobilization.
  - Restrain recurrent spending; reduce untargeted transfers; contain the public wage bill.
  - Prioritize investments in human capital and high-quality capital projects.
  - Implement VAT by 2027 and strengthen tax administration and compliance.
  - Carefully manage risks associated with the Greater Sunrise gas field development.
  - Fully implement ongoing reforms to public financial management and procurement to improve budget discipline and spending efficiency.

### Financial sector and structural reforms
- Financial system observations:
  - The financial system remains shallow despite strong credit growth in recent years.
  - Systemic risks are limited but rapid credit growth warrants close monitoring and supervision.
- Recommended actions:
  - Accelerate issuance of land titles.
  - Develop a national digital ID to address structural impediments to lending and support growth.
  - Address AML/CFT framework deficiencies.
  - Advance structural reforms to boost private sector development, enhance financial inclusion, and support sustainable growth.
  - Continue efforts to strengthen governance and the rule of law.
  - Strengthen vocational training to help unlock the demographic dividend.
- Capacity development:
  - Directors welcomed ongoing capacity development projects and noted continued engagement with the Fund would support Timor-Leste’s reform agenda.

### Selected economic and financial indicators (exact figures as reported)
- Non-oil GDP at current prices (2024): US$1.947 billion
- Non-oil GDP per capita (2024): US $1,399
- Population (2024): 1.392 million
- Quota: SDR 25.6 million

- Real sector (annual percent change)
  - Real Non-oil GDP:
    - 2022: 4.0
    - 2023: 2.4
    - 2024: 4.1
    - 2025: 3.9
    - 2026: 3.3
    - 2027: 3.2
    - 2028: (table continues)
  - Real Non-oil GDP per capita:
    - 2022: 2.2
    - 2023: 1.3
    - 2024: 3.0
    - 2025: 2.6
    - 2026: 2.0
    - 2027: 1.9
    - 2028: 1.8
    - 2029: 1.7

- CPI (annual average)
  - 2022: 7.0
  - 2023: 8.4
  - 2024: 2.1
  - 2025 (proj.): 0.9
- CPI (end-period)
  - 2022: 6.9
  - 2023: 8.7
  - 2024: -0.4

- Central government operations (in percent of Non-oil GDP)
  - Revenue:
    - 2022: 58.3
    - 2023: 50.7
    - 2024: 48.9
    - 2025: 45.4
    - 2026: 42.4
    - 2027: 39.5
    - 2028: 36.6
    - 2029: 33.9
    - 2030: 31.4
  - Domestic revenue:
    - 2022: 12.0
    - 2023: 13.1
    - 2024: 12.2
    - 2025: 11.9
    - 2026: 12.1
    - 2027: 12.3
  - Estimated Sustainable Income (ESI):
    - 2022: 33.1
    - 2023: 27.2
    - 2024: 26.8
    - 2025: 26.5
    - 2026: 24.1
    - 2027: 21.8
    - 2028: 19.5
    - 2029: 17.2
    - 2030: 15.0
  - Grants:
    - 2022: 13.2
    - 2023: 10.4
    - 2024: 9.9
    - 2025: 6.7
    - 2026: 6.4
    - 2027: 5.7
    - 2028: 5.1
    - 2029: 4.6

  - Expenditure:
    - 2022: 114.7
    - 2023: 90.8
    - 2024: 94.0
    - 2025: 97.0
    - 2026: 92.5
    - 2027: 90.1
    - 2028: 87.9
    - 2029: 85.5
    - 2030: 83.3
  - Recurrent:
    - 2022: 90.6
    - 2023: 68.6
    - 2024: 66.7
    - 2025: 73.3
    - 2026: 69.6
    - 2027: 67.9
    - 2028: 66.2
    - 2029: 64.6
    - 2030: 63.0
  - Net acquisition of nonfinancial assets:
    - 2022: 10.9
    - 2023: 11.8
    - 2024: 17.4
    - 2025: 16.9
    - 2026: 16.5
    - 2027: 16.3
    - 2028: 16.1
  - Net lending/borrowing:
    - 2022: -56.4
    - 2023: -40.1
    - 2024: -45.0
    - 2025: -51.5
    - 2026: -50.1
    - 2027: -50.6
    - 2028: -51.2
    - 2029: -51.6
    - 2030: -51.8

- Money and credit (annual percent change)
  - Deposits:
    - 2022: 8.6
    - 2023: 2.5
    - 2024: 7.3
    - 2025: 6.8
    - 2026: 6.2
    - 2027: 6.1
  - Credit to the private sector:
    - 2022: 34.5
    - 2023: 20.6
    - 2024: 31.8
    - 2025: 22.6
  - Lending interest rate (percent, end of period):
    - 2022: 11.0
    - 2023: 10.7
    - 2024: 10.5

- Balance of payments (in percent of Non-oil GDP)
  - Current account balance:
    - 2022: 24.3
    - 2023: -9.8
    - 2024: -29.0
    - 2025: -31.8
    - 2026: -32.3
    - 2027: -32.7
    - 2028: -33.3
    - 2029: -33.7
    - 2030: -33.9
  - Trade of Goods:
    - 2022: 60.4
    - 2023: -7.8
    - 2024: -33.0
    - 2025: -40.9
    - 2026: -40.2
    - 2027: -39.4
    - 2028: -38.4
    - 2029: -37.5
  - Exports of goods:
    - 2022: 107.3
    - 2023: 35.1
    - 2024: 10.1
    - 2025: 4.8
    - 2026: 3.7
    - 2027: 3.4
    - 2028: 3.6
  - Imports of goods:
    - 2022: 46.9
    - 2023: 42.9
    - 2024: 43.1
    - 2025: 45.8
    - 2026: 43.8
    - 2027: 43.2
    - 2028: 42.6
    - 2029: 41.8
    - 2030: 41.1
  - Trade of Services:
    - 2022: -26.3
    - 2023: -18.1
    - 2024: -16.6
    - 2025: -16.7
    - 2026: -16.5
    - 2027: -16.4
    - 2028: -15.5
    - 2029: -14.5
    - 2030: -13.6
  - Primary Income:
    - 2022: -18.7
    - 2023: 11.2
    - 2024: 14.1
    - 2025: 12.8
    - 2026: 12.9
    - 2027: 9.1
    - 2028: 7.4
  - Secondary Income:
    - 2022: 8.9
    - 2023: 4.9
    - 2024: 11.5
    - 2025: 9.8
  - Overall balance:
    - 2022: -6.1
    - 2023: -2.7
    - 2024: -2.2
    - 2025: 1.2
    - 2026: 1.6
    - 2027: 1.5

- Public foreign assets (in months of imports)
  - 2022: 169.0
  - 2023: 195.7
  - 2024: 183.5
  - 2025: 160.7
  - 2026: 150.1
  - 2027: 135.3
  - 2028: 122.3
  - 2029: 109.6
  - 2030: 96.9

- Exchange rates
  - NEER (2010=100, period average):
    - 2022: 156.2
    - 2023: 161.0
    - 2024: 163.5
  - REER (2010=100, period average):
    - 2022: 159.3
    - 2023: 170.3
    - 2024: 172.7

- Memorandum items
  - Fiscal impulse (percentage point of non-oil GDP):
    - 2022: -7.4
    - 2023: 22.1
    - 2024: -4.6
    - 2025: -6.2
    - 2026: 3.8
  - Nominal Non-oil GDP (in millions of U.S. dollars):
    - 2022: 1,676
    - 2023: 1,802
    - 2024: 1,947
    - 2025: 2,079
    - 2026: 2,208
    - 2027: 2,343
    - 2028: 2,485
    - 2029: 2,637
    - 2030: 2,797
  - Nominal Non-oil GDP per capita (in U.S. dollars):
    - 2022: 1,231
    - 2023: 1,309
    - 2024: 1,399
    - 2025: 1,475
    - 2026: 1,547
    - 2027: 1,620
    - 2028: 1,695
    - 2029: 1,773
    - 2030: 1,854
    - (annual percent change): 5.4; 6.3; 5.5; 4.7

  - Petroleum Fund balance (in millions of U.S. dollars):
    - 2022: 17,273
    - 2023: 18,288
    - 2024: 18,274
    - 2025: 17,746
    - 2026: 17,054
    - 2027: 16,145
    - 2028: 15,133
    - 2029: 14,022
    - 2030: 12,807
  - Petroleum Fund balance (in percent of Non-oil GDP):
    - 2022: 1,031
    - 2023: 1,015
    - 2024: 939
    - 2025: 853
    - 2026: 772
    - 2027: 689
    - 2028: 609
    - 2029: 532
    - 2030: 458

  - Public debt (in percent of Non-oil GDP):
    - 2022: 15.1
    - 2023: 14.4
    - 2024: 13.8
    - 2025: 14.2
    - 2026: 14.7
    - 2027: 14.6

  - Population growth (annual percent change):
    - 2022: 1.1
    - 2023: 1.4

*IMF Executive Board press release, September 26, 2025.*

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## References

- [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/)
- [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/09/25/pr-25315-timor-leste-imf-executive-board-concludes-2025-article-iv-consultation_