Washington: An International Monetary Fund (IMF) team led by Pablo Lopez Murphy conducted discussions via virtual meetings for the 2021 Article IV consultation with Timor-Leste during May 4-18.
According to Lopex Murphy, Timor Leste adopted a strong support package that will help to mitigate the impact of the pandemic and revitalize the economy.
Despite early success in containing the propagation of COVID-19, the recent surge in cases combined with the floods in early April will result in a modest economic recovery in 2021.
Real non-oil GDP growth in 2021 is projected at 1.8 percent, driven by higher government spending, rebounding private consumption, and the vaccination rollout that began in April.
Real non-oil GDP growth is projected to stabilize at around 3 percent in the medium term, as structural constraints weigh on growth potential.
Moreover, the current account deficit will continue to increase as oil revenues decline.
Meanwhile, inflation is projected to pick up, reflecting the increase in government spending and in energy prices.
“The uncertainty around the outlook is exceptionally high. An intensification of the pandemic or delays in the vaccination program could derail recovery in the near term. A sustained increase in the number of COVID-19 cases would hurt economic activity, as the planned resumption of infrastructure projects and activity in the services sector are further delayed," he explained.
"The inability to reach political consensus to implement the structural reforms needed to promote private sector development and economic diversification could undermine growth prospects over the medium term," he added.
The team had fruitful discussions with the Minister of Finance Rui Gomes, the Governor of the Central Bank Abraao de Vasconcelos, the Minister of Tourism, Trade and Industry Jose Lucas do Carmo da Silva, Minister of Petroleum and Minerals Victor da Conceicao Soares, other senior officials, development partners, civil society and private sector representatives.
Staff from the World Bank also joined the discussions.
"In the near term, the focus should be on accelerating the ongoing rollout of vaccines and on providing relief to the most vulnerable. Once the pandemic is over, with vanishing oil revenues, putting the fiscal position on a more solid footing to preserve fiscal and external sustainability should be a priority. Expenditure rationalization and revenue mobilization should underpin fiscal reforms," he stated.
"Structural reforms to improve the business environment, strengthen governance, raise labor productivity, and increase financial inclusion would help promote private sector development, create jobs, diversify the economy, improve competitiveness and support the external position. Strengthening disaster risk management, given the country’s vulnerability to weather-related shocks is crucial. At the same time, improving data quality is also vital to support policy making," he concluded.
Cek Berita dan Artikel yang lain di Google News
FOLLOW US
Ikuti media sosial medcom.id dan dapatkan berbagai keuntungan
