In my entry on Brunei and the IMF, I promised that I will inform readers when the 2006 IMF report on Brunei will be released - yesterday IMF has finally released the summary report and it is now available on their website on this link. The 2006 statistical data for Brunei is available on the same website on this link.
I will not say much about the IMF report but suffice for readers to click on the two links above and read for yourself what is the economic outlook for Brunei. For those too lazy to read the full report, here is a short summary.
The Government has continued to reap benefits from the high oil and gas prices and this still continue to dominate the economy. The government has saved those windfall profits for future use. Expenditure has remained constant despite the higher income from the high energy prices. And on the monetary front, situations have improved slightly with lending to businesses strengthened and lower private loans. IMF expected the growth in GDP around ½% previously to be around 3¾% in 2006 and 2½% in 2007.
What does the IMF Executive Board think? They have praised the government for the sound economic management but they also emphasised the need to progress towards economic diversification and a fiscal strategy to handle the depletion of hydrocarbon reserves. They also recommended taking additional steps to strengthen short-term revenue volatility and welcome MOF's strategic long term plan for fiscal sustainability. On the macroeconomic front, they agreed that the currency board arrangements (our link to Singapore Dollar - link here to my May posting to read more) has helped to promote financial stability. They welcomed the move for Brunei to establish a new monetary authority.
Above all, they stressed that economic diversification is key to Brunei Darussalam's medium-term growth prospects. Even though the various RKNs have been aimed at promoting diversification but progress has been slow. They also recommended that economic activities to be better carried out by the private sector, reduce administrative obstacles for business start-ups, better align education and training with the demands of a diversified private sector, and study further options to increase value added in the energy sector.
In the past, the Directors have often chided the government for the poor stastical base but this time they welcomed the important steps taken to improve Brunei Darussalam's statistical databases, and stressed that reliable and timely data reporting will enhance effective monitoring and planning.