The IMF Report

My apologies for the regular readers for not posting anything lately. My sister got married over the weekend and as you know there were many functions which our family had to tend to and hence the lack of postings.

My colleague at MOF informed me that the International Monetary Fund had posted a PIN (Public Information Notice) about the recent Article IV consultation with Brunei. As a member of the IMF, the IMF will send a team to every member country to assess the soundness of the economy. The IMF called it the Article IV consultation as it is under Article IV of the IMF Agreement. Consultation is the nicer word for it. What IMF does is ask for relevant documents, statistics etc as well as interviews. They have their own set of data which they prepared in Washington and checked those against what you give them. Anyway, their assessment of the Brunei economy in my own summary is:

The IMF Executive Directors commended the government for our sound macroeconomic policies and prudent management of oil and gas resources which led to positive performance has led to a high standard of living and has provided Brunei with sizable fiscal and current account surpluses to help weather external shocks. Even though growth has slowed recently due to a decline in hydrocarbon production, economic activity is expected to increase gradually as production rebounds and supportive government spending comes on stream.

Long term challenges facing Brunei is to expand oil and gas reserves, diversify the production base by boosting private sector activity, and enhance fiscal management. Over the long term, continued restraint in budget formulation amidst volatile energy prices remains an appropriate strategy. The IMF recommended broadening the revenue and a gradual phasing out of generous government subsidies along with the creation of a more targeted social safety net. They also agreed that the peg to the Singapore dollar and the associated Currency Interchangeability Agreement continue to be sources of macroeconomic stability.

The IMF Directors also encouraged the acceleration of economic diversification and private sector job creation, in line with the priorities set out in their strategic development plans. They recommended greater private sector participation in areas currently dominated by the public sector, reduction in the large gap between public and private sector compensation packages, and removal of structural impediments to create an enabling environment for private sector development.

Anyway, that's how I summarise it. You can read the entire PIN for yourself with the statistics.

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