East Timor expected to go into economic recession in 2006, IMF says

23 October 2006

Washington, United States, 23 Oct – The recent political crisis in East Timor has affected the co0untry’s economic progress and as a result it is expected to post negative growth in 2006, according to the International Monetary Fund (IMF).

In a statement issued Friday, the IMF said that before the conflict began in the first half of the year, “East Timor had had progress in establishing a basis for a stable and healthy economy.”

Due to the crisis “economic growth in 2006 is expected to be negative, despite an increase in public spending and international aid at the end of the year,” the document said.

The country’s oil and gas riches, “if used efficiently will provide potential for a significantly more prosperous future,” the statement said.

The crisis also contributed to, “deterioration in payment of bank loans,” the IMF said.

IMF estimates showed that annual growth of 7 percent “or more” would be needed to “significantly’ reduce poverty in East Timor.

The IMF also recommends that current expenditure be targeted at “the most needy sections of the population,” and that at the same time measures be taken to reduce, “excessive demand pressures that could lead to inflation with implications for the competitiveness of the non-oil economy.”

The statement confirmed the IMF’s availability for supplying the necessary aid to the country which is “recovering from the crisis and building a strong economy for the reduction of poverty and rapid human development.” (macauhub)