Growth of East Timor’s non-oil economy is “great challenge,” IMF says

1 March 2007

Washington, United States, 1 March – Growth of East Timor’s non-oil economy, making use of the financial stability and revenue from the oil sector, is the “great challenge” faced by East Timor, the International Monetary Fund (IMF) said Wednesday.

In a report published in Washington, the IMF Executive Commission noted the “progress made in stabilizing the economy and creating conditions for future economic growth,” recognizing “the need to deal with the economic consequences of recent disturbances,” in the country.

For this year the IMF forecasts increased growth ion the non-oil sector, rising by 32.1 percent against last year, when it receded by 1.6 percent, but the country’s current instability could affect this scenario.

Gas and oil revenues are expected to total around 882 million euros this year, which is double last year’s total, and almost 400 million euros more than the total revenue in the non-oil sector, according to IMF projections.

In the report, dated from the end of January and published now, the IMF noted the need to improve the investment climate in East Timor, particularly by “the expedite approval of critical legislation,” as is the case with land and labor laws, with the latter aimed at “encouraging greater labor flexibility.”

The IMF underlined its “support” for the Timorese government’s development strategy, ”which is focused on core reforms, needed to promote investment.”

It also supported a “sustainable” increase in government investment “in the medium term, to deal with the considerable development needs of the archipelago,” namely its infrastructure.

This year the archipelago is expected to have total revenue of US$1.375 billion, or 62 percent more than last year, particularly due to oil revenues. (macauhub)