East Timor: Reforms to boost business more urgent that use of oil revenues, IMF says

5 May 2008

Washington, United States, 5 May – East Timor needs to speed up reforms, particularly legislative reforms, to encourage business activities and create jobs and it is not immediately necessary to make use of oil revenues, the International Monetary Fund (IMF) said.

The recommendation was made in the final statement of the latest IMF mission (16-30 April) to East Timor, issued Thursday. It noted that the revenues from oil and gas continued to flow and that the non-oil sector recovered in 2007, driven by government and donor expenditure, following a significant fall in the previous year due to a lack of security and conflict.

“Private business was affected by the country’s security situation and by the drought, which affected agriculture,” according to the statement from the IMF mission headed by Susan Creane, sub-director of the Asia-Pacific Department of the IMF.

The mission met with the Timorese Finance Ministry, representatives of the private sector and civil society and assessed some of the government’s short term policies, particularly in terms of food safety, which it considers can be ensured without increasing current expenditure.

Such an increase, it said, could even increase inflation and lead to losses, given the country’s lack of institutional capacity.

In the statement the IMF also made positive note of the government’s initiatives to stimulate growth of the private sector, particularly the development of a credit database and a regulatory system for banking. (macauhub)