Timor-Leste has been making steady progress in nation building and economic development. However, adjusting from high oil dependency, large social and infrastructure development needs, and weak institutional capacity poses considerable challenges. While prudent saving of its oil wealth in the Petroleum Fund (PF) has provided Timor-Leste with a financial cushion to help offset revenue losses related to the recent fall in global oil prices, fiscal trends under existing capital expenditure plans are unsustainable as the PF will be depleted in the long term at the current rate of withdrawals. The debt sustainability assessment has deteriorated and points to a moderate risk of debt distress reflecting the government's plan to tap concessional borrowing to finance front-loaded public investments. Restoring fiscal sustainability hinges on fiscal consolidation and successful prioritization of government expenditures to facilitate high-return infrastructure projects and catalyze non-oil private sector growth to achieve economic diversification.
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|Size: ||2.6 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2016|
|ISBN: ||9781475533088 (DRM-PDF)|
|Read Aloud: ||not allowed|