Here is the article in markdown format:
Credit Growth Sluggish in Timor-Leste Amidst Network Expansion Challenges
Overview
The Asian Development Bank (ADB) has warned that sluggish network expansion may have contributed to the slow growth in credit access in Timor-Leste.
Credit Access Growth
According to a recent Finance Sector Brief by ADB’s Pacific Department, the number of borrowers at commercial banks in Timor-Leste grew only marginally from 2013 to 2016, averaging 9.5% annual growth over the period. This is a significant slowdown compared to the 21% expansion seen between 2011 and 2012.
Challenges
Despite progress in financial inclusion, including the launch of a Finance Sector Master Plan in 2014 and the installation of an automatic payment system, challenges remain in expanding credit access to a broader base. Institutional constraints, such as:
- Insecure property rights
- Outdated bankruptcy frameworks
are major hurdles to overcome.
Recommendations
To address these challenges, the government plans to establish a national development bank to provide long-term financing. Improving the regulatory framework is also crucial to ensure the stability of the finance sector.
Progress and Challenges
The International Monetary Fund (IMF) has highlighted some of the key advances made by Timor-Leste in financial inclusion, including:
- Launch of mobile banking
- Efforts to improve interbank payments systems
However, the IMF has also warned that the country’s regulatory framework needs to keep pace with the development of its finance sector to effectively identify, monitor, and address new and emerging risks.
Diversified Financial Products
The ADB report emphasized the need for diversified financial products in Timor-Leste, including:
- Long-term financing options
- Providers specializing in asset finance
Addressing these challenges is crucial to promoting economic growth and reducing poverty in the country.
References
- Asian Development Bank. 2015. Growing the Non-Oil Economy: A Private Sector Assessment for Timor-Leste. Manila.
- Banco Central de Timor-Leste website: https://www.banco central.tl/en
- International Monetary Fund. 2016. Republic of Timor-Leste: 2016 Article IV consultation. IMF Country Report. No. 16/183. Washington, DC.