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IMF Calls for Fiscal Reforms in Timor-Leste to Ensure Long-Term Stability

Dili, East Timor - The International Monetary Fund (IMF) has urged the government of Timor-Leste to take immediate measures to ensure long-term fiscal stability by cutting expenditure and implementing projects that build a sufficient non-oil revenue base.

Rapid Growth Crucial for Fiscal Stability

According to the IMF, rapid and sustained growth of the private domestic sector is crucial for achieving this objective. However, several obstacles need to be removed to achieve this goal.

Obstacles to Achieving Long-Term Growth

  • Timor-Leste ranked 172 out of 189 countries in the World Bank’s Doing Business report.
  • The country struggled particularly in:
    • Registering property
    • Enforcing contracts
    • Resolving insolvency, where it was classified last.
  • Paying taxes in Timor-Leste took 276 hours per year, compared to an Asia-Pacific average of 204 and an OECD average of 175.
  • Corruption was highlighted as a major obstacle to doing business in the country.

Combating Corruption

  • The government has established institutions such as the Anti-Corruption Commission (CAC), which has been credited with achieving some progress despite limitations in its mandate.
  • However, observers have noted that the commission lacks power to prosecute and is often attacked by politicians.
  • The CAC has opened several investigations on allegations of corruption against high-level government officials, resulting in convictions in some cases.

Calls for Transparency and Accountability

  • Experts argue that more needs to be done to prevent corruption and increase transparency.
  • The government has declared its intent to pass a freedom of information act, but this has yet to be presented.
  • Some government agencies already publish online information of public interest on a discretionary basis.

IMF’s Call for Fiscal Reforms

The IMF’s call for fiscal reforms comes as the country struggles with high public debt and limited revenue sources. The government has been urged to prioritize transparency and accountability to ensure long-term stability and economic growth.

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