世界发展银行-Timor-Leste-Economic-Report,-April-2020-_-A-Nation-Under-Pressure_44页_2mb

Timor-Leste Economic Report Summary: A Nation Under Pressure (April 2020)

Core Content

This report provides an overview of Timor-Leste's economic developments in 2019 and outlines the outlook for 2020 amidst the challenges posed by the COVID-19 pandemic. It highlights the country's economic recovery, fiscal and monetary dynamics, and the impact of the pandemic on economic activity and public policy.

Main Points

Recent Economic Developments (2019)

• Economic Recovery: GDP grew by 3.4% in 2019, marking the first increase since 2016, driven mainly by public and private consumption.
• Public Spending: Total public expenditure rose by 5%, with significant increases in goods & services and public transfers, though capital spending fell by 8%.
• Budget Execution: Only 84% of the 2019 state budget was executed, the lowest since 2013, due to delays in budget approval and implementation.
• Inflation: Consumer price inflation slowed to 0.9%, easing pressure on the real exchange rate.
• Current Account: The current account turned into a surplus for the first time since 2015, primarily due to increased primary income from the Petroleum Fund.
• Petroleum Fund: Valued at $17.7 billion at the end of 2019, but withdrawals have exceeded sustainable income (ESI) since 2015. ESI for 2020 was set at $537 million, slightly higher than 2019 due to improved Petroleum Fund balance.
• Domestic Revenue: Domestic revenue declined to $186 million in 2019, the lowest since 2015, with direct tax collection falling short of projections.

Key Indicators (2018/2014)

Outlook and Risks (2020)

• Economic Impact of Pandemic: The 2020 state budget was not approved, leading to significant political uncertainty. GDP is projected to contract by nearly 5% in 2020.
• Public Spending Constraints: Budget execution is expected to be limited due to the duodecimal regime and delays from the pandemic.
• Petroleum Fund Withdrawals: A $250 million withdrawal was approved, with 60% allocated to pandemic response.
• Global Effects: International travel restrictions, trade disruptions, and public health measures are expected to negatively affect domestic economic activity.
• Policy Recommendations: The report suggests measures to support households and businesses, including easing utility payments, supporting wages in key sectors, and facilitating credit.

Special Focus: Enhancing Private Sector Development During the Pandemic

• Health Threat: The pandemic poses a significant health risk, with potential for high mortality and morbidity.
• Economic Impacts: The pandemic affects the economy through:
  • Direct costs of the disease (mortality, temporary absence from work)
  • Cost of health-related measures (lower demand and supply of goods and services)
  • Behavioural changes (delayed spending, postponed investments)
• Key Considerations: Economic scarring (hysteresis) is a risk due to potential job losses and firm closures.
• Economic Response Plan: The report recommends actions to secure transport services, maintain supply chains, ensure telecom access, support affected businesses, and protect vulnerable households.

2019 Economic Snapshots

• Economic Activity: Recovery in 2019 was driven by consumption, despite subdued private investment.
• Government Expenditure: Increased by 5% to $1.24 billion, with goods & services and public transfers as key components.
• Public Spending by Classification:
  • Goods & services: 30%
  • Public transfers: 27%
  • Salary & wages: 16%
• Budget Execution:
  • Overall: 84%
  • Capital & development: 73%
  • Goods & services: < 80%
  • Maintenance: 42%
  • Salary & wages: > 90%
• Petroleum Fund:
  • Value: $17.7 billion (end of 2019)
  • Withdrawals: ~$1 billion annually
  • ESI: $537 million for 2020, up from $529 million in 2019
• Fiscal Deficit: Increased to 31% of GDP in 2019, mainly due to higher public spending and lower domestic revenue.

Monetary and Financial Sector (2019)

• Inflation: Slowed to 0.9%, with food prices relatively stable and transport prices down due to lower oil prices.
• Real Effective Exchange Rate (REER): Remained stable, though slightly appreciated due to lower domestic price increases.
• Private Credit Growth: Increased by 4%, driven largely by lending to individuals, with construction and trade & finance sectors lagging.
• Credit Composition: Concerns about the shift in credit towards consumption rather than investment, which could limit long-term growth.

Conclusion

The report underscores the challenges faced by Timor-Leste in 2020 due to the lack of a state budget, political uncertainty, and the global impact of the pandemic. While the economy showed signs of recovery in 2019, the sustainability of this growth is uncertain. The role of the Petroleum Fund in fiscal stability is critical, but its overuse and volatile returns require careful management. The Special Focus highlights the need for targeted economic policies to mitigate the effects of the pandemic and support private sector development.