Post sponsored by NewzEngine.com

Source: IMF – News in Russian

October 6, 2023

Washington, DC : The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with Brunei Darussalam.

Brunei has begun to recover from the pandemic, with COVID-19 restrictions lifted and borders reopened in 2022. However, the recovery has been hindered by reduced Oil and Gas (O&G) sector production, despite rising commodity prices. Real GDP contracted in 2022 due to a decline in O&G production, but this was partly offset by growth in downstream O&G activities and non-O&G sectors. The labor market improved, although gains were primarily in lower-paid jobs. Inflation rose in 2022 to 3.7 percent but has since moderated, with the stable exchange rate helping to mitigate the impact of imported inflation. The fiscal and current account position improved in 2022, 1.6 and 19.6 percent, respectively, driven by higher O&G prices and an expansion of exports from the downstream sector. The banking sector remains stable, liquid, and well capitalized with declining non-performing loans, while domestic lending showed signs of recovery, particularly in the corporate sector.

The recovery is expected to be uneven and uncertainty surrounding the outlook remains high. Growth is forecasted to contract by about 1 percent in 2023 on the back of reduced oil and gas (O&G) production—largely driven by the deferment of infrastructure maintenance in the O&G sector—but the recovery in the non-O&G sector will continue to contribute positively, aiding diversification efforts. Inflation is predicted to moderate to 1.7 percent, with the easing of global supply chain bottlenecks and commodity price normalization. The overall fiscal and external positions are projected to weaken to deficit of around -9 percent of GDP and a surplus of 10.6 percent of GDP respectively in 2023, and through the medium-term. Key challenges going forward include the gradually narrowing fiscal space, the need to shield the economy against O&G sector volatility, global decarbonization pressures, and ensuring intergenerational equity. Risks, such as protracted O&G maintenance activities and a less favorable external environment could impede the recovery, while higher O&G prices could provide an upside.

Executive Board Assessment[2]

Executive Directors noted that a contraction in the oil and gas sector weakened the recovery from the pandemic and the outlook remains subject to substantial downside risks. Against this challenging economic landscape, Directors stressed the need for prudent policies and structural reforms to support the recovery, maintain macroeconomic stability, and promote diversification and climate resilience. Continued capacity development supported by the Fund remains important.

Directors emphasized the importance of fiscal prudence amid substantial uncertainties in oil and gas production and prices and long-term decarbonization pressures. They welcomed the authorities’ focus on a growth-friendly fiscal consolidation that protects the vulnerable and raises public investment. Mobilization of non-oil and gas revenues, implementation of targeted subsidies, wage bill rationalization, and improvements in fiscal transparency and risk analysis would be important in this endeavor. A strong and credible medium-term fiscal framework would also be essential.

Directors agreed that Brunei’s enduring currency board arrangement with Singapore has ensured macroeconomic and financial sector stability. They encouraged further alignment of policy rates with the Monetary Authority of Singapore and more effective liquidity management.

Directors welcomed that the financial sector remains resilient, with strong capital buffers and abundant liquidity. While systemic risks remained contained, they called for continuous vigilance against tail risks amid tightening global financial conditions. Directors also emphasized the need for greater financial market development and additional enhancements in prudential frameworks and AML/CFT enforcement.

Directors welcomed the authorities’ efforts to support Brunei’s economic diversification and climate transition goals and urged the authorities to continue pressing ahead with critical policy reforms, given the importance of these goals for Brunei’s long-term prosperity. Priorities include human capital development, digitalization, enhancing public investments and PPPs, regional integration and data quality. Despite Brunei’s small global emissions share, Directors welcomed the nation’s ambitious commitment to achieve a Net Zero Target by 2050. They underscored the urgency of advancing the transition plan and advocated a comprehensive approach for climate objectives and revenue diversification, including incorporating the recommendations from the Climate Public Investment Management Assessment. Considering the implications of carbon pricing for climate mitigation and revenue diversification could also be important.



[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .

Brunei Darussalam: Selected Economic and Financial Indicators, 2018–28

Area: 5,765 sq. kilometers

Population (2021): 440,715

Nominal GDP per capita (2021): US$31,449.1

Main export destinations ( Nov 2022): Australia (21.2 percent), Japan (15.8), China (15.0), and Singapore (13.4)

Unemployment rate (2021): 4.9%

Labor force participation rate (2020): total 63.8%; male 71.7%; female 54.9%

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

Est.

Proj.

Proj.

Proj.

Proj.

Proj.

Proj.

Output and Prices

Nominal GDP (millions of Brunei dollars)

18,301

18,375

16,564

18,822

23,003

20,321

21,483

22,220

22,952

23,900

24,883

Nominal non-oil and gas GDP (millions of Brunei dollars)

8,047

8,268

8,868

9,790

11,043

11,958

12,738

13,545

14,683

15,829

17,061

Real GDP (percentage change) 1/

0.1

3.9

1.1

-1.6

-1.6

-0.8

3.5

2.8

3.0

3.1

3.2

Oil and gas sector GDP

-1.5

3.9

-4.9

-4.8

-7.3

-4.7

6.3

3.5

2.1

1.9

1.5

Non-oil and gas sector GDP

2.1

3.9

8.9

2.0

4.3

2.8

0.9

2.1

3.6

4.0

4.5

Oil production (‘000 barrels/day)

112

121

110

107

92

84

79

94

102

94

94

Natural gas output (millions BTUs/day)

1,372

1,402

1,358

1,253

1,151

1,114

1,270

1,220

1,195

1,319

1,331

Average Brunei oil price (U.S. dollars per barrel)

73.2

68.6

43.3

72.1

107.7

83.0

79.1

75.3

73.3

71.1

69.6

Average Brunei gas price (U.S. dollars per million BTU)

10.5

9.1

6.7

9.1

14.4

5.4

5.8

5.4

4.4

3.9

3.3

Consumer prices (period average, percentage change)

1.0

-0.4

1.9

1.7

3.7

1.7

1.5

1.0

1.0

1.0

1.0

Public Finances: Budgetary Central Government

Total revenue

32.7

26.4

12.6

24.1

28.3

19.5

19.4

18.6

17.4

16.5

15.7

Oil and gas

26.4

19.8

7.7

20.2

24.5

14.8

14.7

13.6

12.1

11.0

9.9

Other

6.3

6.5

5.0

3.9

3.9

4.7

4.8

5.0

5.3

5.5

5.8

Total Expenditure

32.5

31.9

32.6

29.2

26.7

28.7

27.2

26.5

25.8

25.0

24.3

Current

29.8

29.5

31.3

28.1

25.7

26.7

25.9

25.3

24.6

23.8

23.0

Capital

2.7

2.4

1.3

1.1

1.0

1.9

1.3

1.3

1.3

1.2

1.2

Overall balance 2/

0.2

-5.6

-20.0

-5.1

1.6

-9.2

-7.7

-7.9

-8.5

-8.5

-8.5

Non-oil and Gas Balance (In percent of non-oil and gas GDP)

-53.5

-49.5

-46.1

-44.3

-39.2

-38.2

-35.1

-32.7

-30.0

-27.6

-25.3

Money and Banking

Private Sector Credit

-3.1

2.0

0.2

2.7

6.0

4.0

2.0

2.0

2.0

2.0

2.0

Narrow money

-3.0

6.6

20.8

6.5

1.2

3.8

3.8

3.8

3.8

3.8

3.8

Broad money

2.8

4.3

-0.4

2.7

1.3

2.7

2.7

2.7

2.7

2.7

2.7

Balance of Payments

Goods

2,360

2,208

1,385

2,680

5,153

2,797

3,130

3,467

3,636

3,793

3,989

Exports

6,473

7,207

6,542

11,006

14,130

10,475

10,814

11,139

11,441

11,645

12,088

Of which: oil and gas

2,691

3,244

2,943

4,730

5,660

3,344

3,565

3,718

3,830

3,723

3,787

Imports

4,113

4,999

5,157

8,326

8,977

7,678

7,684

7,672

7,804

7,852

8,098

Services (net)

-1,008

-1,189

-854

-697

-848

-948

-1,043

-1,036

-1,024

-1,013

-1,002

Primary Income (net)

84

361

362

90

-370

261

306

209

150

106

119

Secondary Income (net)

-506

-490

-350

-502

-671

-508

-560

-580

-549

-563

-564

Current Account Balance

930

890

542

1,572

3,264

1,603

1,832

2,060

2,214

2,323

2,542

Current Account Balance (in percent of GDP)

6.9

6.6

4.5

11.2

19.6

10.6

11.6

12.7

13.2

13.3

14.0

Gross Official Reserves 3/

3,407

4,273

3,997

4,980

5,035

5,145

5,257

5,369

5,481

5,593

5,705

In months of next year’s imports of goods and services

6.0

8.1

5.2

5.9

6.7

6.7

6.8

6.8

6.9

6.8

6.8

Brunei dollars per U.S. dollar (period average)

1.35

1.36

1.38

1.34

1.38

Brunei dollar per U.S. dollar (end of period)

1.36

1.35

1.32

1.35

1.34

Sources: Data provided by the Brunei authorities; and Fund staff estimates and projections.

1/ Non-oil and gas GDP includes the downstream sector.

2/ In absence of government debt and interest payments, this is also primary balance.

3/ Comprises foreign exchange assets of Brunei Darussalam Central Bank, SDR holdings, and reserve position in the Fund.

IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Huong Van Lu

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson

MIL OSI

MIL OSI News (multilanguage service