Wed Sep 25 17:54:37 UTC 2024: ## Brunei’s Economy Recovers, IMF Urges Continued Reforms

**Washington, DC** – Brunei Darussalam’s economy rebounded in 2023, with real GDP growth reaching 1.4 percent after two years of recession, according to the International Monetary Fund (IMF). This growth was fueled by the non-oil and gas (O&G) sector and the new Salman oil field coming online.

The IMF’s Executive Board concluded its annual review of Brunei’s economy, endorsing a staff appraisal that highlighted the positive developments while also urging the country to continue structural reforms.

**Key Points:**

* **Growth:** Brunei’s economy is expected to continue its recovery, with growth projected at 2.4 percent in 2024. This growth is predicated on increased O&G production and a rebound in the downstream sector.
* **Inflation:** Inflation is expected to remain stable at 0.5 percent in 2024, supported by easing supply chain disruptions and lower commodity prices.
* **Fiscal Outlook:** The IMF advises a prudent fiscal stance, with a focus on restoring fiscal buffers through growth-friendly consolidation. This includes enhanced revenue generation, potentially through a low-rate carbon tax, and expenditure rationalization.
* **Monetary Policy:** The IMF commends the currency board arrangement with Singapore, which has contributed to macroeconomic and financial sector stability. It also encourages further efforts to enhance monetary operations and inter-agency cooperation.
* **Financial Sector:** The banking sector remains stable with strong capital and liquidity buffers, however, the IMF recommends careful monitoring of credit growth and continued implementation of prudential measures.
* **Structural Reforms:** The IMF emphasizes the importance of ambitious and sustained structural reforms to ensure growth and diversification. This includes transitioning to a low-carbon economy, investing in green technologies, and addressing challenges related to artificial intelligence.

The IMF’s report also acknowledges data shortcomings and encourages Brunei to strengthen its data quality, particularly in areas such as national income, prices, external and fiscal sectors.

**Moving forward, the IMF recommends that Brunei:**

* Maintain a prudent fiscal stance, with a focus on restoring fiscal buffers.
* Enhance revenue generation and expenditure rationalization.
* Strengthen fiscal risk management and transparency.
* Continue efforts to improve monetary operations and inter-agency cooperation.
* Implement Basel III standards for better liquidity management.
* Implement stress tests, considering climate transition and physical risks.
* Further strengthen prudential frameworks.
* Implement ambitious and sustained structural reforms, including transitioning to a low-carbon economy.
* Strengthen data quality and close identified data gaps.

The IMF’s report provides a comprehensive assessment of Brunei’s economic performance and highlights the importance of continued reforms for long-term growth and prosperity.

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