Country Economic Memorandum
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Timor-Leste: Pathways to Economic Diversification - Country Economic Memorandum 2023(Washington DC, 2023-05-03) World BankTimor-Leste has made important development gains since independence in 2002 but is now at a critical juncture. The government has successfully rebuilt public infrastructure, reduced poverty, and quickly built from scratch a network of functional public institutions. Despite these achievements, there is an urgent need for private sector-centered development that is not dependent on the oil sector. Receipts from sales of hydrocarbons have been the main source of government revenues, but their contribution to the economy is decreasing, raising the urgency for economic diversification. High public spending has not translated into strong and sustained economic growth. Furthermore, depleting oil reserves signal an urgency to reduce economic dependence on oil. The public sector-driven growth model has run its course and is fiscally unsustainable. The excessive public spending level led to an astronomical fiscal deficit of 45.3 percent of non-oil gross domestic product (GDP) in 2021. This fiscal stance entails significant risks that bring the country toward a damaging fiscal cliff in 2035. Albeit narrowing, there is a window of opportunity for the government to urgently implement the much-needed reforms in the next five years. There are several potential drivers for increased regional integration. These include the operationalization of the Tibar Bay port, the modernization of the Dili airport, the internet submarine cable installation, and the World Trade Organization (WTO) accession progress. Success requires a concerted and persistent government effort to address supply-side constraints, kick-start economic diversification, and boost export. This report provides an in-depth analysis of Timor-Leste’s economic performance in recent decades and proposes policies to enhance growth. It highlights two key interrelated constraints to sustained and inclusive growth: the ‘missing’ private sector and the need to tap into the growth-enhancing benefits of international trade. Given the diminishing returns of public investments, pursuing a sustainable development path will require a shift toward a more dynamic, private sector-driven growth model. Furthermore, with the right combination of a supportive enabling environment and trade policies, Timor-Leste could capitalize on incipient and established comparative advantages for its exports. Accordingly, the reforms to support private sector development and expand exports have the potential to boost Timor-Leste’s international competitiveness and improve economic diversification.
Directions for Reform: A Country Economic Memorandum for Recovery and Resilience in South Sudan(Washington, DC: World Bank, 2022-06-10) World BankSouth Sudan is at a crossroads in its recovery, reconstruction, and development. Having gained independence in 2011 after two protracted civil wars, the country twice relapsed into conflict: first in 2013 and again in 2016. While the economy began to recover following the 2018 peace deal, progress has stalled amidst a multitude of crises – including the COVID-19 pandemic, climate shocks, and dwindling oil production. At the same time, the broad-based rise in commodity prices due to the war in Ukraine have on balance affected South Sudan adversely. A decade after independence, South Sudan remains caught in a web of fragility and economic stagnation, with weak institutions, recurring cycles of violence, and ubiquitous poverty. Overall, the conflict is estimated to have cost South Sudan an accumulated loss in aggregate GDP of some US$81 billion during 2012 – 2018, equivalent to $11.6 billion per year on average (80 percent of 2010 GDP). Consequently, South Sudan’s real GDP per capita in 2018 was estimated at being one third of the counterfactual estimated for a non-conflict scenario. With the fragile peace deal largely holding despite challenges in implementation, the authorities initiated an ambitious reform program aimed at macroeconomic stabilization and modernization of the young country’s public financial management systems. This report discusses South Sudan’s economic performance since independence, with a focus on leveraging the country’s endowments of natural capital – oil and arable land – to support recovery and resilience. Three messages emerge from this report. First, there is a peace dividend in South Sudan. South Sudan’s real GDP per capita in 2018 was estimated at one third of the counterfactual estimated for a non-conflict scenario. Thus, maintaining peace can by itself be a strong driver of growth. Second, with better governance and accountability, South Sudan’s oil resources can drive transformation. Third, South Sudan’s chronic food insecurity could be reversed with targeted investments to improve the resilience of the agricultural sector.
Gabon Country Economic Memorandum: Toward More Inclusive and Greener Growth(Washington, DC: World Bank, 2022-05) World BankOver-reliance on natural resources has held back diversification of Gabon’s economy, as growth, exports, and fiscal revenues are still largely dependent on extractives. Despite Gabon’s abundant natural resources, growth has been slow to reduce poverty. In the context of dual shocks from low oil prices and the COVID-19 pandemic in 2020, government authorities committed to fiscal consolidation, structural reforms, and economic diversification as part of the Accelerated Transformation Plan (PAT). In addition, at their exceptional summit in August 2021, the Economic and Monetary Community of Central Africa (CEMAC) heads of state provided a strong political endorsement for structural reforms, with emphasis on improved management of public funds and governance, business environment reforms, and regional integration of human capital. This Country Economic Memorandum (CEM) is framed along the new reforms supported by the CEMAC heads of state to achieve faster, more inclusive, and sustainable growth. In this CEM, the green economy is viewed as an opportunity for Gabon to position itself as a champion. Economic transformation is necessary to find a better, sustainable model for job creation: reinforcing labor supply through better skills and job-search training, and creating economic opportunities in a more conducive environment for investment and trade. This CEM aims at supporting policy makers in their reform efforts. Their goal is to help Gabon, a small economy of 2.3 million people, break free from its resource-dependent growth model and create the conditions to move people into jobs in promising green sectors.
Nigeria Country Economic Memorandum : Charting a New Course: Synthesis Report(Washington, DC: World Bank, 2022) World BankNigeria has vast potential, but development has stagnated over the past decade. The country is characterized by strong spatial inequalities and a large north-south divide. Creating better jobs is a necessary condition for accelerating poverty reduction and economic transformation. A combination of limited job creation, booming demographics, and unfulfilled aspirations is pushing young Nigerians to emigrate abroad in search of gainful employment. As a result, Nigeria is at a critical historical juncture, with a choice to make. To chart a new and inclusive growth path, Nigeria needs macroeconomic and institutional enablers and investment accelerators. To catalyze private investment and offer more opportunities to the youth, the priority is to restore and preserve macroeconomic stability. To do so, it will be critical to improve the availability of FX, and the predictability and credibility of the exchange rate system to ensure a level playing field across all firms and individuals. While there is no silver bullet to accelerate growth, Nigeria can become a rising growth star again if it implements a comprehensive set of bold reforms in a timely manner. To implement this set of prioritized reforms, the authorities need to walk the talk and shift their focus from the “what” to the “how”.