AMRO's Annual Consultation Report on Brunei Darussalam 2020 cover

AMRO’s 2020 Annual Consultation Report on Brunei Darussalam

Brunei Darussalam’s external position and fiscal balance should improve considerably, benefiting from rising global oil prices amid better global economic prospects.

Major downside risks facing the economy continue to revolve around the oil and gas sector. The country’s high dependence on the sector makes it highly susceptible to both domestic and external shocks in that sector.

Domestic risks include disruptions in oil and gas production in mature fields, and the uncertain commercial viability of new field explorations in a low oil price environment.

Further short-term fiscal support, if needed, should be flexible and targeted at households and businesses that are most affected by the pandemic, as well as enhancing public investments. In addition, efforts to reduce the high dependency on oil and gas revenues should be further strengthened, while enhancing spending efficiency.

The government should maintain its accommodative macroprudential policies to ensure sufficient financial resources to support the recovery of private sector activity. In the recovery period, the withdrawal of these measures should be gradual to avoid a cliff effect.

The country should also remain proactive in managing natural disaster risks by allocating the necessary budget to enhance climate change mitigation and adaptation measures under sustainable development policies.

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