The International Monetary Fund (IMF) forecasts that Timor-Leste gross domestic product, excluding the contribution of the oil industry, will grow by about 5 percent this year as government spending picks up after two years of political uncertainty.

After its staff inspected Timor-Leste this month, the IMF issued a written statement saying a fiscal strategy is needed to ensure fiscal sustainability in the long run and to protect the assets in the national oil fund.

The statement quotes the leader of the IMF mission, Niklas Westelius, as saying:

“The strategy should focus on strengthening control and efficiency of spending, mobilising domestic revenue by increasing tax compliance and implementing a value added tax, and making effective use of concessional borrowing.”

Mr Westelius said precedence should be given to spurring growth in the private sector and the creation of jobs to ensure employment expands rapidly.

“Improving the business environment should help encourage business formation, promote private investment, and generate employment opportunities,” the IMF statement quotes Mr Westelius as saying.