IMF Sees Brunei Growth Picking Up in 2026 but Warns of Large Budget Deficits

WASHINGTON, D.C. — Brunei Darussalam’s economy is expected to grow faster in 2026 as higher energy prices support its oil and gas sector, but the International Monetary Fund says large budget deficits leave the country vulnerable to swings in hydrocarbon revenue.

In its 2026 Article IV consultation, the IMF projected 2.3% economic growth this year, up from 1% in 2025. It expects inflation to rise from minus 0.3% last year to 1.3% as higher global food and commodity prices reach consumers. The IMF Executive Board completed the consultation on September 18 and released its assessment on September 23. imf.org

Brunei’s external position strengthened in 2025: its current account surplus reached 18% of GDP, and the IMF projects it will widen to 19.5% in 2026. Higher oil and gas prices are expected to increase export earnings and government revenue, although limited growth in production volumes will restrain their effect on the broader economy. imf.org

The budget presents a different picture. The IMF estimated a fiscal deficit of 18.9% of GDP in fiscal year 2025/26, reflecting weaker hydrocarbon revenue and continued high spending. It projects the deficit will narrow as energy revenue improves, but Executive Directors urged Brunei to keep spending within its budget even if prices produce a windfall. imf.org

Directors called for a medium-term plan to reduce deficits and for more government revenue outside oil and gas. Their recommendations included better-targeted subsidies and restraint on public wages while protecting vulnerable households and priority development spending. They also urged measures to encourage private investment, address skills gaps, and make it easier for businesses to obtain permits and trade. imf.org

The IMF described Brunei’s banking sector as sound, with strong capital and liquidity buffers. Still, its outlook remains closely tied to energy markets. Price changes, disruptions to shipping or hydrocarbon facilities, and delays in diversification could all alter the growth and budget projections. imf.org

An Article IV consultation is the IMF’s regular review of a member country’s economy and policies. The 2026 staff report is also available from the IMF. imf.org