Since 2005, Timor-Leste’s state receives multi-billion dollars from Petroleum Revenues.
These revenues, on one side, enable the state to expand its programs by financing milliondollar
infrastructure projects, social services, subsidizing veterans and elderly, and expand the
state’s bureaucracy during the last five years. On the other side, it turns Timor-Leste into a
Rentier State, confirmed by various quantitative data and qualitative analyses. The argument
that Timor-Leste is a Rentier State based on various characteristics, namely independence of
the state vis-a-vis domestic economy, composition of GDP, proportion of public expenditure
as domestic economy, employment structure, and Dutch Disease. Due to this, it shapes the
economic structure in its own unique way, and the characteristics in which the state and
society interacts. This paper discusses some of the current economic policies and some of its
impacts. Furthermore, this paper intends to provide some theoretical as well as conceptual
framework to help understand the current political economy of Timor-Leste, and the
challenges that it faces as a petro-dependent country.